Hey, I'm putting in a lot of research and effort in learning about and testing different short selling strategies/systems. There aren't many good books on the subject. I'm specifically looking for strategies that you can scan stocks for. My time period is days to weeks, even months. I'm more of a swing and position trader. I'd like to hear systems that have worked well for you specifically on the short side. Or suggested books on the subject. With the bull market we've had I've been mostly trading long only but starting to feel it's time to get the short side fine tuned. Also to implement within a market neutral strategy where there's a long and short position using the same system. Thomas Carr's market neutral trading got me going on this. It's a good read. I'll be testing the mean reversion strategy this week. I'm also particularly interested in testing short plays using Heiken Ashi with parabolic SARs or moving averages. I'd appreciate any suggestions. Thank you in advance!
BTW two books on short selling I've read are How to Make Money Selling Stocks Short and Trader Vic. Those are good, but for the time being I'm looking for something more mechanical/technical, til we're in a confirmed downtrend.
I use same methods for shorts as I do for longs, just make it faster on shorts. I suppose you can seek fundamental weaknesses that have shallow trend up, start looking for those as they will most likely plunge when overall market starts the turn.
There is always value analysis. It is difficult to screen stocks for such a strategy, you wind up spending a lot of time on edgar/google. Basically take modern value investing and turn it around to look for overvalued stocks.
The various books by William Oneil might give you some ideas. He even has a book titles how to sell stocks short. Its mostly chart patterns from what I remember. I used to look up shorting candidates by using finviz.coms screener to look for financially weak companies and pair those up with weak looking charts ie downtrends and double tops etc. Its very possible to screen stocks quickly based on the 3 statememts they put out quarterly. You can graph those out in excel.and start to see trends in the financial data that might spot weakness. But it goes without saying that the statements only give you partial view on the fundamentals of a company as you never know it could get bought out out of nowhere causing the stock to rip 30%. I am also keen on finding good shorts again.