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Strategies & Market Trends : Picks of the quarter -- Ignore unavailable to you. Want to Upgrade?

To: Sr K who wrote (3631)	6/26/2007 1:54:32 AM
From: Elroy	Read Replies (1) \| Respond to of 20435

Yup, you're correct, but this would require tracking short accounts, adding in cash from the short sale, and other calculations that I'm not really interested in doing. Simplicity is key, and it's easier to just pay commission on the end value of the short trade. Think of it this way, a long position that goes in your favor and you close out has a higher commission that an equivalent amount long position that goes against you (since the size of the position, and thus commission, increased). Similarly, a short position which goes in your favor (the stock declines) will have a larger commission that one which goes against you, since the value of the short trade will be larger. So think of commissions for both short and long positions as being higher when they make you money, and lower when they lose you money. It may not be perfect, but it's good enough for us.