Earlier today, I posted a blog entry titled "Sell in May, and ...", in which I suggested that traders consider going short this Summer instead of being flat. Unfortunately, I have received a (rather silly) comment complaining because I did not suggest a specific trade, and implying that I did not know how the markets were going to move this Summer. So, in case there is any confusion, this blog entry (part 2) is intended to clarify my original blog entry.
Short Trades Have Feelings Too
The idea of my original blog entry was simply to remind traders and investors that making short trades is a viable option, instead of only making long trades or no trades at all. I intentionally avoided suggesting a specific short trade, because suggesting a single trade out of the blue does not help anyone. The only useful way to suggest trades to someone is to consistently suggest every trade over a significant length of time (weeks, months, even years, depending upon the trading time frame). Otherwise, they are only trading a fraction of a complete trading technique or system, and they are more than likely not going to make a profit.
The idea behind my original blog entry was as follows. Short trades are some of the most profitable trades that professional traders make, and if you are only making long trades, you are only trading halfway. Instead of staying flat this Summer, consider continuing trading, and adding short trades to your repertoire, and perhaps you can increase your profit substantially.
Looking Into My Crystal Ball
I do not know how the markets are going to move this Summer ... and neither does any other trader. Profitable trading is not about trying to predict the future. Profitable trading is about following a trading technique or system, that keeps your losses to a minimum, while allowing your profits to increase. Profitable trading is about keeping your emotions under control, and making trading decisions based upon market dynamics. Profitable trading is about lots of other things, but it is not about guessing what will happen in the future.
If a so called trader gives you a trading tip (e.g. buy XYZ at $50), because they "know" what the market is going to do, you should turn and run away as quickly as possible. However, if you find a trader that admits that they have no idea what the market is going to do, you should pay attention, because this trader is probably making a profit.
Sell in May, and ...
So, is the saying "Sell in May, and go aw ... short" accurate or not? The answer is that it doesn't matter, because no professional trader would make a trade based solely upon a saying. If your trading technique or system indicates that you should enter a short trade at some point in May, then consider the saying as an additional confirmation of your trade. However, if your trading system or technique indicates that you should enter a long trade in May, don't avoid the trade, or even worse, change your trading technique or system just because the saying is not in agreement with you.