Throw It Down

If we study the historical data……we will find……market trade in trending zone only 30-40% , rest of the time it moves range-bound…………

For few peoples (including me ) shorting seems easy……., for longs we need established up-trending market but shorting can be done in down-trending as-well range-bound market easily.

But in some case…….picture goes differently……, we short a stock and it start rising drastically. Though, it is always possible …..but to avoid such conditions we can use some cautions, also ....when we short at highest levels....our stop become too small but if we short at lower-levels......the stop become big......so always try to keep stop as low as possible.

1. Simply mark the highest high and lower lows at chart……..if primary trend is down or range-bound …….short it with stop above day’s high.

2. If the stock has broken day’s high but failed to break previous day’s high and now trading below day’s high ……short it with stop at previous days high.

3. Find a stock that is trading below previous days close……short it with a stop 1-2 points above last day’s close.

4. If stock break day’s low……short it with stop above day’s high. But in this case stop will be much bigger, so better to keep the stop either above last day’s close or based on small Time-frame.

5. Never short a stock that is trading below 3-4%.......reason being…..most probably it won’t go much down unless there is a bad news or market is crashing.

6. Never short a stock that is making new highs and in up-momentum.