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Strategies & Market Trends : STEAMROLLER'S DAYTRADES
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To: NASDBULL who wrote (1202)10/8/1998 6:50:00 AM
From: Wayners  Read Replies (1) of 1561
 
You mean you sold 700 shares. You've discovered the biggest difference between going long and short. When you go long, your gains are automatically compounded going forward. When you are short you have reshort profits in order to get the compounding going forward. As you make money in a short account, you have to keep less and less money in the short account in order to cover the short. You need to take that excess money as it accrues and reshort the stock. You do not have to cover your position in PVN in order to short more shares. For example with PVN you shorted $60.3125 x 700sh = $42,218.75. You have to keep a minimum of half of these dollars reserved in order to cover the short at the beginning of the trade--$21,109.375. Lets say PVN drops to $30. At $30 x 700sh = $21,000 and half of that is $10,500. So you've got $21,109.375 - $10,500 = $10,609.375 maximum available (fully margined) to short additional shares. At $30 you can short an additional $10,609.375/$30=354 shares. Clear as mud?
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