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The issues around selling short are not indicator issues - they are
execution issues. You're going to have to know how good your broker is at
locating shares to borrow, whether they will pay you interest on the money
you're going to be lending them and whether your back-testing took into
account extra slippage due to the uptick rule. Then you're going to have to
see if your broker's account screens and margin systems can even cope with
short sales in a comprehensible manner. Are you going to be able to react
quickly when your broker cancels your position because they ran out of
borrow?
Check short interest ratios before you even think about it. And do remember
while you're at it that while losses on a long position are a maximum of
100%, you can lose much more than that on a short - a stop isn't going to
help you if the company gets bought out at a big premium. So your position
sizing model may need fine-tuning.
Markets behave differently on the downside - they move down faster with
vicious bull retracements. It's a hairy ride. Oh, and by the way, tax regs
are against you all the way.
Shorting is like options - you need to be very sure you know what you're
doing before you start - and the learning materials out there are much
better for options than shorting - there's no Shorting Industry Council to
hold your hand!
If you just want to get a feel for that side of the market, consider the
Ursa or Arktos mutual funds. If Prechter is right and we've just finished
wave 2 of a big cycle ride, then a long term short will bring stability to
your portfolio for sure.
Andrew
-----Original Message-----
From: edwinncw [mailto:edwinncw@xxxxxxxxxxxx]
Sent: Wednesday, March 30, 2005 6:02 PM
To: Metastockusers@xxxxxxxxxxxxxxx
Subject: [Metastockusers] Re: short sell
Hi
Thank for your comment and recommendation on Roys newsletter and
system. I will try to acquire more information from him, but beside
that, is there any other indicator in the Metastock sutiable for
this?
thank
edwin
--- In Metastockusers@xxxxxxxxxxxxxxx, "superfragalist"
<jackolso@xxxx> wrote:
>
> Edwin, no offense intended, but based on your question you're not
even
> close to being ready to short stocks. Shorting takes more skill
than
> going long and the risks are much higher.
>
> A moving average or two is all you need, if you know what you're
doing.
>
> I strongly recommend you buy Roy's newsletter. Read all the back
> issues and the April issue. Setup the SPY and QQQQ trading system
> that's written about in MSTT and practice on those two stocks. If
you
> get good at going long and short on those two, then you can apply a
> similar trading approach to other stocks.
>
> www.metastocktips.co.nz
>
>
>
> --- In Metastockusers@xxxxxxxxxxxxxxx, "edwinncw" <edwinncw@xxxx>
wrote:
> >
> > Hi
> >
> > I am interested in short selling the stock. Can someone
recommend me
> > any indicator or formula are suitable for this purpose.
> >
> > Thank
> > edwin
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