I agree with you guys....its just my style to start hunting for shorts when the markets have had a nice bull run. I also look at cross sector analysis in a longer time frame. I don't care how much the MM and specialists run up this market at this point....im only looking to short when the time is right....not to go long cause i ...."may be missing out on the rally". After a point in a rally i refuse to join in....i will s.o.h. for days or even weeks..... waiting for the opportunity to short the stocks on my lists. I have played the "johnny come lately game" early in my trading career.....don't care for it.
Rearden, You and I have disagreed on a number of issues in the past, including the use of stops, either mental or physical, and I have previously responded in the thread you refer to with my own view. I have a question for you. I think it is fair to say that trading is essentially a game. It is a serious endeavor, to be sure, but it is a game nonetheless. The two critical features of any game are the rules and the stake. In trading, the rules would be your criteria for entry and exit, whatever they may be. However, as I understand it, the stake would be the amount of exposure you would allow in order achieve your intended result. As I see it, this "stake" is effectively a stop, either physical or mental. (I favor the mental variety.) So, my question is this. What is wrong with my interpretation? This is not a rhetorical question. It is my understanding that you have made several million dollars trading. I have not. I am not even close. Therefore, it is only fitting that I give your response due consideration. I may not like it, I may not even employ it, but I would be a fool not to respect it. Therefore, you have my attention. Please advise.
Yes....and that was a good play....YELL made a higher low in mid Oct from Sep......while the index took off like a rocket. But look at YELL now on the weekly...it bumped up against a multi month supply area. That in it's self is not enough for me to short it...but look at the $TRAN index now....thats not even an uptrend....its a stick going straight up for peets sake. Odds favor a correction at this point than the index continuing a trend line of nearly 90 degrees up. And and when (key word when) that happens...i look at YELL because it underperformed the index. I also belive oil will make another small run up at this point. The bottle neck is in the distillers not crude supply....so the numbers we get are followed by knee jerk reactions. If $TRAN had not shot up as aggressive as it did...i wouldn't be looking to short YELL.
The total amount of funds I have on deposit in all of my trading accounts combined is only 17% of my net worth. Therefore, even if I were to get completely and suddenly wiped out in both my equities and options accounts, I'd be 'fine', and could just write a check the next day to keep trading at my usual size. That's not to say I trade carelessly, but only that the market has no idea at what price I got in, so my unrealized P/L situation has absolutely no bearing on my exit points. My trading is 100% pattern recognition/gut feel/discretionary. Maybe stops are useful for the automated black box/quant/strict system type traders...but I wouldn't really know.