If you’re worried that you’ll be a little short to your account, ask for his advice before trading.
“I’m going to be trading in all sorts of positions,” Slim told me, “some long-term [or] some short-term.”
The “Short-Term” Position
There are a few factors when it comes to “short” trading, and they’re related to the number of options you’re trading.
Slim says he’ll have options for 30 days of every month. That way, he can put an unlimited number of positions into and out of a given stock, so long as he has a sufficient number of shares to make it all fit. But he’s also not using them as a hedge (like “hedge-fund managers”). In general, the longer stocks last, the less you’ll need to put in.
“The strategy is more based on how things go and the size,” Slim explains. “You’re going to end up putting in more money if something goes horribly wrong early on in a trade. You’re not a hedge fund manager who has to have a lot of money sitting around.”
Of course, that’s not to say that you’re only trading short if you don’t think there will be any real upside for your short position (which you should have even if there isn’t anything you can short at all).
Slim recommends trading the stock he’s looking at most often, and trading that at the highest price the stock is priced at, so that’s what you’re doing.
That’s why he told me he didn’t use any options to short the Dow; his goal was to trade the Dow at the highest price-earnings multiple for the three days.
“I could probably do a couple more weeks’ trades at the highest stock on the list, which I would love to do,” he told me, without mentioning him by name. “But that doesn’t really mean I’m going to do any more.”
The “Long-Term” Position
Now, “long” trading could also apply to a position you’ve made in a stock for a few weeks, but for the more experienced trader, it’s a little bit more difficult.
After all, what are you going to do when the market crashes, crashes dramatically, or your stock price rises, but you’ve still lost 100 percent of the profit?
You can try to rekindle that position, but
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