When you trade, you can buy stocks or sell stocks to make profits but you must always on the right side. When you are confused, get out of the trade. Why short-selling stocks are a good opportunity? Short selling stocks can double your portfolio fast and sometimes it’s highly risky. We will short sell only when there is huge fear from the investors. There are some tactics to short-sell and you should know when to do it.
Short selling is when you don’t have stocks in your stock account and want to sell it because of the fear that people have for this stock. There is a bearish sentiment about the stock and people rush to exit at cost. Short sell is borrowing the stock from investor and paying them back after days or in a month. It is the same way the future markets work.
Resistance, support and volume are the three things to keep your eyes on because it works all the time. support and resistance are easy to calculate if you knew about the Gann Square of nine. It is an easy to calculate resistance or support for any stock or commodity. It helps you to find daily support/resistance as well as monthly support/resistance. If you want to learn about the Gann Square of nine, proceed here
The reason behind the short selling of stocks would be fear and another thing would hedge their long positions. We don’t hedge positions and its tactic to avoid huge losses and stay on profits. We will see about hedging in another chapter, but for now only short selling during bearish markets can fetch you twice the returns. Many have made fortune short-selling in 2 days or less, remember the 2008 financial short selling? It can be applied on any markets like metal, gold or commodities where the bearish sentiments hold for several months. Fear to one trader is gain to another trader, there were no systems used to predict the BUY or SELL signal coz all the markets were trending down for several months.
If you are looking to learn about short –selling, then try books on amazon from William J O’Neil whose CANSLIM strategy is very popular among the investors. He teaches through simple techniques and it works all the time. Start practicing and paper trade initially to succeed in real-time. The goal is to get better one percent every day and end of the year you are 365% better which may seem a mammoth task done but easily achieved.