Is shorting a dead end street?

Don, you make a great point which I actually forgot to mention on my last post with respect to what I take away from this thread: If the longer time frame trend is up (as is clearly now the case) short trades should carry a smaller, less aggresive risk:reward ratio.

I day trade SSO, the 2x SPY. On Friday I was short and was actually sitting on a nice profit, but since my risk reward ratio was 1:2, I never reached my profit target and the profit became a loss.

Im going to work with 1:1 with trades against the main trend from now on.
thanks
J

 

well shorting is not a bad thing unless you know your limit to short.
I know day trader,s that short at 3.55 and then the next day they cover in the morning
It all depends on you system and the sector you follow
But yes we are in a up trend and it is not easy to nail the top
The market could go so high just to make you bleed cover short or margin call before it come down to you short target.
YEs shorting is fun in financials. : -)

 

Shorting just went on vacation. It's back big! Thanks to our President!

 

I have found, much to my chagrin, that the market doesn't seem to give a hoot about my personal politics.

 

Just got squeezed again

f*&ck

 

Why are you fighting the tide?

 

Futures were down, ISE Index was down, Lehman anniversary is tomorrow, insider selling is at yearly high, etc. etc. etc. etc.

 

Fell in the same trap today. Happens ALL the time!

 

Right there is your first problem. The last 2 things you mentioned are completely irrelevant to determining market direction. Forget about making daily buy/sell decisions based on insider selling or anniversaries. As for the futures being down... yeah, they were - until they started going up. You need a trading plan that will allow you to distinguish when it is time to cover a short position, when you are proven wrong. The time to cover is not when you are getting "squeezed", which implies that you're already taking a big loss. Long or short, have a game plan that will limit your losses and get you out at the right points. If you don't have one, keep looking for one. You should NEVER be getting squeezed, because that implies that you are sitting through large losses while the market moves against you.

 

You shorted into an opening gap down... that's generally a bad idea, as the market fills those gaps most of the time, especially when it's not on high volume and not a big gap. Mondays are the least likely to fill, but it's never a good idea to go against it anyways. You're better off buying most of the time when the market gaps down, unless it's a large gap on high volume.