The fundamentals of shorting right now

[#1]

Lots of people calling hte shorts right now, I thought I would give my 2c worth. All the favourites - OML, ACL, MTN, and AGL are trading at resistance - some with ascending triangles. Now, in order to short, you need to set your stoplosses. 1*ATR means that you have to call the downswing near perfectly - something that most traders consider impossible - so you are likely to get stopped out at least once - meaning you will have to increase your profit targets. 2*ATR is probably the minimum failsafe. At 2*ATR, you will want to be making at least 4*ATR profit to warrant the risk. So, taking slippage, etc into account, you will want AGL to be trading at the low 1600's to make decent profit. For that target, you have 3 things against you 1) VIX is low, meaning no volatility 2) Rand is strong, and will have to weaken considerably since AGL is dual listed 3)resources and general bourse are trending up, so we will need evidence of a downswing to spook a selloff. Just my thoughts, welcom comments!

[#2]

My bank balance (or what's left of it) confirms. Maybe not a good time to short...

[#3]

When volatility is low, then positions become a *****shoot, and the spread and commissions will take you out. Volatility is a key requirement for successful trading.

[jack12]

mmm, nah the time was right, but hindsight is a *****, eaten most of the profits on DDT, FSR hurting big with AGL but ANG, IMP and PPC have been good to me. So all in all, dont expect a 3day pullback when there is a false breakout. An the moral of the story is trade the day, trade the price of the day- unless of course you are into fundamentals and longer term.

[HateGauteng]

Mr Market ate my shorts. . . .wiped out again.

[#6]

Another one joins our club...

[eddy66]

how does it work? if i have 10k,use 9k on futures.lets say my loss is R1100,do I lose everything or what exactly happens?

[eddy66]

at least AGL is coming back a little...

[jack12]

they take the money from your MM cash balance, if that is mt, they make a margin call, and sell your shares at the going rate to cover the losses. I dont know what they will do if you have only one share ie AGL. (They do take a margin on the volitily of the market/shares) also presume they would slowly liquidate all your positions to meet the required margin balance

[richardw]

Eddy - I think you should hold it, go to Simon's courses, and then get back in quietly :) Seriously, otherwise you're going to be very cranky. We all want you to do well (heck, we want us to do well) but I fear for you, boet!

[HateGauteng]

I got liquidated all the way to zip! mmmmmmm . . . . shorts

[#12]

If you have 10k, and 9k is used on futures, then some of that 9k will be used as margin. Let's say 6k of the 9k is used to buy the shares, then 3k will be used as margin. You need to have that 3k in your account at all times. Now if you loose 1k, then that 1k will be taken from your cash balance to top up the margin. So, if you loose 2k, and only have 1k in cash, you'll be short by 1k in cash. But since you had 3k from the beginning as margin, and you had 1k in cash - which equals 4k, and you lost 2k, you'll be short by 1k on your margin of 3k. You'll get an sms warning you that your cash has depleted. You only have 2k of the 3k margin left. Now if your investment drops by another 2k, you will have no margin left and your contract will be closed out. Which will leave you with the 6k minus whatever the close-out loss will be. Does that make sense?

[jack12]

AGL is falling so you may be saved yet.

[richardw]

What happened? All in one contract, didn't get out fast enough?

[swordfish]

i am hoping wishing and praying and hoping wishing and praying ...... AGL

[#16]

Talked too soon Jack. Agl now going up, and picking up steam...

[#17]

I think resorces has had its ups for this week, I predict a downslide on moday morning.

[jack12]

She was cummin down nice then there was a spike?? ZAR-$ ?

[eddy66]

so only when your margin is depleted your contracts will be closed out?

[#20]

O BOY !!