Thread: Is Any One Else Short Selling???

Originally Posted by kwerner

Bob - Would you say it's time to short GM? Closed at $4.95 today; article below mentions how they may run out of operating cash this year.

Bloomberg.com: Worldwide

Do you think it's a good candidate?

Oh boy. GM has been on my daily reports for a long time. I don't have them all with me here, but I'd guess my last Short Sale point would have been back around $6.25. I usually will enter only the first day it is on my list, although that doesn't really seem to matter much due to the entire market tanking.

I actually show it closing at $4.36, which is about 12% less than you have it at.

My concern would be that the market has already adjusted for that news, and the only thing they might hear from this point out is that they are bankrupt, which would be good for you, or that the Fed gave them a bazillion bucks, which would really be bad for you.

If I were entering the trade for tomorrow (Monday), here's how it would go for me:

1. Take your entire portfolio account balance. If it is under $30k, this stock is too risky. If it is under $50k, risk 3% of the value. Under $250k, risk 2%. Over $250k, risk only 1% of account value.
2. Multiply the account value by the risk percentage. So, if your account is $72,000 you'll risk 72,000 x .02 = $1,440.
3. The difference (today) between the close ($4.36) and the stop ($7.18) is $2.82. This is the risk per share.
4. I take $1,440 and divide it by $2.82 to get the number of shares to enter the trade at. In this case, 510 shares.
5. To protect myself from really bad news, I'd set a limit at about 97% of today's close. So, $4.36 x .97 = $4.22.
6. I'd place a Short Sale order for 510 shares with a limit price of $4.22 tonight, for Monday's trade. This means that, if your trade executes at $4.50, you'll sell $2,295 worth of stock, not $1,440. If the price then climbs to the Stop Exit of $7.18, you'll lose about $1,367 -- close to your risk of $1,440.
7. Each day, I'd review the Stop, and reduce it to my new value. My report comes up with this, so you'll need to use another method. My suggestion is to allow no more than about 35 trade days to exit this position. So, divide the $2.82 risk by 35. You'll get $.08 per trade day. So, every trade day, reduce your "Stop Exit" by $.08, and reduce your total risk by about $41.
8. In the meantime, you'll want to plan a Profit Exit. I use 15-20% of the entry price. So, assuming you get into the trade on Monday at $4.50, your Profit Exit will be somewhere between $3.60 and $3.82. When the price drops to that range, exit the trade and walk away with your profit.
9. In this case, you'll see your risk is about 65% ($2.82/$4.36) of the entry price, but your reward is only 15-20%. The nice thing is that momentum, both of the market and the stock, is in your favor to hit the 15-20% before the 65%.

Sort of confusing, I know, but I hope this helps you understand how I do this stuff.

Nothing major happened to me today. The market went up, so my account went down. My account value dropped 3.72% for the day. No positions closed. No new orders will fit my risk.

Originally Posted by bflbob

I actually show it closing at $4.36, which is about 12% less than you have it at.

You are correct; damn Google Finance seems to be a convenient, but unreliable source sometimes. Shorting at $4.36 doesn't seem like quite as sweet of a deal.


I wasn't expecting a detailed explanation of your shorting strategy; much appreciated.

Rep++

Thanks for sharing!

Today was a pretty good day for me, considering that the market was fairly flat.

I had several stocks cross the 15% mark, but none made it to my trigger point.

However, with just 5 minutes left in the trading day, I saw one was still over the 15% mark, so I closed the position:

• CCL -- Shorted on 11/3 at $24.89 -- covered at $20.81 for a 16.39% gain in one week

No other positions were entered or closed, since they had all dropped below 15% at the 5-minute pre-close point.

Overall, I finished the day up 4.60% in my account. I'm happy with that!

Oh boy. GM has been on my daily reports for a long time. I don't have them all with me here, but I'd guess my last Short Sale point would have been back around $6.25. I usually will enter only the first day it is on my list, although that doesn't really seem to matter much due to the entire market tanking.

I actually show it closing at $4.36, which is about 12% less than you have it at.

My concern would be that the market has already adjusted for that news, and the only thing they might hear from this point out is that they are bankrupt, which would be good for you, or that the Fed gave them a bazillion bucks, which would really be bad for you.

