Making Money Shorting Stocks

Another week has come and gone, and in that time, most of the stocks I have selected produced incremental profits. The stock that was shorted last week, which was the stock that I said I knew nothing about, produced a profit of more than 10% in one week. Many fundamental analysts, especially the CFA type, the type that thinks they are smarter than everyone else, but could never outperform an index if their life depended on it, probably would die for 10% a year.

That being said, one stock I selected, EKO.v, has been a real stinker. That stock was too far away from its 50dma when selected, and I will keep that in mind when selecting stocks in the future.

This is the 14th week of the experiment, and here are the breakdown of the results thus far:



Here is this week's mega trending stock:



As you can see, the 50dma has formed an impenetrable wall that has acted as a bulwark against any bullish price action. Naturally, as per the rules of this strategy, we would place a stop above the 50dma.

In order to maximize profits trading and investing in stocks, I feel that we should take WD Gann's advice, and "be just as willing to sell short as you are to buy." In fact Jesse Livermore, certainly made more money shorting stocks than he ever did going long.

What I try to to do is to go with the flow. If the trend is down, then short, and if the trend is up, then buy. Here is what Mr. Livermore had to say about this principle:

"I was short one hundred and fifty thousand shares of
stock, not because I knew the news was coming, but because I was
going along the line of least resistance."

By trading with the trend, we are going along the line of least resistance. Thanks for visiting.