Is Any One Else Short Selling???

[MJ DeMarco]

Bob, hope you didn't killed today ... not a good day to be short. Lets us know you're OK!

 

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[bflbob]

Bob, hope you didn't killed today ... not a good day to be short. Lets us know you're OK!

Well...there is a small pool of blood forming in the seat of my pants.

I'm down about 9.13% in the account for the day.

Amazingly, no stops were hit, so I'm still in all my positions.

On the up side, I have great news in my 4-unit thread!

 

[bflbob]

To start off, my one short order from last night filled high due to the jump at the start of the day:

• EIX -- Shorted at $32.00 -- $1.48 over my limit

As I mentioned above, none of my positions closed today, although ADM is VERY close. It ended the day at $20.98, and my stop is set at $21.16, so if the market is up in the morning, I'm out of that one (likely).

I've talked a little bit about my Risk Pool, and even though it is a bit confusing, I'll try to explain the wierd reult it gave me today. Based on the crappy day I had today, I actually have room for 4 more positions in the risk pool today. It doesn't seem to make sense, even to me. But I think I'm understanding it a bit better.

A few days ago, I posted this:

The difference is the risk I have left on the table. Even though my account only changed $.49, my stops all moved up, due to the down trend of the market recently. This tightening of stops reduced the risk in my Risk Pool, allowing for another position.

Today is that same thing, only from a different angle. While my stops did mainly tighten, the closing prices gained, bringing them closer to my stops. In the example above, my stops came DOWN to the closing prices. Today, the closing prices came UP to the stops. Either way, less of my (remaining) account balance is "at risk".

In total, I'm willing to risk no more than 25% of my account balance on any day. How many dollars that is depends on the balance that day.

But for any one position, the AMOUNT I'm willing to risk goes UP as my account balance increases. At the same time, the PERCENT of my account I'm willing to risk on any one position goes DOWN as my balance increases.

So, even though I'm getting a signal to enter more trades in my 25% Risk Pool, those trades will be smaller dollar risks, yet higher percentage risks.

I kind of think of the system in the way an accountant thinks of "Sunk Costs". It doesn't matter what happened yesterday or today. The 10% I lost is gone (well, not really, since I didn't close the positions, but...). My research says that from where I am today, entering 4 more positions is the right thing to do.

I'm just risking 25% of a smaller pool today than I was yesterday. And since most prices are up, I'll essentially be shorting them at the prices from a week ago. It's a great deal, unless they continue to climb.

Yesterday, there were 324 stocks on my loser report. Today, it's down to 296 -- the first decrease in many days. But there still wasn't a single long signal.

Here are my orders for the morning:

• CCL -- Short with limit of $27.17
• HUM -- Short with limit of $31.28
• KG -- Short with limit of $7.23
• LUV -- Short with limit of $10.90

It seems odd that three of these are healthcare related. Maybe something to do with Obama's health care plan??

We'll see if tomorrow's ride is as rough as today's was for me. It would be unusual for two big up days to occur in a row, but who knows?

One last comment -- even though today hit me hard here, I have money in retirement accounts that is long in the market. I'll guarantee today was a plus day for me overall.

 

[bflbob]

Here are my orders for the morning:

• CCL -- Short with limit of $27.17
• HUM -- Short with limit of $31.28
• KG -- Short with limit of $7.23
• LUV -- Short with limit of $10.90

I don't know if anyone else read this, but I didn't. I posted it, but I never placed the orders.:iamwithstupid:

As I mentioned above, none of my positions closed today, although ADM is VERY close. It ended the day at $20.98, and my stop is set at $21.16, so if the market is up in the morning, I'm out of that one (likely).

This happened exactly 19 seconds into the trade day. The price spiked, my stop loss order triggered, the price dropped, and I got out at $20.58 which was $.40 less than it closed at. You can never tell! Good thing, since it closed the day out at $21.50.

This was my first losing trade since 10/9 -- when I was long on some positions. The momentum has definitely stopped, but I'm not sure the bad days are over yet.

As I mentioned above, I never placed any orders last night. Some of those opportunities are gone now -- no longer on my report. A couple of new ones showed up, and one I bypassed last night is still there. My Risk Pool says to take on 5 new positions, but I can only find 4 to enter:

• Shorting HUM with a limit of $29.80 (was $31.28 last night)
• Shorting LMT with a limit of $77.04
• Shorting NWL with a limit of $13.22
• Shorting SLM with a limit of $9.90 (a bit outside my specs, but carried from last night)

Overall, my account was up .62% for the day. Not quite enough to make up for yesterday.

The total number of stocks on my report dropped from 296 to 257 today. This is another sign that the momentum has slowed. I won't be surprised if I see some longs starting to show up by early next week.

Now that the Fed's announcement is out of the way, maybe things will be a bit smoother over the rest of the week...until Tuesday night's election results hit. Then, who knows what will happen?

 

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[Jonleehacker]

I'm enjoying your updates Bob.

Looking forward to your presentation of all the details at the B&P

 

[bflbob]

Oh, Boy! Time to catch up.