Shows what I know. With my rules, you'd have never entered, since the stock never hit above $4.09, well below my $4.22 limit. But it did close down at $3.29 -- 17.75%, and has dropped further in after-hours trading.

The real question is "What could you have sold it for?" The market price on it dropped so quickly, that you might have actually sold it for considerably less than the $4.00 opening price.

Another good day for Mr. Bob...

I closed out one position today:

• SLM -- Shorted on 10/30 at $10.66 -- covered at $8.858 for a gain of 16.2%

I had several other stocks cross the 15% line during the day, but all backed off before they hit my triggers. I'm now holding 15 positions, and all but two are profitable at this point.

The wild swings seem to have slowed down, but the is still plenty of movement compared to normal.

I closed the day up another 4.64% today for my account as a whole.

I just wish I hadn't talked about GM, since it was down another 11% today.

Today was one of those Grand Slam, hit it out of the park days for me. Plenty of positions have been close to closing over the past couple of days, and today, they did.

Here are the positions that closed for me today:

• GME -- Shorted for $27.18 on 11/3 -- covered at $21.52 for a 20.82% gain in 9 days
• NVLS -- Shorted for $14.19 on 10/17 -- covered at $12.33 for a 17.64% gain in under a month
• SNI -- Shorted at $28.47 on 11/5 -- covered at $23.47 for a 17.56% gain in 7 days
• FITB -- Shorted at $11.08 on 11/3 -- covered at $9.13 for a 17.60% gain in 9 days
• GE -- Shorted at $19.49 on 10/17 -- covered at $16.07 for a 17.55% gain in under a month

You'll notice several at around 17.5% gains. This is because I was going to be out of my office at a property closing. Since I couldn't keep an eye on the trades, I put cover orders at around 17.5% gains on my top four positions, and they all hit.

Of the ten positions I'm still holding, five are showing gains over 10%, so they are primed for closing within a day or two unless the market turns. I'm still only holding two losing stocks -- EIX and BMC -- and the worst is under a 7% loss.

I finally reached the point where there is more room in the Risk Pool. I have placed orders for the following stocks for tomorrow:

• GD -- Shorting with a limit of $56.40
• HAS -- Shorting with a limit of $24.56
• XLNX -- Shorting with a limit of $15.34

Of these, I think XLNX has the best chance of making me money quickly. HAS will likely make money too, but after a longer hold period. And GD is a bit more of a risk. If the price climbs to $64.31 -- about 12% -- I get stopped out. But it is also a large position, so it will make me more dollar profit if it drops 15% or more.

Overall, my account showed another 5.98% gain for the day. Quite a nice run lately!

oh boy, you are going to have a huge tax bill by the end of the year!
I'm glad you are doing good with this.

Yesterday, nothing happened by spittle.

Early in the afternoon, I was "King of the Shorts".

By the closing bell, I had nearly Shat in my Shorts.

I ended up down for the day by 5.51%

I was fortunate to have one position close out during the better part of the day:

• NWL -- Shorted on 10/30 at $14.00 -- covered at $11.54 for a 17.57% gain in about two weeks

GD -- Shorting with a limit of $56.40
HAS -- Shorting with a limit of $24.56
XLNX -- Shorting with a limit of $15.34

Due to a small price increase at the start of the day, I Short Sold these positions at a pretty good price:

• GD at $57.99 -- $1.59 over limit (2%)
• HAS at $24.95 -- $.39 over limit (1%)
• XLNX at $15.67 -- $.33 over limit (2%)

Of these, I think XLNX has the best chance of making me money quickly. HAS will likely make money too, but after a longer hold period. And GD is a bit more of a risk. If the price climbs to $64.31 -- about 12% -- I get stopped out. But it is also a large position, so it will make me more dollar profit if it drops 15% or more.

NOT!

Just about the opposite on these. GD did the best, with a price decrease of 3%. XLNX followed, with a gain of nearly 6%. And HAS was the worst, with a gain of almost 10%!

In fact, it was the large position in GD that kept me from having a worse day than I did.

On to Friday...

