Position risk -long v short

[tomorton]

Classic financial advice is always anti- any facility that allows the individual to short a market. It's certainly true that a short position leaves you theoretically liable for an infinite loss, even ignoring leverage, as there is no limit to how high a price could rise.

In addition to which, falling prices are not driven by the exact opposite behaviours as rising prices, and attract a different group of participants to rallies and bubbles.

My question is, do you traders (who can go long and short) apply tighter risk management / position sizing / stop setting to your shorts as to your longs?

 

[wackypete2]

Whether you are long or short you have a position in the market. How I manage the position is not based on which side I am on with the exception of time. Most markets, stocks or commodities generally fall faster than they rise as a rule of thumb mostly due to fear as traders panic and want out of their long positions at any cost. I expect my short trades to have a shorter lifespan than my long trades so if the trade doesn't develop rather quickly I get out. I'm willing to wait a bit longer for long positions to move in my favor.

Peter

 

[tomorton]

That's a useful pointer Pete, so you would consider cutting out a short that didn't move pretty quickly into profit?

 

[wackypete2]

That's a useful pointer Pete, so you would consider cutting out a short that didn't move pretty quickly into profit?

yes, sooner than I would cut out of a long given the same circumstance. Of course I'm a very short term trader and I expect my trades to move sooner rather than later or else I get out. I am just more patient with longs than shorts for the reasons stated.

Peter

 

[Joules MM1]

... do you traders...apply tighter risk management / position sizing / stop setting to your shorts as to your longs?

the pos sizing stays original to your plan of risk regardless of direction .....i think that's good business practise......a guaranteed stop might be a good option to consider which might cost you a couple of points/pips depending on the platform

recently, gold had an amazing rally spike partly due to new money coming in from commercials (who are at altime lows in their short pos) and short covering from mid tier monies and numpties ......all on news annoc release, so, the idea that markets fall faster than they rise needs correct context......when and where