Shorting technique ?? "Help"

Discussion in 'Trading' started by nasdaqmadness, Mar 12, 2002.

  1. Does anyone use this technique? I have been wanting to try this but I am not sure if it would be considered shorting on a down tick. I have some stocks that I love to short but I quite often enter the trade too early in order to make sure I get filled before the sell off. My plan ...... Can go long 500 shares and short 500 of my chosen stock (equally hedged) then wait for exhausted run up to reverse then sell only long position (now 100%short) this sale of long will almost always be on a down tick while the sea of red has begun. When support is evident I would buy back my 500 long being neutral again. This neutral position could be held until the next confirmed sell off. I have read about bullets/ conversions using options for the short side of the trade but never about using only stock. I would not sell my short position until I was done playing this stock. Exiting the position would require the proper timing. Entry could be done on run up actually locking a profit into the 2 positions. The obvious draw back to this technique is that it would tie up twice the capital. Any advice would be appreciated. :confused:
  2. sure you can do it if you have 2 differant accounts.
  3. Bullets/conversions are used by listed traders due to the inherent difference in the uptick rule for listed vs Nasdaq. If you are trading nasdaq stocks then hitting a bid on an up[tick is much easier due to decimalization (providing you have a gppd platform and good executin skills) even when the stock is selling off.

    Back to your original idea, yes many have had that idea before...cannot be done in the same account.
  4. GeeTO69


    if the reversals are so easy to spot, then what i fail to understand is why not just go short or long at appropriate reversals without complicating the issue? i don't see how this helps. if you are sure it's going down then just short at right time, why complicate things with a long position that you now need to sell suffering additional commissions? doen's make sense to me, seems a false sense of security. {{shrug}}
  5. Gold_Rik

    Gold_Rik Guest

    Not that I am Biased to shorting, but fact is from Naz 5000, its a wonderful trip. Send me an e-mail will try to help out
  6. GeeT069

    The reversals are sometimes very hard for me to predict until they are confirmed. I am speaking of an intraday reversal that explodes to the down side .60 -1.50 within 1 min. I wouldn't mind (at will) selling my long into weakness right at the start and give up .10 to .15 to lock in 1.00 after the carnage has ended. I have shorted at market and gotten filled half way down at first up tick or tried to chase the stock with a limit order and never filled. I may be missing some better method to try and get short near the top on the way down. I would love to spend a week looking over the shoulder of a veteran trader. "Some day"
    It seems like it would be great to get short by just selling a long position. If you traded only the short side for a few days you would only be adding one extra round trip. (the original short and covering at the end) Thanks for the feedback.

    In the short time I have been a member here it has become very evident to me that this will be a great site for a student like myself to learn more about trading!!
    Thanks all :)
  7. jem


    Perhaps in order to test out your shorting ability you would want to set up a conversion or just buy a really deep in the money put to offset your long stock. That way you do not have to have two accounts. That way you will find out if hitting downticks really works for you. If it does you may eventually find yourself in the need of the services of a firm that allows its traders to buy bullets.
  8. Nasdaqmadness,

    Everyone used to do this. I believe it was called "shorting against the box". I used to do it with a firm that cleared with Penson, and they had special margin set ups so that it didn't eat up your capital. My understanding is that it is now ILLEGAL even if you use different accounts and/or different names :eek: . Be careful. (I had one account in my name, and one in my wife's). Hopefully that lame downtick rule will be history soon.