Time Frame: 5min
Whats up guys, today I want to go over shorting. First off what is shorting? Many people are confused on what shorting actually is. To simplify it, shorting is when you "borrow" shares from your broker by selling them and then later on you have to buy them which is called "cover". The difference is your profit. When you're shorting a stock you are betting that it will go down. An example would be "I'm short at $4.90 for 1k shares" and "I covered at $4.70". That means I sold 1k shares at $4.90 and then you bought 1k shares at $4.70. Your profit would be $0.20 per share. Some traders might get confused on the difference between shorting and selling your long position. When you short something you have a negative amount of shares. If you go long for 2k shares and you sell those 2k shares you have 0 shares left after you sold everything. But when you short you don't have a long position. If you went short 2k shares you would be negative 2k shares. Then you would "cover" them by buying 2k shares, which would would mean you have 0 shares left. Hopefully that made some sense. Some technicals that I use are the 9/18/50 smas, regular and psychological support/resistance levels, and vwap. A bearish indication would be if the 9 crossed under the 18 and it went under vwap. Also if a ticker can't hold a support level its a good bearish indication. If it gets rejected off a resistance level that is a good indication however its more risky because it can retest the resistance and break it next time. In GLYC today a great short would have been under $16. The 9 crossed under the 18 on the 5min. The $16 psychological support didn't hold. It also fell under vwap. Volume and momentum died down. If you guys have any questions let me know. Be careful shorting because it is more riskier than going long. However its good to know how to short on bloody market days.