Shorting Into The Hole
Catch a short seller red handed
Have you ever heard the saying “To catch a thief you need to think like one”?
Well, perhaps the same could be said for trading…
To catch a short seller you need to think like one.
Have you ever entered a short position, price starts to move in your favour, and you’re feeling pretty smug about the trade?
The next thing you see is a big strong bull candle, which closes at highs.
Your gut is telling you that you might well have just shorted into the hole… as they say.
Not quite the aggressive bear you thought you were…
Everyone else who is human and short is feeling the same.
“Ooops, I mistimed this, I better get the heck out of here!”
And so the aggressive buying continues, short covering combined with fresh longs.
A perfect storm for a pop…
So the question is…
To catch a short seller, do you need to think like one?
- Where on your chart would be the absolute perfect short trap? (any TF)
- Where would it look like an easy short, that could turn into a nightmare pretty quickly?
Because, if you can identify that situation before it happens then you just might put yourself in a position of power to capitalise on the frantic hole shorters covering…
Not always, of course, sometimes getting short is exactly the right thing to do.
But the market has a habit of punishing aggressive shorts more often than not.