Best book on shorting stocks

yonnie · 6 August 2007

could anybody point me in the right direction?

thanks

tasmanian · 6 August 2007

stan weinstein - profiting in a bull and bear market.

i wouldnt like to be holding stocks long atm.i am looking for a bounce and then a further drop for the rest of the year.

some great shorts developing on the market atm.ive already got a few and will top them up when/if they rise abit or top them up if they drop more.

im in a full bear suit now.could be just a correction but its going to get more painful imo if your holding longs.might be a chance to bail on the next rally.

just my opinion could be wrong so we will see what happens.rebound for the xao up near 6200 the down below where we currently are.

yonnie · 6 August 2007

thanks tas, will ask the library.

yeah, at the mo I`m bailing out `cos I think it will stay volatile for a while longer than first thought.

only catching stocks down 20+% on the day and sell in the next few days.

good luck

jempol · 7 August 2007

May be : How to short stocks(william o'neil)

yonnie · 7 August 2007

hi tas and jem,

thank you both for your contribution.

those books you guys recommended, were they any good and did they help you in your trading?

thanks

tasmanian · 7 August 2007

gday yonnie,

stan weinsteins book helped me alot especially if you are after a book explaining how too get a good part of a stocks trend either up or down.

its a good book for both going long and short.definetely worth a read.its quite easy to understand and pretty basic but a great place to start imo.id be suprised if it didnt help you in some way.

from what i read in that book ive been finding some good stocks too short atm.i wouldnt be suprised if they turn in too some nice gains.the book helped me make some great gains on the way up hoping it does the same on the way back down.thats if we are headed down but looks that way too me some stocks look very bearish imo.nothing guaranteed so ill just see how it works out.

good luck with it all

weird · 7 August 2007

yonnie,

It is very difficult to find books, let alone good books, on shorting stocks.

And for a reason, the stock market has an upward bias.

tasmanian · 7 August 2007

weird said:
yonnie,

It is very difficult to find books, let alone good books, on shorting stocks.

And for a reason, the stock market has an upward bias.

thats true over the long term but the market would be rising less than 50% of the time.its either up down or alot of sideways.

learning too and shorting is hugely important imo as they say up by the stairs down by the elevators.

shorting stocks is a great way too make money in a bear/downtrending market rather than sitting your cash in the bank or being a long term investor.crazy imo to hold stocks long term when they are clearly in a downtrend sure good stocks will eventually make new highs in the long term but why not profit on the way down as well as the on the way up. you can profit greatly when stocks are dropping.

i have a cfd account i use only for shorting and a cash account for longs.the cfd providers even pay interest when you are shorting rather than charging you interest so even better.

shorting is simple just do the opposite to when you go long.top up when it breaks through support and the stock is in a clear downtrend.but make sure you have stops etc funny when you buy a stock long it drops when you sell it short it rises.anyone that says trading is easy is a bloody genius imo.

ramble ramble anyway learn too short stocks last couple of weeksa have been very profitable for me when alot of others are hoping the market rises im happy to see it drop

weird · 7 August 2007

Tasmanian,

Backtesting mechanical shorting stategies on the stock market, by reversing the logic behind long entries, and using a broad market filter, such as the index is down, or below an MA, etc, in most cases does not work well at all. As you mentioned, this is perhaps more relevant for longer term strategies.

Mind you, I'm not saying that shorting does not work as a trading strategy, particularly in other types of markets, and short term trading for stocks, or stock indices using leveraged instruments.

What I was eluding at, is that it is not easy, and hence there are not many books suggesting reversing long strategies, on the stock market, when the broad market starts heading south, particularly using similar types of exits.

tasmanian · 7 August 2007

weird

wo worries mate i wasnt having a go at you i was just letting weird know thats important too know how too short stocks as well as going long..agree theres not many good books on shorting but i believe weinstiens theory can be very profitable in going either long or short.

ive never backtested the theory and im not sure if you are familiar with it or not but its basically looking for stocks in a long consolidation that break their 30wkma and resistance on a build up of large volume.that is called a stage 1 breakout .

then the stock moves into a stage 2 uptrend as long as its stays above its 30wkma just ride the trend until it levels out forms a stage 3 then eventually breaks back through its 30wkma into a stage 4 downtrend then if its a good candidate short it.
depends on the overall market/sector etc but ive been following it as one way to trade and has proved pretty succesfull.

not sure if you could backtest this system but if you had the time id be very interested in the results.

cheers

weird · 7 August 2007

Hi Tasmanian, I have read Stan Weinstien's book, so am atleast familar with the terms.

I have been paper trading (too many side projects at the moment! This is one of many ... time is the enemy) a short and long trade system based on the SMI Wyckoff course, but was more focusing on the short trades for the exercise, and this was before the recent decline. The system showed enormous promise.

It does use an Index filter, but not in switching off general trade direction for the other, which is probably what is on most peoples minds, in the current or perhaps more accurate to say in the recent past conditions, without knowing the future.

yonnie · 8 August 2007

thanks guys

is wyckoff into shorting too?

any books of his on this subject?

thanks

motorway · 8 August 2007

yonnie said:
thanks guys

is wyckoff into shorting too?

any books of his on this subject?

thanks

...

Of all the things that are most desirable to know about the stock
market, these two are most important.

1) First, to be able to determine the final top of a bull market,
and second, to determine the top of the intermediate swings, and
finally the top of the minor moves.

