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What if they are nowhere near where they should be on the upside
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Markets can stay irrational longer than you can stay solvent!
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Not financial advice. I agree, but I would recommend LEAPS or longer duration shorts and looking at relevant macro signals. Many people have learned the hard way. Including me. Be careful with shorting, especially short durations. Markets tend to go up more days than they go down. But if you time it right, look at relevant signals, and are patient, etc., it can work well :)
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I have made much trading SMH, so if I lose some I do not care. I am not losing principle.
I prefer to not short. The markets have an upward positive bias that is easier to trade and profit from as apposed to downside moves in the markets.
That being said, I trade within a regime. If the regime is bullish- I buy. If the regime is bearish- I sell.
However, buying to open is MUCH more forgiving than selling to open.
When you buy to open, you have less risk. When you sell to open, you do not have an asset to hedge your bet. By design, buying to open provides the hedge against future price deprecation against our existing cash flow.
In essence, it is partially a cash flow problem.
I prefer to not short. The markets have an upward positive bias that is easier to trade and profit from as apposed to downside moves in the markets.
That being said, I trade within a regime. If the regime is bullish- I buy. If the regime is bearish- I sell.
However, buying to open is MUCH more forgiving than selling to open.
When you buy to open, you have less risk. When you sell to open, you do not have an asset to hedge your bet. By design, buying to open provides the hedge against future price deprecation against our existing cash flow.
In essence, it is partially a cash flow problem.
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