Continue reading...When shorting equities, one often faces the challenge of distinguishing between a topping formation and a change in trend. Many successful short sellers will try to focus their efforts by looking at clues that are offered from the schools of technical analysis and fundamental analysis. Read on to find out how studying these different methods a trader can gain confidence in shorting the market
Technical AnalysisSince the equities markets are primarily dominated by long traders, short traders try to prey on the weak longs to trigger breaks and start downtrends. They try to put enough pressure on the market to create situations where the weaker long gets out because of the fear of giving back gains. It is the job of the short seller to find tools, such as different chart patterns or indicators that are used specifically for predicting the start of a decline or a panic sell
Trying to short a market using technical analysis usually means finding an overbought indicator and a...
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