2) To be able to determine the final low in a bear market; the
bottom of the intermediate swings, and the end of the minor moves.

Master this branch of the subject thoroughly, it is vital.

But there is one step more: Your education will not be complete
until you can cover all your shorts and go long at the bottom of a
panic, a depression or of an intermediate swing, and sell out all
long stocks and go short at the top of a boom or an intermediate
bull movement. This will be the result of practice, training, and
experience. It requires great flexibility of mind and absolute
control of your emotions. You can learn to do it if you will study
and faithfully practice this Method.
Richard D. Wyckoff

yonnie · 8 August 2007

thanks motorway,

wonder if anybody can really determine all the tops and bottoms of the markets, swings and moves.

are there firm rules or is it discretionary?

motorway · 8 August 2007

yonnie said:
thanks motorway,

wonder if anybody can really determine all the tops and bottoms of the markets, swings and moves.

are there firm rules or is it discretionary?

There are Absolute Principles from which flow contextual Principles and Rules

Can all tops and bottoms be determined ......... Absolutely !

Determined is not predicted
There is an element of anticipation , of opportunity being seen to be born mature and ripen... That only then needs to be identified

What represents the window of opportunity is what Wyckoff called the
hinge and springboard

Here is some ore that can be refined to GOLD

motorway

Some people regard a stock (or the market) in this (springboard)
position only when it breaks through an old line of resistance or
support into a higher or lower field. I claim that the beginning of
the springboard move is at the bottom of a range of accumulation, or
in the upper levels of a range of distribution.

Have patience to wait out a situation until you see it is ripe for
an aggressive move. Then act promptly. Do not debate whether it
would be better to wait for positive proof of the correctness of
your decision. By the time you are 100% certain, the move will have
started and your opportunity slipped away. If this does happen,
don't make the mistake of running after the move which has
escaped you, for in that case your judgment is consciously or
unconsciously biased by your first error and chances are you will
not thereafter act with a clear mind. It is best to say: The higher
it goes the less I want that stock (if you were bullish), or: The
lower it goes the less I want to sell it short (if you were
bearish); so I'11 just look around for the next opportunity.

One who can operate only on the long side of the market is only half
a trader. He sees everything through the eyes of a bull. He thinks
everything is always going up. He never can see any money on the
short side. The truth is, a chronic bear has a better chance of
making money than a chronic bull.

But do not try to catch every turn in the market. Wait for the best
openings.

In my most successful short swing trading campaigns I took a
position on an average of once a month. Five or six of these
campaigns showed losses. These were small, because a stop order was
always placed on each trade. Result: A very satisfactory net
profit at the end of the year. The profitable trades ran into
substantial figures -- usually several times the risk.

Richard D Wyckoff

tech/a · 8 August 2007

Of all the things that are most desirable to know about the stock
market, these two are most important.

1) First, to be able to determine the final top of a bull market,
and second, to determine the top of the intermediate swings, and
finally the top of the minor moves.

2) To be able to determine the final low in a bear market; the
bottom of the intermediate swings, and the end of the minor moves.

Master this branch of the subject thoroughly, it is vital.

But there is one step more: Your education will not be complete
until you can cover all your shorts and go long at the bottom of a
panic, a depression or of an intermediate swing, and sell out all
long stocks and go short at the top of a boom or an intermediate
bull movement. This will be the result of practice, training, and
experience. It requires great flexibility of mind and absolute
control of your emotions. You can learn to do it if you will study
and faithfully practice this Method.
Richard D. Wyckoff

This in all its simplicity is all you need to know.

Its learning and application can be approached in a number of ways,but clearly you need to be able to identify with some form of accuracy these points.(Something that can/will take years,many books,lectures,tutorials and ofcourse software).
Personally I have found a combination of Fib,Elliott and VSA to be the best way of doing this.I guess exponents of Gann would include that.

Chorlton · 8 August 2007

motorway said:
I took a
position on an average of once a month. Five or six of these
campaigns showed losses. These were small, because a stop order was
always placed on each trade. Result: A very satisfactory net
profit at the end of the year. The profitable trades ran into
substantial figures -- usually several times the risk.

Great advice IMO regarding the subject of Risk / Money Management......

Also, Thanks to Motorway and others for constantly posting their knowledge on Wyckoff and his methods. Its clear that there is much more to him than simply VSA which is what I lot of people initially believe.......

yonnie · 8 August 2007

sorry guys, but I think I get off here.

I`m just no prepared to put in years of study to be able to name the top and bottoms of the markets, swings etc etc.
I know my limitations.

I think I`m just content to ride the wave as long as it lasts until the fundamentals have changed one way or another.

No 100 mils for me, but just content with 10.

thanks for all your help guys.

weird · 8 August 2007

yonnie,

nothing to be frazzled by,

I think Chorlton summed it up very well with some of the more important and directly usable points, with the emphasis on that last quote.

yonnie · 8 August 2007

thanks weird,

yes, I`m definately going to read Weinstein for shorting stocks but as for determining the tops and bottoms and years of study to be able to do that

lets say I`ll just leave that to the brainy ones amongst us that have that kind of ambition

Best book on shorting stocks

yonnie

tasmanian

yonnie

jempol

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tasmanian

weird

tasmanian

weird

tasmanian

weird

yonnie

motorway

yonnie

motorway

tech/a

No Ordinary Duck

Chorlton

yonnie

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yonnie

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