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

To: Dave O. who wrote (101)	6/6/1999 4:10:00 PM
From: Tai Jin	Respond to of 18137

I agree that in a down market and also in volatile markets, you have to be playing the short side as well. I cut my teeth on short selling soon after I started trading. It was very profitable, although it can be very disastrous if played wrong. You must know how the stock behaves and where resistance is before you attempt to short it. One thing I noticed over a year ago is that stocks which doubled or more in a day or two were excellent short candidates. Over time these runs lasted three, four or five days before they were safe to short. This indicates that there were more momentum traders in the game. The point is that situations change and you have to adapt or else. ...tai

To: Dave O. who wrote (101)	6/6/1999 5:39:00 PM
From: James F. Hopkins	Read Replies (1) \| Respond to of 18137

Dave; I don't know that this will work for everyone , a lot depends on your broker how long your trading and a few other factors or understandings you have to clear up with your broker. Not all traders are treated equal , they will let me go short a lot more than some new account and that's understandable as they have come to know I clear up any margin call faster than they can notify me of them. --------------------------- Shorting takes a margin agreement that has to be approved in the first place so people that don't arrange to have margin accounts cant short. ( my understanding and it could be different with other brokers, I use waterhouse ) ------------------- Well I'm net short at this time, & ( maxed out ). But I do have a good cash level To get shares to short each order has to be approved , they have to check to see if they are available to borrow. This means short orders even at market are not as fast as plain out market sell orders. Also If & when I go short if the market is going down I can forget trying for a limit order, what broker wants to look for shares knowing the limit will not take..and who is going to hold borrowed shares for you to trade until the price comes to you. If the market is moving Up a limit order short will often work but then you don't get any price improvement either. So most all my shorts are kissed and made at market, covering at with a limit order doesn't encounter the same problems. In a down trend I'm subject to stay short, if I need to cover I don't BUY TO COVER, I simply BUY..in effect this has my arse covered but it's not treated exactly the same, I'm now in effect short against the BOX.. Expediency is the advantage of being short against the Box, I can sell that long I bought faster than I can short..so I drop to net short without them looking for shares or it waiting to be approved. Then too in a serious down turn shares to borrow can dry up fast, if your already short even against the box that ( we couldn't find the shares thingy won't happen ) ------------------- So FWIW if your in a down trend stay short and hedge off the upside. Also there is nothing that stops me from buying twice what I'm short..except if I'm totally maxed out then I need to close some of the short side. It does sound sort of dumb to be long and short on the same issue at the same time..but it makes pulling the trigger for the down side faster, and also can be done with limit orders & with out the broker having to be concerned that he will look for shares and the trade not take anyway. I'm not a big trader just a regular one, I do not get a short rebate like some do, I don't think waterhouse gives short rebates to anyone ( Rebate=part of the interest they make on the money sitting in escrow from the sell ) My short side is marked to book each Friday..excess goes in my cash, debit is pulled from it. Each night it's marked to book in regards to my buying power, and or can cause a margin call if my cash and equity are not enough to cover the min margin requirements as per the closing price. ------------------------------ Some time ago I was asked "why would you short against the Box instead of just selling the stock " well I didn't know how explain it then and may not have done any good with this. But lets say you are long to start with but getting antsy, if you go against the box you stop any upside gain, and have "cocked the trigger" to go net short in a heart beat when you do sell your long, and so effectively you have set a target of when to go short, & that's hard to do if you have to short at market unless you just sit at your screen and wait. There are other angles to it but boxed short is much like being in cash until a certain point hits , then being able to go short without the hassle even if the market is tanking and you can't get on line or a broker on the phone, a stop loss order on your longs can also put you net short , as well as a limit order sell.. In fast down markets many of us have had a hard time trading in the past, all the web-based operations seem to get loaded up, not just waterhouse. Jim