Sunday, May 08, 2022

Going to the Dark Side

After an unsuccessful stint at shorting stocks in 2012, I started shorting stocks again in the past two week.  So far all but one of my shorts have been successful.   I expect the one unsuccessful short to become profitable this week, if the market continues its downward trend.

Here's what seems to be working:
  • Find stocks that have earnings reports during the week.
  • From that list, choose the high growth stocks. 
  • Choose stocks with higher prices, about 100 or higher.
  • If there is an up day, short a few stocks.  I usually choose 2-3.
  • On a down day, OK to short if it is the first down day.
  • Close out immediately if stock drops after earnings as soon as possible, even in pre market or after hours.
  • If the stock goes higher, I will hold for a few more days and may even short additional shares at a higher price.
So far, I have shorted AMZN, NET, DASH, SQ, ROKU and PYPL before earnings.   I shorted FB when it popped after earnings.    Most have fallen within a day, sometimes hours, after shorting.   Some fell by as much as 15%.   At this point ROKU is the only position in which I am losing money.  I could have closed it for 1.5% gain, but got greedy and waited for it to fall further, which it never did.   

To note, I am usually only shorting 1 share since I am learning.   Occasionally,  I will sort an additional share if the stock goes higher, as in the case of ROKU.

This week, I am considering shorting COIN, which has earnings after hours on Tuesday.  I will definitely short COIN if the market rallies on Monday, but a rally looks unlikely based on the current futures.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial nor investment advice. Please consult a professional advisor.

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