TechniTrader Provides "List of Sell Short Market Tips"

Trading Basics About Selling Short Stocks

Most traders and investors learn how to buy stocks then spend most of their time looking for great stocks to buy and trade for a few days, or to invest in for many years. However, as soon as a Downtrend market correction starts many traders and investors do not know what to do. They either hold onto their stock and lose 50-80% of their gains, or they just sit and wait hoping the Correction will end soon. What they are missing is vital information below, in the list of Sell Short market tips.

There is a total lack of preparedness for Downtrends and missing key information within the list of Sell Short market tips can lead to large losses, anxiety, and frustration. For long term investors, this can be devastating and can take years to recover. 

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For Retail Traders not knowing how the Downtrend behaves, why it moves differently than the upside, who sells short, what strategies work, and how to interpret indicators when stocks are trending down increases the risk of whipsaw trades, poor trade results, and an eroding capital base. Confidence deteriorates when there are continually losing trades or weak trades, due to needing a foundation regarding the basics about downtrending markets.

Here is the list of Sell Short market tips: 

1. Tops 
Tops develop faster nowadays than even a few years ago. High Frequency Traders can create Sheer Cliff Tops™ that plummet double digit points in a single day.

2. Quiet Rotation™ 
Quiet Rotation™ by the giant and large Institutions is intended not to disturb the trend, and they do sell even while the stock moves up. However as smaller lot buyers who have lower capital bases slowly stop buying, the trend actually “bends” under the weight of the giant and large lot rotation selling. Rounding trendline patterns are more prevalent nowadays due to this condition. These changes in the balance of power between buyers and sellers can be seen in indicators. The "Balance of Power Indicator" reveals this candlestick pattern.

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3. Market Participants
Only 3 Market Participant Groups actually Sell Short. They are all use Technical Analysis except for the High Frequency Traders which use news algorithms to find negative news to sell short. Technical patterns are more defined due to the rising number of Professional Traders selling short these days.

4. Indexes
A Market Correction is not always a big Downtrend on the Indexes. Since the Dow 30, S&P500 and other indexes are a formula that derives a base value for that index, a Correction may not be a true Downtrend for these indexes. Instead the indexes can and often do move in a wide Trading Range, which is harder to interpret if a trader does not understand how a Trading Range Market Condition behaves.

5. Entries and Exits 
Entries and Exits for Selling Short must be extremely precise. That means Candlestick Patterns for both entries and exits must be specific to Selling Short. Using indicator cross-overs and other outdated signals often create more whipsaw trades than profitable trades.

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To be successful during a Market Correction traders and investors need to learn how to read the downtrend all of its subtle nuances and patterns as introduced in the list of Sell Short market tips. 

Summary

Traders and investors benefit by understanding how, why, when, and what constitutes a Bear Market, an Intermediate Correction, or a brief Retracement. Using the proper analytical tools and honing Spatial Pattern Recognition Skills™ dramatically improves results for both short-term traders and long-term investors.

I wrote another article about Selling Short with chart examples CLICK HERE.

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Trade Wisely,

Martha Stokes CMT


Chartered Market Technician
Instructor and Developer of TechniTrader® Stock and Option Courses
TechniTrader DVDs with every course.

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