Tuesday, November 27, 2012

Going against the market - a couple of profitable short trades

Here are another couple of good examples of short trades that have generated nice profits. Again, the initial entry signals were valid and would have cropped up on the scans that I use. From there it is simply a question of placing the trade and then watching it unfold, and letting the profits run.

The interesting point about these two trades in particular is that both downtrends started during a period when the general markets were going up. As I've mentioned several times before, I try and look for the majority of my trades that potentially will breakout and travel in the same direction as the indices. However, my overall system parameters state that I should always try and have a proportion of positions going in the opposite direction.

Providing the chart set up is valid and meets my criteria, then these potentially identify stocks exhibiting undue levels of relative strength or (as in these cases) weakness compared to the market, and not only act as a hedge in your portfolio, but also can be very profitable trades in their own right.

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