Selling Short Do's
Now that you know the Selling Short Don't's in the stock market, lets get into what you really want, the Selling Short Do's.
There are two major strategies to sell short stocks when stock trading:
Topping Patterns
Topping patterns are also known as "Weak Sister" patterns. These are stock chart patterns such as:
Click the above links for a detailed explanation on how to trade each pattern.
Expert trader and Author Stan Weinstein recommends additional rules when trading these patterns:
- Insure the S&P 500 Market Avg. is below the 30 Week MA, and is trending down
- Look to see if the Industry Group it is in has broken below it's 30 Week MA. You can use a stock screener to determine which Industry Group it is in.
- Insure that the Stock individual chart shows it below it's 30 Week MA, with the MA NOT trending up.
 For further in-depth information on Short Selling , "The art of Short Selling" contains valuable tips to help you learn the art of short selling stocks.
You will learn:
How to spot long term set-ups that offer huge rewards to the downside
The Technical Analysis patterns that show a stock price downturn
How to take advantage of making money "both ways"
Short Swing Trade
Chart by MetaStock
Swing Trade Strategy
1. Confirm the strength of the trend.
2. Look for a price pullback c/w at least 3 consecutive up days with higher highs. Volume should be lower on the pullbacks.
3. The 5 Day RSI Indicator should be above 50. When the RSI forms a top and begins to turn down, you should look for a share price retracement to bounce off the 20 day simple moving average (SMA).
4. Look for key Candlestick reversal patterns at the bottom of the pullback such as the Harami, Engulfing pattern, Dark Cloud Cover or the Evening Star Doji.
6. Insure your position sizing and money management rules are in place.
7. Sell short and make the stock trade!
This is just one of many Swing Trading techniques.
Author and expert Swing Trader Kevin Brown has created The Definitive Guide to Swing Trading Stocks. This program has earned a reputation as the #1 Swing Trading Course available online and will help you with short selling.
Check it out for yourself.
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Recommended Short Selling Tools and Resources
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The Art of Selling Short:
See How Easy it is to Sell Short!
Learn How to Take Advantage of Making Money "both ways"
Learn More Here
Sell and Sell Short:
Learn How to Profit in a Falling Market by Shorting Stocks, Futures, and Options
Learn More Here
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