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Strategies & Market Trends : gary smith shorts and longs -- Ignore unavailable to you. Want to Upgrade?

To: David R. Parker who wrote (344)	2/4/1999 4:54:00 PM
From: backman	Read Replies (1) \| Respond to of 430

a couple of thoughts: 1) gary indicates that last year his longs were not his strength, shorts were...why trade the "weaker" side of his system? 2) mentally, shorts are tougher, but i think it's more emotional than anything else. 3) trade size...i trade in a fixed dollar amount, not share size..datek fills my LIMIT ONLY orders whether it's 100 shares, or 268..round lots not required. i may miss some plays due to limit requirement, but i dont trust MM at the open... 4) id be uncomfortable having 10-12% of my capital in any single position...too much cash can be lost in a single trade, relative to portfolio size. i use 3-5% of my capital in any single trading position 5) i'm unable to "keep it simple", but i'm willing to be on the sidelines, so...i would not have gone long during the last week, because i didn't trust market internals, and expected a "blow-off". that's my risk/reward model..yours, i'm sure, is different. don't put all your eggs in gary's basket until you demonstrate to yourself that it's actually working...real dollars, real trades LOL david

To: David R. Parker who wrote (344)	2/4/1999 5:05:00 PM
From: drsvelte	Read Replies (1) \| Respond to of 430

Welcome David! I don't have as much trading capital as you, so my trades tend to be in the 300-500 share range. I also modify my lot sizes by how confident I am in my interpretation of the chart. I am not a strict GBS disciple - I only do market orders on very rare occasions. As backman indicates, you have MM playing their games, plus the problems of opening gaps. I usually wait 15-30 minutes before entering a trade at the open. I do miss some opportunites, but my comfort level is higher. Also, I don't rely on the charts alone - I look at IBD, Zack's, and sometimes fundamental data. This is probably blasphemy to Gary, but, again, its about my comfort. Look forward to you posting your picks.

To: David R. Parker who wrote (344)	2/4/1999 6:23:00 PM
From: Fortinwit	Respond to of 430

David, Welcome aboard. And some thoughts and responses. I seem to be averaging about 12-15 positions myself these days. A couple always seem to be on the verge of stopping out, and a couple are nearly at limit. Every few days, something will limit or stop out and I have to remember to look every night to see what I might have sold during the day. It's very important to take the emotion out of this and to keep it simple. GBS recommends market orders at the open, and, although I've been burned a few times, I find that this is still the simpler way to go. I can sleep in and miss the turbulence of the first hour. I also do place alot of limit orders on low volume options, so I often will miss taking shares when something gaps up. But they quite often run even further, and a market order would have been fine. On the other hand, I've taken stock at the open which turned out to be the high for the day, and often, several days. I've had a disastrous couple of weeks now, having been nailed by some bad earnings releases. EK comes to mind as a personal example. I still hold it looking for a bounce (which is starting to happen) to get out. GBS did mention he did better last year on the short side, and to be honest, so did I. I wonder if there are reasons we can quantify to explain this. I think it's wonderful that we have several good brains looking this stuff over on a daily basis trying to improve on techniques that seem to work rather well. My own personal changes to the technique incorporate measuring congestion for 6 weeks and eliminating stocks with > 20% price congestion. I'm not sure that this has helped all that much, but it means I don't have to look at as many charts. The other change is that I play options. I don't want a lot of risk capital playing these techniques, yet. Options protect my downside risk and, by increasing leverage, I don't have to worry about the price of a stock. But, the downside is higher spreads and higher commissions. I'm willing to live with this downside as I go to bed each night knowing my maximum loss. Good luck with this and keep us all posted on what you find. F.