{"id":2195,"date":"2009-11-08T12:03:52","date_gmt":"2009-11-08T17:03:52","guid":{"rendered":"http:\/\/leavittbrothers.com\/blog\/?p=2195"},"modified":"2009-11-08T12:03:52","modified_gmt":"2009-11-08T17:03:52","slug":"the-difference-between-going-long-and-going-short","status":"publish","type":"post","link":"https:\/\/blog.leavittbrothers.com\/?p=2195","title":{"rendered":"The Difference Between Going Long and Going Short"},"content":{"rendered":"

There are some who say going long and going short are equal and opposite. In fact some say if you have a hard time doing one or the other, flip the chart upside down.<\/span>
\nI disagree. To me they are very different, so here’s a quick write up with my views. This isn’t THE difference between the two, it’s MY difference. <\/span>
\nBut before I start, you need to know my biggest weakness as a trader so you know my frame of reference.<\/span>
\nBy far my biggest weakness, the one characteristic that prevents me from making massive gains (instead of just very good gains) is my inability to hold during an extended uptrend.<\/span>
\nDozens of times I’ve bought stocks at 15, sold at 18 and then watched the stocks rally to 40 over the following 6 months. Why I can’t hold is something I don’t know, but I am the way I am, and I’m ok with it. I guess at heart I’m just a singles and doubles hitter, not a homerun hitter.<\/span>
\nHere goes. In my eyes, here’s how going long and going short differ.<\/span>
\nGoing long is much more mechanical. Most often I have an exact entry level or an exact resistance level I’m keying on, and I take my entire position all at once.<\/span>
\nGoing short is more intuitive. I have a general area I want to enter, and I tend to build into a position knowing that my first or second entries are not going to be ideal and will most likely show me a loss in the near term.<\/span>
\nRelated to the above…<\/span>
\nMy longs tend to either work or not work right away because I’m playing a volume breakout of a certain level.<\/span>
\nMy shorts tend to show me a loss in the near term because I don’t have an exact entry; I’m just trying to get in at a decent, but not perfect level.<\/span>
\nI’m more active on the long side. During an uptrend, I’m in and out with 5-20% gains and rolling profits to the next trade. I wish I could hold, but I can’t. So I keep pecking away with little wins.<\/span>
\nI’m less active on the short side…mostly because there are many less good short set ups during a downtrend than long set ups during an uptrend and because it takes longer for shorts to play out.<\/span>
\nRelated to the above…<\/span>
\nMy holding time with longs is much shorter than with shorts. Longs may be held for a couple days or two weeks at most. <\/span>
\nShorts, assuming the market is trending down, tend to be held longer. There are many whipsaws and false moves up that I try to ignore in an attempt to let the chart fully play out.<\/span>
\nMy entries with longs are almost always breakouts. In fact my favorite trade is a continuation breakout within an uptrend. If a stock rallies from 30 to 40 and then consolidates for a month, I play the breakout and move into the mid to high 40’s.<\/span>
\nMy entries with shorts are typically on bounces, not breaks of support. This is because too many times I’ve shorted breaks of support and got burned a couple days later when the market or stock rebounded. Losses will cause you to change your ways. \ud83d\ude42 So I prefer shorting a bounce to an area that provides a decent entry knowing I’m not going to time it perfectly. In fact it’s so rare that a “back kiss” works perfectly, I’d consider it random luck. I almost always show a loss on shorts in the near term, but that’s fine. I’m just looking for a decent entry within a bigger move.<\/span>
\nThis may start to get redundant…<\/span>
\nMy longs trades tend to work right away…I’m in and out and rarely show a loss.<\/span>
\nMy shorts tend to take time to work…I’m in…then I’ll add to a losing position as long as the overall chart still supports the downside…then I’ll hold as long as possible to let the chart\/trend fully play out.<\/span>
\nMany traders will say the market moves faster to the downside than upside. This hasn’t been my experience and it’s why I trade actively and quickly to the upside and slowly and less actively to the downside. When a stock breaks out at 20, it can move quickly to 22-23 (within a week), but if it breaks support at 20, it’ll drop to 19, bounce back up, drop again, bounce again etc etc. Shorts just seem to take more time. This has been my experience even though it differs with what many traders say.<\/span>
\nStill being redundant…<\/span>
\nGoing long is not quite an exact science, but it’s close. <\/span>
\nGoing short is more art. It’s more “feel.”<\/span>
\nIn my eyes going long and going short are definitely not equal and opposite. I could never turn a bearish chart upside down and pretend it’s a long. <\/span>
\nThat’s it for now. If I think of more difference, I’ll post in the comments below.<\/span>
\nIf you have anything to add, please do.<\/span>
\n