Shorting Strategies

Discussion in 'Trading' started by silvius, Jan 17, 2001.

  1. silvius


    I would like to start a thread on just shorting strategies. Is anyone successfully trading the markets by only entering short positions? What stocks do you look for? What is your share size and how long do you stay in the market (minutes or days)? Do you trade just listed, NASDAQ, or both? Do you use an online broker or direct access broker. It seems to me that a decent living can be made by just playing the short side, but I would rather hear first from those experienced traders who have tried this strategy. Thanks for your input!
  2. I play the short side by shorting climax runs. I find stocks usually under $30 that have the biggest % gains. Usually anything over 40% is due for a retracement. It's very high probability.

  3. I very often trade the short side, as well as the long side just about equally. I suppose it is possible to play only one side of the market (Tony Oz played only the long side successfully even during the NASDAQ crash last March), although I think it's much better to trade both sides depending upon the type of market you're in and the situation.

    Anyway, with regards to shorting, I only trade NASDAQ stocks and often will short the following situations:

    1. Fading the gap/morning gap ups. Especially in this bear market, most gap opens lose steam after the open before moving back up. If the gap up is more than 5 points, I'll often short the opening and keep a tight stop. My time frame on trades like this is usually just a few minutes, and I'll trade 200-300 shares.

    2. Recognizable chart patterns. A few months back one of my key stocks I watch, JNPR was forming a parabolic top after running up almost 100 points in 2 weeks. In this case I bought put options(5 contracts)rather than shorting the actual stock, and held the position for a week.

    3. Intraday breakpoints. Every evening I calculate the next day's upper and lower breakpoints for the stocks I watch, and if one of them breaches the lower breakpoint I'll short 100-300 shares, adding to the position if the move continues down. Also, if the stock hits the upper breakpoint but fails to breach it, I'll go short there looking for the stock to be repelled back down. I usually only trade 100-200 shares in those cases and keep a tighter than usual stop. In both cases, my timeframe is intraday, and I rarely hold the position overnight unless the stock continued moving down and never triggered my stop.
  4. limbo


    I simply want to take a moment to thank all of the experienced traders that take the time to put forth their knowledge and strategies for us new traders to grow on-in this case Zboy--but all the many others too. I always look forward to reading this site to learn. A big thanks-your effort is much appreciated. I will do the same and return the favor to some new traders in the future.