Hi Gary,

In a down market, do you utilize short etf's, ie., dog, dxd, qid, sds or their ilk?

Thanks

Chuck

Chuck, I think you mean do I use “short” indices (Shorting QID for example, would basically make me long.)  In any event, I will trade the QID.  Others are also appropriate, of course, although I don't trade them.  Keep in mind, however, slippage on the “short etfs” can be quite significant at times.

Reader Jake writes:

I'm a bit puzzled by your recent reply to Chuck regarding Position Sizing? I'm sure I'm probably misunderstanding what you are saying so please forgive me if I'm talking %$&* :)

Say you want to risk losing 1% of your Total Equity per Trade, and you have a Stoploss of 4% then you would be able to trade 4 positions.

eg $100,000 Portfolio, Risk is 1% ie $1000, and with a 4% Stoploss, that is $1000/.04 = $25,000 Position Size.

So $100,000/$25,000 = 4 Positions ?

Thank you so much for your recent reply to my earlier question regarding Average Time in Trade, I printed out nearly all your Street Articles and refer to them quite often!!!

 Incidently with your "new"??! Stoploss/Targets of 4%/3% do you allow for anticipated bid/offer spread and commission charge when you put the orders in or do you accept the slippage in each direction?

 Thank you so much Gary,

 Best wishes,

 Jake

Jake, you have it exactly correct.  I should have written a 4% drawdown in that “Ask the Chartman” NOT a 40% drawdown.  My bad!

As for the spreads, I try to get in and out with limit orders, but obviously there is occasionally some slippage.  However, both that and commissions are usually made up by interest gains when you’re in cash, so it tends to balance out.