long and short

This is a discussion on long and short within the Trading Systems forums, part of the Methods category; Hello every one I care to know every one trading philosophy and strategy (in general). First how do you formulate ...

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Old Jan 23, 2005, 5:31pm   #1
 
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long and short

Hello every one

I care to know every one trading philosophy and strategy (in general). First how do you formulate a long term view of the market and base on it do you formulate strategy to mach your point view. Second what kind of side way market strategy do you use it seem the hardest or the less noted then a trend system trading strategy. I see in the futures market they use a tend system strategy the futures have been a side way market could people use a tend system strategy in a side way market. Do they flow the intermediate, short trend even if the long term is a side way. Third there are 3 major trends in the market long intermediate and short people trade only when all confirm each other the longer term tend usually out weight the mid and short trend. Fourth do people go long and short in the same time to get the best of all market movement say for example we are in an up trend market (the index) I would go long more then short and the other way around if the major trend is down I will go short. Also use the percent of the traded stock which are up in say one month period opposed to the under performing stocks and use this percents s how many position I will go long and how many I will go short. For example the major trend is up (t he index) And the positive performance stocks are 60% of the total traded markets. So out of ten 6 I will go long and 4 I will go short so I put the probability in my side and also to hedge the risk. Many thanks
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Old Jan 23, 2005, 7:01pm   #2
 
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Originally Posted by 8waverider
Hello every one

I care to know every one trading philosophy and strategy (in general). First how do you formulate a long term view of the market and base on it do you formulate strategy to mach your point view. Second what kind of side way market strategy do you use it seem the hardest or the less noted then a trend system trading strategy. I see in the futures market they use a tend system strategy the futures have been a side way market could people use a tend system strategy in a side way market. Do they flow the intermediate, short trend even if the long term is a side way. Third there are 3 major trends in the market long intermediate and short people trade only when all confirm each other the longer term tend usually out weight the mid and short trend. Fourth do people go long and short in the same time to get the best of all market movement say for example we are in an up trend market (the index) I would go long more then short and the other way around if the major trend is down I will go short. Also use the percent of the traded stock which are up in say one month period opposed to the under performing stocks and use this percents s how many position I will go long and how many I will go short. For example the major trend is up (t he index) And the positive performance stocks are 60% of the total traded markets. So out of ten 6 I will go long and 4 I will go short so I put the probability in my side and also to hedge the risk. Many thanks
First, I find that I am usually right about the long term (ok, I´m NOT referring to 2080), but short term noise and information tend to convince me otherwise. There is no way to strictly determine the future in my view and no guarantee the past tells us anything, so I prefer to stick with the present, although very recent market action always gets my attention. Or maybe it´s just the coke bottle and those aliens.

Second, symmetrical trend following systems, almost by definition, are extremely susceptible to whipsaws. The only real solution I have found to the whipsaw problem is to use one sided trend following systems, but the downside to those is that stock selection becomes the only way to extract profits (money management still the only way to not lose, as usual). I trade only the long side now, having accepted and endorsed the fact that stock selection is my only way to win, as the zigzag method just doesn´t appeal to me.

Third, I find the notion of there being some three specific trends in the market silly. Just because Dow had the nerve to publish his idiosyncracy (no disrespect meant to anyone) doesn´t mean it contains any more truth than the lightningstruck idea I once got that time cycles in the market are determined by, not phi, but pi (3,14 something...you know, that circle). Feel free to waste your time on researching this anyone. As for trend confirmation, if I decide to buy I buy, and if I decide to sell I sell. I´m not keen on confirmations, they bore me to death and have the effect of making me want to buy vegetables rather than stocks.

Diversification among longs and shorts is theoretically extremely sound in my view. The practical problem is that you´re not always going to find exactly ten trades every day, and deciding when the market is strong and when weak is certainly not as straightforward as it sounds. That said, I´m all for it. Personally I buy as many stocks as I feel is necessary, ala Peter Lynch (again, I´m not referring to 2080).

Looking forward to other posts on this subject.
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