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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: sherry who wrote (1330)	6/23/1999 10:44:00 AM
From: Eric P	Read Replies (1) \| Respond to of 18137

Shorting stocks. An excellent topic for a detailed review. I thought I had read a bit about it on this thread, but couldn't find it in the thread summary. Perhaps someone could put together and 'publish' on this thread a good introduction/review of shorting. Points to cover might include: Upticks, short list, others... If no one else take on this task, I'll try to put something together this evening. Anyone care to give it a whack??? -Eric P.S. In terms of options trading, maybe someone could touch on this a bit, but I'd prefer not to become too deeply entrenched into options trading on this thread, if possible. Options trading is a whole other world from stock trading.

To: sherry who wrote (1330)	6/23/1999 12:10:00 PM
From: Dave O.	Respond to of 18137

< Re: Shorting Stocks > I think it's a good idea for anyone who wants to trade to learn both sides of the market. A book to provide some general background info an shorting is Kathryn Staley's, The Art of Short Selling. I look for any stocks that are extended relative to Bollinger Bands and I'll also look at Stochastics and/or RSI. I also love shorting after a runup in the market indexes. After the benign CPI number last week and Greenspan's remarks we had a big upswing and I've been shorting since last Friday. I would recommend anyone new to shorting to take small positions initially, so that you don't get easily wiggled out and also to get comfortable with the concept. We all know the market doesn't go up undefinitely and only playing the long side limits ones overall profit potential. Dave

To: sherry who wrote (1330)	6/23/1999 5:48:00 PM
From: Eric P	Read Replies (2) \| Respond to of 18137

Shorting Stocks Definition: nyse.com Some traders are very successful with shorting stocks. It is a widely known fact that stocks typically fall much faster than they rise. This is because buying tends to be something done rationally, while selling tends to be much more emotionally driven. As a result, properly timed shorting of stocks can be quite profitable. Now for a little dose of reality. Shorting stocks is very difficult to do successfully. It is much more challenging than buying stocks for many reasons. First, your universe of available stocks to short can be severely limited by the length of your brokers short list. Understand that in order to sell a stock short, your broker must be capable of borrowing the shares you wish to sell short. In addition, the stocks must also be marginable stocks (typically >$5/share). Stocks meeting these criteria are typically maintained on a list by your broker, known as their 'short list'. Most daytrading firms use software that will automatically reject orders attempting to short a non-shortable stock. Assume you have identified a stock that you wish to sell short, and have verified that it is on your brokers short list, you must now identify a good entry point to sell the stock. Once again, you face additional limitations with entering your position. Specifically, *you must initiate your short position on an 'uptick' or at a price which is at least 1/16 point above* the best bid price of the stock.** How do I know whether the stock on an 'uptick'? On the Nasdaq market, the uptick refers to the last change in the inside bid price of the stock. => I.e. for an uptick, the bid price of the stock is now higher than the previous value of the inside bid price of the stock. For exchange listed stocks (NYSE, AMEX), the uptick refers to whether the most recent trade price of the stock is higher than it's previous trade price. (Somebody may need to help me with the fine details of NYSE shorting...) See chapter 9 of the Nasdaq Traders Manual for more information: nasdaqtrader.com Once you know the stock is shortable and the stock is on an uptick, you can place an order to sell short the stock. You odds of getting filled on a Nasdaq order short be exactly the same as your odds of getting a sell-long order filled. On the NYSE/AMEX, however, your short order falls to the lowest priority of all sell orders for that stock at that price. This might cause additional difficulty in getting a fill with a limit order. To summaryize, short selling can be profitable, but it can be very difficult due to the limitations placed on short selling. -Eric