Profiting in bear markets

[Billyb]

I'm quite surprised that there is very little discussion here about going short on stocks (and other markets). When people talk here about the profits they made, invariably the way they made it is by the traditional buy and sell approach. Is it not better to trade with the downward trend rather than against it?

If we are talking about the method of trading where one makes a profit from riding (a medium to long term) trend, then it seems almost impossible to profit if we rely on the traditional buy and sell approach of ASX listed stocks. I've looked at a lot of the charts of Australian stocks recently, and I've come to the conclusion that right now, hardly any stocks are trending up, and the ones that are could very well turn right around on a few more bad headlines. So the probability of winning trades seems pretty low if we just buy and sell Aussie stocks using a (longer-term) trend following system.

On the flipside, there are something like 150 Aussie stocks and about 10000 US stocks that can be short sold. In addition, a hell of a lot of these are trending down. It seems insane to me that I don't read anywhere about people taking advantage of this and profiting from it. Is there a reason for this? Am i missing something here? Is there more risk than I think?

 

[LifeChoices]

Kind of odd you wrote that, as I was thinking a similar thing at the same time.

I thought I'd dig up some the stocks that actually profited from the peak on 3 Dec 2007 to the lowest point on 2 March 2009 - here's what my computer spat out. I'll have to check some of these top ones - as they look a bit odd. One thing is certain - very few stocks made any profit during 2008

| EXT | 160.64% |
| RRL | 70% |
| BOW | 60% |
| ORG | 56.82% |
| SXY | 47.06% |
| LNC | 40.96% |
| NHC | 40% |
| AIX | 38.04% |
| KCN | 26.58% |
| ESG | 25.53% |
| NVT | 9.05% |
| STO | 7.84% |
| OSH | 6.18% |
| AGK | 2.23% |
| NCM | 1% |
| CSL | 0.55% |

 

[ice]

I suspect it's more of a case that the serious professional traders who are the most comfortable trading short don't spend much/any time on chat sites.

ice

 

[tech/a]

Personally trade the FTSE

 

[Billyb]

Personally trade the FTSE

Tech/A - do you mean you short the FTSE? If so, what makes you choose the FTSE, and what broker allows you to do this - IB?

Thanks

 

[tech/a]

IB
Currently long was short for 30 mins before that.

Here is the chart a few minutes ago.
Pulling back losses.

 

[tech/a]

Closed long 5241

I like the FTSE as it is technically obedient.

I can read it far better than the SPI and its far far more liquid.

Software is tradeguider R/T.(VSA).
Data Esignal

Will be short 5238 if filled

 

[tech/a]

Filled and very nearly stopped!



Anyway back to work
Posting and trading at the same time isn't that bright!
See typo on chart was 5238 fill

 

[Wysiwyg]

I'm quite surprised that there is very little discussion here about going short on stocks (and other markets).

I'm not surprised this thread turns up when the market has dropped 1 thousand points already.

 

[tminus]

is there a different method you are using to colour the bars, as some up bars in the down trend are coloured red.

 

[tech/a]

What makes you think they should be any other colour?

 

[tminus]

I am used (still a noob) to seeing candlesticks coloured differently depending on if they close higher than their opening price. I haven't seen OHLC bars coloured.

 

[tech/a]

I am used (still a noob) to seeing candlesticks coloured differently depending on if they close higher than their opening price. I haven't seen OHLC bars coloured.

If you have a closer look they are close only bars
Open is not important

 

[nulla nulla]

I thought we had been trading a tightening bear market for a while now.

 

[Billyb]

Closed long 5241

I like the FTSE as it is technically obedient.

I can read it far better than the SPI and its far far more liquid.

Software is tradeguider R/T.(VSA).
Data Esignal

Will be short 5238 if filled

Technical obediency - very important but something I haven't thought about much - thanks!

 

[AlterEgo]

Open is not important

Interesting. I've been reading a bit of Larry Williams work recently, and he says the open is the most important price of the day!

 

[AlterEgo]

Although your graph is an intraday one, so my comment wouldn't apply. Forget I said anything. Carry on.

 

[tech/a]

EOD I agree
But VSA looks at range and close relative to that range combined with volume.
Using a 1 min chart during volatile times like now you can see pretty clearly the "flow" in the short term
If we open it 15 to 60 min we can see it a little clearer.