| OT: Eichler, on short vs. long bias: Clearly, it makes more sense in the abstract to consider a short bias, and develop skills at shorting, in a bear market. There are a number of difficulties with the practice though, as I'm sure you must experience (and, if you haven't, then please reveal how you've overcome them!). For day/swing-trading purposes, the uptick rule can be painful, heavily cutting into theoretical profits on a properly anticipated move. Also, I've found often that, because the market tends to run more quickly when it heads to the down side, and also rebounds more dramatically, trading rules and habits which make perfect sense on the long side can be counterproductive. In other ways (short squeeze, borrowing shares, long-term positive bias), the equity markets stack the odds against short-sellers, at least at the margins: For these reasons, some serious equity-trading systems don't include short-selling at all. For me it's added up to an inducement to study commodity futures and options, and, at this point, to isolate just a couple of short-side methods that I feel comfortable trading, even in THIS market. |
