KA111
20.04.2001, 13:04
Shorting?
Extreme Voalitilität kennt immer zwei Richtungen, mit denen sich Geld verdienen läßt. Wenn das, was der Markt gerade vollzieht, sich als Trendwechsel entpuppen sollte, wäre shorten gegen den Strich und darf nicht zum Fight gegen den Markt werden. Daher im Moment, bis zur Klärung, nur einmal für die Schublade....
Shorting is a much more beautiful trading "art" than than the long side. This is because you are against a machine that is designed, from its very core, to head upwards. The basic theory in shorting is remarkably simple, albeit extremely difficult to apply in practice...that is because of our innate ability to "fight" rather than to "give in" to the machine. And its in the "giving-in" part that keeps you alive, so you can take advantage of an even better opportunity in the future. You see when the bull takes your money away, how will you practice your art? You will only dream of it.
1) Shorting into extreme strength: Do not place your full normal trading size on the first shot. Place a "feeler-trade" - one that will not hurt you too much in case the market continues its uptrend. Set a Stop Loss for this and abide by it (give in). Set a PLAN to where you will ADD to this position, either higher or lower. Set a stop Loss for THAT and abide by it (give in). You are shorting a machine that is designed to go up. Do you have a plan? If not, well that would equate to arbitrarily entering a room full of thugs and
expecting to outbox all of them, because you think you are a good boxer, and they don't box as good as you do.
2) Stop-Loss: Keep in mind that if you violate it, you may be on the road to creating a "monster trade" that will END YOUR DAYS AS A SPECULATOR. Monster Trades are born this one and only way.
3) Giving-in: Don't be mad, don't take it personal. Laugh, get out, and Short it later. "Monster Trades" are VERY personal. When you find yourself rationalizing, complaining, crying and whining about how its not supposed to go up - you are pretty much dead. My best trades come when I don't even want to waste my time rationalizing, because I LIKE IT MY TRADE. Give-in when you feel the competition is getting a little hot...this is called RISK MANAGEMENT - the most important single factor in trading - have you heard of it? As posted earlier, get out...OR get out of half to reduce RISK.
4) Short Targets: Why is it that people love to short the strongest stocks and markets? I suppose its the "Black Diamond" or "Extreme" appeal. Its really cool, and if you hit it right, your ego got its share of the cake, but you see, all too often, the market will break your ego into 100 million pieces. Have you ever had that? I have. My money is in the bunny slopes....Do you watch Discovery Channel? Have you seen a lion stalk a herd of wildebeast? Is the lion choosing the biggest, baddest wildebeast with the sharp horns? NO!! It picks on the little sick one that looks like it can't run...are you getting the picture? LOOK FOR WEAKNESS BEFORE SHORTING!..then short the next rally.
5) Signs of weakness: Your best indicator is RELATIVE STRENGTH. When a stock or sector is not rising (as its pattern usually dictates) with the broader market, and responding WELL to broader market downturns. Be cautious a stock that is already falling while the market is still rising is EXTREME weakness - you are late. Look for one that "just doesn't want to go up anymore."...This is a signal (so simple) that on the NEXT market downturn, it is MORE LIKELY to give you MONEY if you are short, than the other one across the street that is tearing through the roof (why short that?).
6) Shorting into Extreme Weakness: Just don't do it. Avoid stocks or markets that are deep into a downtrend - a small "pop" to the upside can wipe you out, if you are not carefull in planning or if you are not fast enough to get out.
Gruß
KA111
:)
Extreme Voalitilität kennt immer zwei Richtungen, mit denen sich Geld verdienen läßt. Wenn das, was der Markt gerade vollzieht, sich als Trendwechsel entpuppen sollte, wäre shorten gegen den Strich und darf nicht zum Fight gegen den Markt werden. Daher im Moment, bis zur Klärung, nur einmal für die Schublade....
Shorting is a much more beautiful trading "art" than than the long side. This is because you are against a machine that is designed, from its very core, to head upwards. The basic theory in shorting is remarkably simple, albeit extremely difficult to apply in practice...that is because of our innate ability to "fight" rather than to "give in" to the machine. And its in the "giving-in" part that keeps you alive, so you can take advantage of an even better opportunity in the future. You see when the bull takes your money away, how will you practice your art? You will only dream of it.
1) Shorting into extreme strength: Do not place your full normal trading size on the first shot. Place a "feeler-trade" - one that will not hurt you too much in case the market continues its uptrend. Set a Stop Loss for this and abide by it (give in). Set a PLAN to where you will ADD to this position, either higher or lower. Set a stop Loss for THAT and abide by it (give in). You are shorting a machine that is designed to go up. Do you have a plan? If not, well that would equate to arbitrarily entering a room full of thugs and
expecting to outbox all of them, because you think you are a good boxer, and they don't box as good as you do.
2) Stop-Loss: Keep in mind that if you violate it, you may be on the road to creating a "monster trade" that will END YOUR DAYS AS A SPECULATOR. Monster Trades are born this one and only way.
3) Giving-in: Don't be mad, don't take it personal. Laugh, get out, and Short it later. "Monster Trades" are VERY personal. When you find yourself rationalizing, complaining, crying and whining about how its not supposed to go up - you are pretty much dead. My best trades come when I don't even want to waste my time rationalizing, because I LIKE IT MY TRADE. Give-in when you feel the competition is getting a little hot...this is called RISK MANAGEMENT - the most important single factor in trading - have you heard of it? As posted earlier, get out...OR get out of half to reduce RISK.
4) Short Targets: Why is it that people love to short the strongest stocks and markets? I suppose its the "Black Diamond" or "Extreme" appeal. Its really cool, and if you hit it right, your ego got its share of the cake, but you see, all too often, the market will break your ego into 100 million pieces. Have you ever had that? I have. My money is in the bunny slopes....Do you watch Discovery Channel? Have you seen a lion stalk a herd of wildebeast? Is the lion choosing the biggest, baddest wildebeast with the sharp horns? NO!! It picks on the little sick one that looks like it can't run...are you getting the picture? LOOK FOR WEAKNESS BEFORE SHORTING!..then short the next rally.
5) Signs of weakness: Your best indicator is RELATIVE STRENGTH. When a stock or sector is not rising (as its pattern usually dictates) with the broader market, and responding WELL to broader market downturns. Be cautious a stock that is already falling while the market is still rising is EXTREME weakness - you are late. Look for one that "just doesn't want to go up anymore."...This is a signal (so simple) that on the NEXT market downturn, it is MORE LIKELY to give you MONEY if you are short, than the other one across the street that is tearing through the roof (why short that?).
6) Shorting into Extreme Weakness: Just don't do it. Avoid stocks or markets that are deep into a downtrend - a small "pop" to the upside can wipe you out, if you are not carefull in planning or if you are not fast enough to get out.
Gruß
KA111
:)