You bring up several issues that can't be explained in one message.
I will briefly touch on them and hopefully provide some real life examples going forward.
>>> IMO shorting a stock based only on the technical chart is very risky, especially without knowing the fundamentals of the company. I always look at the institutional ownership of a company, the amount of shares in the float of a company, the short interest, and if there has been insider buying or selling of the company. <<<
No, it isn't. In fact not knowing the fundamentals often is better. You aren't clouding your mind with facts other than price is falling and where to expect price to rebound. This has to do with supply vs. demand. Hopefully I can provide some examples going forward.
>>> CALM is an example where someone who was short would have had significant problems. Someone who shorted CALM based on the chart alone in the last year would have had difficulty. <<<
Maybe yes, maybe no. CALM isn't a good example either way, in my opinion. 80% of the charts I look at are ambiguous. They don't present very good low risk, high probability set ups. That doesn't mean they won't go up, if long. That simply means the risks are greater.
In the case of CALM, it has been in a sideways trading range for the past few months. I look for stocks that are in a defined trend either long or short. I'm not looking for sideways. That's why the chart is ambiguous to me.
I look for low risk entries that have a high probability of succeeding. You have to be patient for these set ups and when they come, you go in full force.
>>> Since CALM is such a low float stock, even having a buy stop order wouldn't necessarily have helped since the shares tend to move quickly past any stops. <<<
CALM trades about 890K shares per day on average. That's enough liquidity for most people. Over a million shares per day would be better. I avoid those stocks that trade about 200K per day or less, on most occasions. |
