Short CFDs

[kerosam]

i am considering shorting as a possible short term (days to weeks) strategy during this time of volatility... mindful that i read in other threads that we are still in a long term upward trend. it is attractive to me because of its payment of interest during holding period on a bearish company. has anyone short selling sucessfully? any indicators more appropriate for shorting?

 

[tasmanian]

Re: - short CFDs

gday kerosam,

ive had abit of success shorting lately.like you said its a bonus to get paid interest whilst a stock is dropping.why only make money as a stock rises???better than holding long term imo.go long then short it on the way down as well.

i only use cfd,s for shorting i do an occasional long play but will close that out at the end of the day.rarely do that though 95% shorting.have a cash account for longs cfd,s for shorts.

what i look for is a stock that has has a nice rise for a couple of years and theres plenty of those atm.then ill look what sector that stock is in.if the stocks sector is looking bearish as well then i will consider it.ill only short it if the sector is bearish which i think is important.

i look for a stock thats had a nice rise then starts consolidating at a top.if it breaks down from that top ill short it once it drops through that consolidation bottom.also sometimes ill short when its in a channel and bounces off the top of the channel and sell at the bottom of the channel.

once it breaks the bottom of the channel buy a small parcel 1st.then if it comes back to the bottom of the channel bounces off and goes lower again then ill buy another parcel.then just keep topping up as it makes new lows.sounds easy in theory but not always that easy.important to cut losers quick and ride the winners all the way down.same as going long

now i havent been doing a great deal of shorts the last few years but ive done pretty well lately as you can imagine.i always like to have one or 2 shorts on to hedge against my longs.atm i have about 6.ill go to a maximum of ten.

ive got a watchlist full of stocks that look A1 candidates for shorts just have to see what happens over the next few weeks.i toped up on a few tonight at close as i feel this recovery was abit too quick and we will be back below 6000 again soon.nows the time to get into shorting imo i feel we are going alot lower yet.

 

[tasmanian]

Re: - Short CFDs

also i generally make my 1st parcel small about 20% of my intended parcel so if im wrong my loss is smaller.also only add if your 1st trades are showing a profit then u know you are right.

never top up losers NEVER

 

[kerosam]

Re: - Short CFDs

thanks tasmania,

1. when buying within the channel, what's your safety factor or stop loss? I usually put a 3% stop loss then trailing... that's with normal sharing trading... not on shorting. I assume the trend in this channel you mentioned, is going sideways (?) unless it also works in a uptrend.

2. Volatility within the channel. chart goes like a yo yo in channels. where to buy or when to sell e.g when to close the short order.

3. do you think construction sector is a good one to consider?

 

[tasmanian]

Re: - Short CFDs

kerosam,

my initial stoploss is usually very tight.then will relax it abit once im in profit.
if a trade goes against me initially and im stopped out ill keep a close eye on it and reenter when it drops below the consolidation low next time.alot of the time secong breakdown is more profitable.even if i have a couple of $100 losses ill usually cover that when you get on to a big winner and make alot more to cover the losses.
one big winner can make up for alot of small losses just have to be patient and dont bail on the big winners let profits run as much as possible.

ill usually have my stop above the last days trading high and move it down once the stock consolidates and moves lower.once it drops out of that consolidation ill top up if i want more of that stock.

so say a stocks bouncing between$10 and $11 once it drops below $10 ill buy say 300 shares as a test buy.the stop would be above the last days high say $10.20.so if it goes above $10.20 im out with less than $100 loss.$60 + brokerage.

then if it dropped to $9.80 then rose back up to $10 and moves lower again ill buy another 300 and move my stop down to $10.05.if it consolidates between 9.80 and 9.60 for a few days then drops below 9.60 ill buy 400 and move my stop down too 9.84 or thereabouts depends where the candle highs/lows are.always making sure my next buy is at a lower price than the last so all my trades are in the money.

so ill repeat the process untill i have a parcel size im comfortable holding.

hope that makes sense im not that good at explaining over a computer.

hope it gives u a rough idea.its al trial and error the more u do it youll get a feel for certain stocks and how there acting

take a look at the financial and property trust sector charts also utilities recently dropped out of its channel and rose back to the low.i expext it to bounce of it and continue lower.quite a few sectors are looking weak.anything property and financial is looking abit shaky atm.

any other questions let me know or if i havent explained it too well ask me and ill try to explain it better but the more you do it the more comfortable you fell with a stocks action so it might be just picking a few stocks for a while and get a feel for how they act.

looks like the shorts will do well tomorrow dow getting hammered tonight i had a feeling that would happen i think that last rally was a bit of a sucker rally wouldnt be suprised to see the xao down to mid 5000,s so shorts are the way imo atm

 

[tasmanian]

Re: - Short CFDs

also only short stocks that are in a downtrend.
so dont short a stock in a channel where the overall trend is up.make sure the channel has formed below previous highs.

well thats the way i do it everyone trades a bit differnt but it might give u somewhere to start and u can make your own changes to suit your style

 

[kerosam]

Re: - Short CFDs

opportunity coming tasmanian.

http://www.bloomberg.com/apps/news?pid=20601103&sid=a.EBmjxCErFA&refer=us

 

[BentRod]

Re: - Short CFDs

Some great post's there Tas.

 

[Nick Radge]

Re: - Short CFDs

Also consider using a GSL if the share price is off its highs by more than 30%. Shorting heavily sold off stocks opens the door to be caught in a takeover, especially during bull markets.

 

[kerosam]

Re: - Short CFDs

i was abt to make my first cfd short order. tot i'll put up my draft order for comments...

1. instead of 'buy', i tick 'sell'.

2. 'code' & 'quantity' as per normal.

3. 'price'= price i want to sell my cfds for.

4. 'gsl'= % probably 3% of my 'price' above.

e.g.
code: xyz
quantity: 1000
price: $5
gls: $5.15
deposit: 10%= $500.00

sell company xyz cfds for $5.00. if price increases to $5.16, gsl kicks in and i'll take a loss of $0.15 x 1000= $150. maximum i can lose on this trade. if price decreases, profits for me

comments?