How to short a stock.

Many traders would like to know how to short a stock. In general terms the thing to look for is the current trend of the stock. The stock must be going down and so must be in a downtrend, now a downtrend is defined as lower highs and lower lows. The second criteria to look for is a stock that is moving below its 50 day moving average these two confirmed that the stock is indeed in a downtrend and is being sold in bulk. We now have a candidate for shorting but we also should do a little bit of research for half an hour to an hour and find out what the reason or if there's a reason for why the stock is falling in price. This could be due to many factors and it's not really important which factory it is obviously losses, lower sales and lower revenue all contribute to the selling of a particular stock.

The actual short of the stock, the entry point at which one short’s a stock can actually be anywhere once the downtrend is established it's actually best not to give a precise location on a chart due to the fact that the professional traders and other educated investors all know where people are being told to short a stock by trading gurus and other authors. But as a general rule the price should be going down so that you’re in profits straightaway and always use a stop loss, just in case the trend does change or the stock consolidates into sideways moving price action. If the company is on the verge of bankruptcy then you can let the stock price ride all the way down to under a dollar and then buy it back, these are the best shots to take because you know the stock has a high probability of not recovering. Look at any chat and you'll see that the old Wall Street maxim of the bulls take the stairs and the bears take the lift or elevator down meaning you can make three times as much money a lot quicker shorting stocks so it's well worth trying to master this particular skill. The PHD Trading Method is a perfect system for capturing shorts and is well other a look.