Category: Money tips Release Date: 2006-04-18
To cover short positions are stuck as a form of passive coping strategy, it is not a good way to get out of trouble, but in certain cases, it is the most appropriate method. The stock market is not the best method, only the most appropriate method. As long as the use of well, it will be a tool for turning defeat into victory; if used shall not be law, it will become a hotbed of cocoon. Therefore, application-specific skills in time to cover their short positions to observe the following points:
First, the initial bear market can not cover their short positions. Stocks of the people understand this principle, but some investors can not distinguish between CBBC turning point in how to do? There is a very simple approach: stock prices are not falling to the deep firmly refused to cover their short positions. If the stock price than the lowest 5% do not have to buy to cover short positions, because arbitrarily time intraday volatility is likely some sort of relief. Than the lowest bid if the price 20% to 30% or more, and even some chopped when the stock was prematurely, it can be considered to cover short positions, room for further decline in the market outlook has been relatively limited.
Second, the broader market has not stabilized do not cover their short positions. Tape at the drop channel or relay rebound can not cover their short positions, because the stock fell further decisions will be dragged down along with most of the stocks decline, only a very small number of adverse economic strength of individual stocks may be an exception. The best time to cover their short positions in the index at a relatively low or when you have just reversed upward. At this time of rising great potential decline may be the smallest, cover their short positions safer.
Third, weak stocks have not been replaced. Especially those who tape up it is not up, big Pandie it down along with the non-Zhuanggu. Because the purpose is to cover their short positions to cover short positions in stocks with earnings later in front of quilt to make up the loss of shares, since so no need to limit himself to make up the original quilt species. What varieties do not cover their short positions make up the key, the key is to cover short positions of the species to have the greatest profit, this is to be an important consideration. Therefore, to cover short positions to make up on make up a strong unit, can not make up weak stocks.
Fourth, the early surge of super dark horse had not been replaced. There have been many historical dominance of the leader, issued a brief bright light, they then entered a long night of darkness. Such as: Sichuan Changhong, Shenzhen Development, China Jialing, Qingdao Haier, Jinan Qingqi and so on, they fell a long life cycle, often after dark or still deep down there is a deeper bottom after the bottom. Investors smoothing of such shares, will be increasingly make up more sets, more sets, and deeper and will eventually run into trouble.
5, grasp the opportunity to cover positions, and strive to a qualified success. Must not sub-cover their short positions, we should gradually cover their short positions. First of all, ordinary investors with limited funds and can not withstand repeated smoothing operation. Second, the margin call is a mistake to buy a previous act up, which in itself should not once again become the second error transactions. The so-called margin call is one level bid for the imprudent behavior of the defense to do several times to cover short positions, the more to buy more sets of results would make ourselves into inextricable situation.