I was tied up last night at a meeting, so I didn't get to pick stocks until this morning. Here's what I Shorted today:

• AFL -- Shorted at $43.84, a bit over my limit of $43.55
• MCHP -- Shorted at $20.81 -- right at my limit price
• WAT -- Shorted at $40.24, almost 1% over my limit of $39.95

No positions closed today.

It was another whip-saw day, with my account showing good gains, then dropping to near breakeven, then back up again.

In the end, all three of my new short positions made money for the day. Pretty decent money actually -- 2.5% to 5%.

With stocks going in my favor again, and with a fairly large number of different stocks (15), I've been pushed to the deep end of the Risk Pool. That means no new positions on Monday. But I do have a few that are ready to close if the market moves in my favor on Monday.

Yesterday, the Dow climbed over 550 points, and my account dropped 5.51%. Today, the Dow dropped only 338 points, yet I gained 7.18% in my account for the day. Looks like I'm still picking right.

Interesting thread, I like your trading style, keep up the good work!

Andrew

Monday was a funky day. Markets around the world were down overnight, so the US markets should be too, right??? Nope. Sort of.

The day started off in my favor...my best three positions were all in the 15%+ gain range. Only one ever actually closed before the market turned, actually going into the plus range for part of the day. At the end of the day -- the last 15 minutes or so -- the market dropped again, falling 2.63% or 223 points.

I closed just this one position:

• MWW -- Shorted on 11/5 for $13.43 -- covered at $11.08 for a 17.5% gain in 12 days

Overall, my account value increased by 5.3% for the day.

Another wierd day, with the market in the plus most of the day, then plunging in the afternoon, only to end up 151 points to the good. During the plunge, I managed to close one position:

• EL -- Shorted 10/31 for $34.75 -- covered at $28.65 for a gain of 17.55% in 18 days

I had several other stocks "close", but not closed. Most retreated by the end of the day, but there are still a couple within striking range for tomorrow.

Nothing too exciting today, other than that I'm getting close to being able to add another position to the Risk Pool, especially if I manage to get out of one tomorrow.

Overall, I finished .27% in the red for the day. Not bad, when the DOW was up by 1.83%.

Bob,

I like what you are doing -- taking advantage of the market environment and trading the direction. A lot of folks don't realize that you can make a lot more $$ in bear markets vs bulls as declines are swifter and more pronounced than rises. Fear is a stronger emotion than greed.

Bob,

I like what you are doing -- taking advantage of the market environment and trading the direction. A lot of folks don't realize that you can make a lot more $$ in bear markets vs bulls as declines are swifter and more pronounced than rises. Fear is a stronger emotion than greed.

VERY good day today. Four positions closed. 7.53% gain in account value for the day. Gotta go rent an apartment, so the details will need to wait for a day or two.

Bob - Good to see you kicking tail!

Originally Posted by bflbob

Both the CFO and CEO of our company think I'm nuts for shorting. They keep calling it gambling. But I'm up around 45% in the last few months due to following this system. Part of the system is managing risk, and position sizing. So, for now anyway, it is a gamble I'm willing to take.

Do they still think you are nuts or gambling? Truly amazing that someone can hold a C_O position and have no clue about risk management. Kinda defies what their leadership is supposed to do doesn't it?

Originally Posted by Edge

Bob - Good to see you kicking tail!




Do they still think you are nuts or gambling? Truly amazing that someone can hold a C_O position and have no clue about risk management. Kinda defies what their leadership is supposed to do doesn't it?

The issue is that (the CEO at least) they have tried the Short Sale thing, made a lot of money, and then lost it. I think they feel I'm just Short Selling. I'm not. I'm trend following. The trend just happens to be short right now.

Of course, I've been fortunate (not lucky) in that the market has been in a pretty consistant fall. Otherwise, I don't think I'd have any where near the results I'm seeing.

My closed trades so far during November indicate an annualized gain of about 300%. Since we are only 2/3 of the way through the month, it's likely I'll be closer to 400% by 11/30.

I'd really taken a bath in the market since we met in March, and now I'm pretty much even from that point. From my low point, I'm up nearly 80%, and that is only around 4 months of trading.

I have no doubt that I couldn't have seen these results if the trend wasn't so strong and prolonged.