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A few comments interspersed below.
Richard Estes wrote:
>
> A few thoughts on shorting:
>
> A move from 25 to 50 is 100%, a move from 50 to 25 is 50%. The upper
> reaches of a long is infinity, while a short is 100%. %s count!
In theory this is true. But if one is trading a stock long or short, one
usually sets a price target. Then closes out their position if it is
reached. So in practice shorting and going long should be no different
in terms of %s.
>
> The strong get stronger and the weak get weaker. Don't ever short a stock
> because you think it is too high or go long on a stock because it is too
> low.
I agree with these but will add to your first suggestion. A stock that
has a particular type of run up in price will surely come down on profit
taking. This is an ideal time to make a short trade. But you need to
have some good technical indicators to tell you when.
>IBD's RS rankings is most effective means of measuring trend and rate
> of change in an individual stock.
The way IBD establishes RS ranking is over a 6 month period of time. You
should be able to come up with some thing in IRL that would be better.
But that takes some time and energy to set that up. But IBD is still
very good.
>
> Forget market, focus on your stocks. If you are using an effective system,
> you won't be hurt. Its buy and sell signals have held up in all your
> testing, stick with it. Your stock might not follow the market.
I have mixed feelings about this. In the absolute since a trading system
should give one the buy & sell signals. But to be honest some decisions
in a trading system are subjective and not objective.
If we use TA to bias our trades in our favor. i.e., provide us
information. It should be no different that the market gives us
information as well. I have learned that keeping track of the market
does give me more information to make decisions on. i.e., hopefully
information to bias the trade in my favor.
Harley
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