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Short trading? What is a decent weekly return?

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inyaface

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Hi all,

Still learning to recognize terms that people use in this forum. Question:
1. When people say they are "shorting" a stock, is it shorting in the general sense (without ever owning the stock)? thought that was prohibited in Australia currently or am I wrong?

2. If purchasing stocks then selling it immediately within a few minutes/hours, what is that called?

3. Do people generally classify crystallised gains or profits on a daily, weekly, or annual basis?

4. I'm currently classifying myself by counting weekly gains (crystallized). With 10k since before Christmas, I'm profiting from 150-900 per week, with only 1 week where that didn't happen. Is that a good perfomance? What performance I should be aiming for? i.e. what is the benchmark? surely is not just beating term deposit performance annually. Is there a website which describes various % performances of various managements or people selections?

Thanks!
 
inyaface said:
... 1. When people say they are "shorting" a stock, ...

2. If purchasing stocks then selling it immediately within a few minutes/hours, what is that called? ...
Click to expand...

1. You must know what shorting is! You shorted NCM!!
2. Haste.
 
burglar said:
1. You must know what shorting is! You shorted NCM!!
2. Haste.
Click to expand...

Well I thought I did, but re-reading the stocks magazines apparently shorting is currently prohibited in Aus.....so what I have been doing has been haste.

Which makes me wonder, what then people do when they say they are shorting in this forum?
 
inyaface said:
...2. If purchasing stocks then selling it immediately within a few minutes/hours, what is that called?
Click to expand...
That would be considered "very short trading" joke!

David,
Short selling means you sell shares that don’t exist and in turn you must buy them back at one stage.
Long buying is the opposite, you simply buy real shares (the actually do exist) and thus you can sell them whenever you want – no duty.
In the first case you most certainly expect the share price to fall and in the latter you hope it’ll rise.


...thought that was prohibited in Australia currently or am I wrong?
Click to expand...
That would be new to me – although I don’t know too much either
 
inyaface said:
Well I thought I did, but re-reading the stocks magazines apparently shorting is currently prohibited in Aus.....so what I have been doing has been haste.

Which makes me wonder, what then people do when they say they are shorting in this forum?
Click to expand...

You are allowed to short.
 
inyaface said:
... 1. When people say they are "shorting" a stock, is it shorting in the general sense ...
Click to expand...

Ok, I was unhelpful yesterday.
But today I did some research and found this:
http://www.investopedia.com/terms/n/nakedshorting.asp#axzz2NNUIUXqD
http://www.investopedia.com/university/shortselling/shortselling1.asp#axzz2NNafjqVZ

If you have confused short selling with naked shorts and covered shorts, I recommend further research.
Some forms of shorts have been temporarily illegal (especially in the finance sector) since the GFC as it was feared that shorting would bring the market to it's knees. Most bans have been lifted since, but with new regulations.

And for the history buffs:

(Reuters) - "He who sells what isn't his'n, must buy it back or go to pris'n." - Daniel Drew, 1797-1879, American financier:
http://www.reuters.com/article/2008/07/16/us-sec-shortselling-history-idUSN1641520620080716
 
inyaface said:
Well I thought I did, but re-reading the stocks magazines apparently shorting is currently prohibited in Aus.....so what I have been doing has been haste.

Which makes me wonder, what then people do when they say they are shorting in this forum?
Click to expand...

Check the date of your magazine. Short selling was banned at the height of the GFC but the ban has been lifted since.

On your other questions:

3. Whatever floats your boat really, but I'd say the principle is to assess performance after a timeframe that makes sense relative to your trading duration / activity. If you trade every 20 seconds you might want to check how well you are going every hour. But if you are a long term investor, checking daily returns is probably meaningless.

4. There is no benchmark as such. Every strategy and every trader will have different performance over different timeframes. It's like asking what is the benchmark income for say an actor. You can get an arithmetic mean but does it really make any sense to average the income of Tom Cruise with the aspiring actor who hasn't had a gig for 3 years? The other thing to remember is that returns are only meaningful when you look at them in relation to the risks taken. With $10k capital you can leverage up and go nuts with your trading and get massive P&L in percentage terms, but you'd be just waiting for the inevitable blow up at the end of it.
 
YMI said:
T
David,
Short selling means you sell shares that don’t exist and in turn you must buy them back at one stage.
Click to expand...

Actually you are selling shares that do exist, but you need to borrow them...

Its ok though, you get to return them when you done shorting crap out of them!

Good overview of how IB does it here...but its all automatic you just place your sell orders and if its allowed to be shorted and they have inventory to loan, boom its done and your short...


Evil shorters!:badsmile:

CanOz
 
inyaface said:
... 2. If purchasing stocks then selling it immediately within a few minutes/hours, what is that called? ...
Click to expand...
I suggest that the term you are seeking is "Day trading":
http://en.wikipedia.org/wiki/Day_trading


On Feb. 12 this year, I bought BOA when they dropped from 62c to 45c
Then I checked on the BOA stock thread.
I sold BOA within 45 minutes.

I could say I was day trading, but truth be known, it was sheer panic!!

https://www.aussiestockforums.com/forums/showthread.php?t=25331&p=754819&viewfull=1#post754819
 
CanOz said:
Actually you are selling shares that do exist, but you need to borrow them...
Click to expand...
Fair dinkum! I was planning to sell half a billion Google shares and buy them back for 1ct on the next day.:nuts:
Thanks for the clarification
 
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