Dave,
My grasp of the actual proportion of longs and shorts in any given stock at any moment is quite weak. It's always changing, some are short, some are longs who just sold for a profit, some for a loss, etc. So, if my statement is incorrect I would appreciate someone correcting it. Having said that, I don't believe traders in stocks are too different from traders in commodities. When bulls are strong, the price goes up. Just the opposite when bears are in control. There is fundamental disagreement between the two for each trade. Therefore, a bear will short as a stock rises since they're convinced the price is too high and must fall. If they're wrong, they lose whatever money the bull made plus commissions and slippage. Because most small traders don't short, shorts are more often professionals. They also tend to trade more shares at any one time than the little guy/gal. When my broker allows me to short "any amount" of DELL or whatever, I really don't know if the actual shares exist for borrowing (thereby suggesting there are more longs than shorts) or whether so many shares exist that, practically speaking, it all works out at the end of the day (suggesting there are an equal number of longs and shorts). Too much for my little brain. Commodities are just a whole lot easier to quantify (not that I trade them).
For your position trading, do you favor NASDAQ, NYSE or any other stocks? My main concern is the huge gaps that can really wipe out a short. I'd like to position trade, but I need to work out the details much more than I have.
Regards,
Paul Kaz |
