Short pain...

Discussion in 'Trading' started by Mvic, Nov 20, 2006.

  1. Mvic


    I get the sense that many who are calling for new records everyday are being sarcastic and are actually short or want to be short. Guys, this is a complete newbie mistake and believe me I have made it myself in the past but you have to get over it. It is true that one day the market will turn but that day could be 1 month, 1 year, 1 decade away for all you know, and chances are that when it turns you will be shaken out before any big drop (assuming that that low probability event even happens, it is far more likely to chop down).

    Trade what you see, not what you think you should see is a basic trader's mantra. Right now we are in a strong bull market and buying the dips works very well, so thats what you do until it doesn't work so well. Eventually when it stops working you may have a few losing days, or even a week (with proper money management it shouldn't be that bad at all), but that is the price you pay for being able to take consistent money out of the market for months, maybe longer who knows. If you are worried about a outlier event and the market crashing then just buy some very cheap (low vix? what that means to me is that protection is cheap not that market is about to crash) OTM puts, sell a few ATM puts to cover them, and maybe don't hold overnight.

    My comments are directed to all but the biggest futures/index traders. On individual equities I am far more circumspect and don't see much that inspires me here, but unlike in previous bulls when I have not found good equity value this time I am making a mint by not imposing my own view of value on the market. I guess what helped me achieve this breakthrough was realizing that I am not smarter than other market participants or at least not well capitalized to make a difference (I am not sure that anyone is long term) and taking my OPINION and shoving it. The market and the fundamentals are just too complex for me to grasp (oh i know I just have lowly BA in econ and IR and the rest of you are Nobel prize winning economists so you are better qualified to trade macro fundies than I) and when it come to trading the technicals any kind of fundamental OPINION is completely unhelpful.

    When you find that banging your head repeatedly against the wall hurts, my advice would be to stop and try something different.

    Good luck all.

    Disclaimer: If we crash tomorrow it doesn't invalidate a thing i have written, it just shows that my timing opening my big mouth really sucks :)
  2. its funny you say that to shorts yet when longs buy the big falls in a bear market wether i was 2000-2003 or 1987 they all made money. the fixation on shorts is amazing as everyone's after a non existent theme.the # of shorts is so small its incredible and has no bearing on the market. trying to top tick a short is no different than trying to find a bottom in a declining market yet the obssesion to hurt the shorts is so strong
  3. Mvic


    I agree, there just seem to be a disproportionate number of them on ET. As I mentioned I have gone down that futile road myself in the past and just wanted to give others who are in that mindset a wake up call.
  4. jan168


    weel said Mvic:
  5. jan168


    Hi, Mvic:

    I like your insight. any more good advice?

    the market is not necessary drop. simply shift the sector, slowly.

    for last years, the money made on housing has to put somewhere in the market, just same as the huge profit of energy.

    I knew some bag holders who finally got even with the energy stocks... after 25 years.. actually was the grandaughter got the money... the one who bought was an ECO professor of a state universty.

    --he got in 1980 --the peak of energy.