Shorting HUM with a limit of $29.80 (was $31.28 last night)
Shorting LMT with a limit of $77.04
Shorting NWL with a limit of $13.22
Shorting SLM with a limit of $9.90 (a bit outside my specs, but carried from last night)

The above orders were for 10/30, and the market was up well right from the start. I sold short as follows:

• HUM -- $31.69 -- $1.89 over limit (6%)
• LMT -- $81.99 -- $4.95 over limit (6%)
• NWL -- $14.00 -- $.78 over limit (5%)
• SLM -- $10.66 -- $.76 over limit (7%)

While that was good news on the SALE side, it raised havoc on the cover side. But only with one stock:

• SWN -- Covered at $33.426 for a 25.8% loss in only 3 days

It also put a dent in my account value, dropping it by about 1.34%.

=============================================================

On Friday, 10/31, I entered the following short sales:

• EL -- Shorted at $34.75 -- $.53 over limit (1%)
• SEE -- Shorted at $16.46 -- $.43 over limit (2%)

I watched in amazement as HUM opened at $29.53, and then plummeted to $25.01 before climbing back up to close at $29.59. I had a GREAT cover on it:

• HUM -- Shorted on 10/30 for $31.69 -- covered at $25.19 for a 20.51% gain in 1 day!!!

I ended up down another 1.59% for the day though. Not the best week I've had.

But -- for the month of October, I had 20 winning trades versus 8 losing trades. Best of all, I had an annualized 151% gain for the month, excluding fees.

=================================================================

On to today, November 3rd...

I shorted the following three positions this morning:

• CCL -- Shorted at $24.89 -- right at limit
• FITB -- Shorted at $11.08 -- $.45 over limit (4%)
• GME -- Shorted at $27.18 -- $.34 over limit (1%)

No positions closed today, yet, despite the market being up most of the day, I was in the profit all day long.

Overall, my account was up 2.19% for the day. Pretty darned good!

I'm up to 16 positions right now, and I don't anticipate having room in the risk pool for any more until I close some of them.

I'm close on a few, but they aren't in profit positions -- I'm seeing my stops come down to the trade price rather than the price coming up to the stop. This is good, because it reduces my profit loss risk on those positions, so even if I lose, I lose small.

For example, if I short a stock at $10 with an initial stop at $20, I have a $10 risk. If my share price climbs to $20 the next day, I lose $10, or 100% per share. But if the stop drops down to $11 over several days, and then the stock climbs, I only lose $1, or 10% on the stock.

So, although my initial risk might be 100%, my average risk might come down to 30% because of this effect. If I gain an average of 20% and lose an average of 30% it doesn't sound too good. But if I win twice as often as I lose, I'm netting around 10% per trade. If a trade occurs every 5 days on average, then I can roll that 10% many times in a year.

 

[bflbob]

Sucky day. Down 8.2%. One position closed. Gotta' go vote.

 

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[bflbob]

Catching up...

Yesterday, I closed one losing position:

• DHR -- Shorted on 10/21 at $56.66 -- covered at $61.49 for an 8.52% loss

And I placed two orders for this morning:

• MNST -- Shorted at $13.47 -- $.32 over limit
• SNI -- Shorted at $28.47 -- $.42 over limit

While yesterday was the worst single day I've had since using this system (percentage-wise), today was the absolute BEST!

My account value climbed an amazing 11.88% in one single day.

In my mind, the markets should have gone the other way...down yesterday, due to uncertainty, and up today, since we now have a new President.

I almost baled on my trading strategy after this past week and yesterday. Today, I'm back on track.

 

[bflbob]

Another great day for me today!

Up nearly 10%, although still no closed positions.

I do have 4 stocks that are +10% gain or more today.

Maybe they'll hit in the morning?

Two days ago, all were in the red, profitwise.

 

[MJ DeMarco]

10% in one day is very impressive ... When can we expect your book "How to make millions shorting stock" ? ... BIG Congrats!!!

 

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[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?

 

[bflbob]

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.

 

[bflbob]

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.

 

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[kwerner]

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!

 

[bflbob]

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!

 

[bflbob]

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.

 

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[bflbob]

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. :smx4::smx4:

 

[bflbob]

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. :great:

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!

 

[andviv]

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.

 

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[bflbob]

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.

 

[bflbob]

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.

 

[g-dogg]

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

Andrew

 

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[bflbob]

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.

 

[bflbob]

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%.

 

[MJ DeMarco]

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.

 

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[MJ DeMarco]

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.

 

[bflbob]

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.

 

[Edge]

Bob - Good to see you kicking tail!

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?

 

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[bflbob]

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.

 

[bflbob]

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.

UPDATE TIME:

Here are the four positions I closed on Wednesday:

• GD -- Shorted on 11/13 for $57.99 -- covered at $49.16 for a 15.23% gain in 6 days
• AFL -- Shorted on 11/14 for $43.84 -- covered at $36.14 for a 17.56% gain in 5 days
• LMT -- Shorted on 10/30 for $81.99 -- covered at $69.69 for a gain of 15% in 3 weeks
• MCHP -- Shorted on 11/14 for $20.81 -- covered at $17.53 for a 15.76% gain in 5 days

This GD is the same one I spoke of a few days ago, that I thought would be the biggest risk. In actuality, I'm still holding the others, while GD is the big winner.

I had a signal to Short more positions on Thursday morning, but left my memory stick, with all the data on it, sitting at home on my nightstand. I was shooting blind on Thursday morning...