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nwinski wrote:
>
> Don Green wrote:
> >
> > I have decided to short another 1000 shares of BA at 49. It appears to have
> > topped at 49, unless the market REALLY recovers.
> >
> > So I am now short 2000 shares of BA with an average cost of 48.75
> >
> > With this much money online, I will be quicker to cover my short than I
> > normally would
> >
> > Regards
> > Don Green
>
> Don,
> I don't agree with this logic. Increasing exposure should not an
> excuse for reducing profit margins. With only a 1/2 point difference
> between your initial position and second half of your position, the risk
> reward profile should be vitually the same. If you call your insurance
> company and ask to double your insurance coverage do they say "ok, but
> we will have to substantilly cut your preumium rate"? I don't think so.
> The same logic applies here. There is an intangible cost involved in
> every trade called risk. No one knows exactly what the costs is, but you
> must be certain that you make enough on your winning trades to more than
> cover the risk and losing trades. Please explain how doubling your
> exposure cuts your risk so that you can afford to take a smaller profit
> margin?
>
> Fully Exposed,
>
> Norman
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