The whole truth about short positions

Recently, an investor asked me why I write in my reviews about when I buy securities and exit longs, but rarely mention the possibility to go short when the support line breaks or the resistance lines? After all, after 2009 and the growth of early 2010, many popular stocks look expensive - overbought, and maybe you should focus your trading strategy to a greater extent on the opening of "short" positions?

I'm a Bull.

First of all, I realized a long time ago that I'm a bull by nature. in the stock market. I have a better sense of securities that are lurking and waiting to shoot up. And when I believe that the general trend in the market will be directed downward in the short or even medium term, I first of all intuitively seek for the "not yet shot" stocks in the "second echelon". For a "bullish" trend will forever accompany the global development of the stock market, while movements against - "bearish" trends are a priori unnatural and are often triggered by hysterics and Insider. It's like a heart on the right side.

"Shorts" - short positions

Secondly, if I am and I trade from the shortI do it within an hour, within a day, or at most within a week. I just don't have time physically to write about a new position. And, despite the fact that I open short positions for such a short period, I try to have a very good risk/return ratio, that is, the resistance was close at hand, and it was clearly drawn, and the "margin" down was significant 10 - 15%.

The Debt Game

Third, playing from the "short" is always gambling. You can wait out the storms of the stock market as long as you like. And when you are dripping with messages from an investment company about your margin level, your intuition and logic very quickly shut down and all the laws of technical analysis are forgotten. So if you use borrowed funds, no matter paper or money, always keep your leverage ratio at 50-60%.

Conclusion

By no means did I mean to say that shorting is a bad thing. But personally, for my trading strategy, which implies mostly medium-term investments and catching nice big trends - playing with borrowed securities is not worth the candle.
On a successful "short", because market falls often pass quickly and vertically you can catch good money, but just as easily you can lose it before you have time to orient yourself. And to the long, sometimes tedious, uptrend You can always join in and wait meaningfully for the profits.