Momentum Daytrading - Tricks of the Trade Message Board

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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade

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To: Ken Wolff who wrote ()	8/5/1998 1:47:00 AM
From: John T.	Read Replies (1) of 2120

Can intraday traders avoid the uptick rule with a box or hedge when selling short? Would someone please explain in detail the procedure whereby intraday traders establish a box or hedge when selling short so as to avoid the uptick rule? Is this the same procedure as "shorting against the box?" I understand that "shorting-against-the-box" is the act of selling short securities that you already own. For example, if you own 200 shares of ABC and tell your broker to sell short 200 shares of ABC, you have shorted against the box. However, when you short against the box, you have locked in your gain or loss, since for every dollar the long position gains, the short position will lose and vice versa. I don't see the utility of shorting againt the box, except perhaps to delay recognition of your gain on the sale of the stock. It appears that if you short against the box your gain on the short sell will be offset by your loss on the long position. Is this the correct procedure that intraday traders use? If not, what is the correct procedure?

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