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Comment by samfisher83 | Hacker News Reader

If someone is consistently good at losing money 60% of the time. Why not just do the exact opposite of whatever their initial hunch is. Then they should make money. Based on loss of 36% from the article that is more than just transaction and trade fees which are 1 to 2%of trade therefore if they just do the opposite of what they are doing they should make money.

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If you don't reach your destination by always turning left, then always turning right should be the winning strategy?

This is not about binary decisions. The problem is to pick two points in time: When to buy and when to sell.

Well I guess the opposite of doing day trading is not doing day trading... it works!

https://en.wikipedia.org/wiki/The_Opposite

If you lose money because you don't quite beat the spread, doing the opposite might mean that you just lose money faster. There are also fees, and the enormous risk of taking short positions (the natural opposite of long positions).

The risk profile changes when you switch to an opposite strategy

If you went long, and lost money, going short instead doesn't mean you would make money, it means you could lose on the interest payments, you could lose on being forced to close, could lose on the different risk profile of having unlimited loss potential

Even more so with derivatives.

There are borrowing costs with shorting, but you usually don't go long on shorting stocks its more of short term thing. In that case borrowing costs are not too bad.

What is the opposite of buying a specific stock? Buying every single other stock?

In investing, my understanding is the opposite of a long is a short.

Shorting has asymmetric risk.

When you are long your loss is 100%. With a short it is theoretically unlimited.

> Shorting has asymmetric risk.

Shorting is perfectly symmetric with longing (except linguistically -- because "shorting" is perfectly normal, but "longing" not): in the former you have unlimited downside risk and limited upside set by the price at which you sold, in the latter you have unlimited upside potential and limited downside set by the price at which you bought.

Isn't this the situation that a margin call is meant to handle -- limiting your losses to the collateral you have on deposit?

Short selling a stock.

The opposite is to borrow and then sell it.

That has a lot more risk.

https://en.wikipedia.org/wiki/Short_squeeze

You can't just flip all your decisions because that would only work if your decisions are inversely correlated to the right decision. Losing traders are usually completely uncorrelated.

Except that the loss in not calculated on 1 transaction.

If you go exactly even before transaction fees, on a big enough number of transaction you loose everything....exactly because of transaction fees.

> Why not just do the exact opposite of whatever their initial hunch is.

If your initial hunch is to buy a stock you don't own yet, you can't sell it instead.

You buy stocks for two reasons. Either you think they will go up (long) or you think they will go down (called "shorting"). You can think of them as opposites.

Buying short isn't the opposite of buying long - it's the reciprocal. Which is an important distinction: if you buy a diversified portfolio of 10 stocks and one goes bust, if you bought long you've lost 10%. If you bought short, you're completely broke.

> If your initial hunch is to buy a stock you don't own yet, you can't sell it instead.

You can (by selling on margin) if you have a margin account.

You can short it.

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