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Re: [sharechat] Short Selling Conditions

From: "Cristine Kerr" <>
Date: Fri, 26 Mar 2004 08:16:02 +1000

Agreed, agreed, agreed.
----- Original Message -----
From: Baa Baa
Sent: Thursday, March 25, 2004 9:46 PM
Subject: Re: [sharechat] Short Selling Conditions

Stop losses ...

Are an open advertisement to the buyer, that sellers are in the market [at
fixed and observable prices], and consequently, those with the capital and
resolve to do so, can drive -down- a price position by selling, such that
stop losses are triggered in succession, hence presenting an opportuntiy for
the perpetrator -to be the acquiring party! Is it not conceivable that the
seller is also the buyer?

IMO, the only good stop loss order is the 'mental stop loss' and a 'hot
wire' to the market price. I for one would -Never- disclose my sell price
[place a forward stop loss oder] prior to actually selling [in stosks].
Forces greater than mine are sure to capitalise on my vulnerability and
naieve disclosure otherwise.

In options, where it moves quickly and in large %ages, a trailing stop loss
has merit. In stocks, it's the lazy traders advertisement to cunning buyers
with the wherewithall to create the price that allows them to acquire -your-

Think about it.

>From: "Cristine Kerr" <>
>To: <>
>Subject: Re: [sharechat] Short Selling Conditions
>Date: Thu, 25 Mar 2004 17:23:55 +1000
>Hi Karyn,
>Many thanks for your contribution.
>You've raised very valid points, especially regarding stop losses - I agree
>with your observation.
>   ----- Original Message -----
>   From: Karyn W
>   To:
>   Sent: Thursday, March 25, 2004 2:19 PM
>   Subject: [sharechat] Short Selling Conditions
>   Short selling doesnt have much effect on a market as there are VERY
>   conditions placed on such sales by the stock market.  It is not
>   that everyone can do, even if they wanted to, unlike buying shares.
>   eg. only a limited number of companies can be short sold, only a small
>   percentage of their shares may be short sold in any one day, sales must
>   usually be settled within 3 days, requirements for margin cover, etc 
>   for more detailed information see the ASX conditions at
>   Automatic stop losses are a more potent tool to put a market into a
>   spiralling decline, and indeed has been given as the reason for the big
>   day" market crashes that have occured - ie.  as the price falls,
>   pre-determined stop losses are triggered, the stock is sold
>   without human intervention, the increased volume of sellers pushes the
>   down, triggering more stop losses, and so on.
>   Now that people can set auto stop losses via online brokers, it will be
>   interesting if we see the same type of volatility in the Aust markets as
>   been seen in the US.
>   Karyn
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