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Re: Mustang66 post# 10276

Thursday, 01/13/2011 9:33:44 PM

Thursday, January 13, 2011 9:33:44 PM

Post# of 34471
Yeah, and the challenge with that "boxing" strategy is you have to be right 4 times or you start canceling your gains or losing your shirt altogether.

1. Start shorting when it is going to pull back
2. Go long on your hedge shares when the prices is about to go up
3. Sell your long hedge shares before it pulls back
4. Cover your short position before it runs again

That strategy takes an awful lot of getting it right to be successful, and it involves locking up a lot of capital trying to neutralize bad short investments. Going long on a good company or short on a bad company sounds like a much more sound investment strategy to me than betting against a rising star and coming up with complex strategies to hedge your losses. All just my opinion though.

The boxing strategy would help explain the insane volume on a stock with a relatively small float. Thanks for the info JB3729

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