This mistake is all about timing and when you get into the trade – you are right but you still end up losing.

A Scenario to Avoid:
– Stocks (usually penny stocks) that have a supernova spike
– It is spiking incredibly high, but you enter short
– You’re looking for the decline to happen right away, but it keeps increasing
– You were right that it would decline, but it happened later than you expected so you take a loss
– Even though you were right, you still lose because your timing was off

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8 COMMENTS

  1. Wait… now I'm super-confused.. One wouldn't lose money in this situation, right? Sure, one would lose out on a potentially greater profit, but your account wouldn't show digits in red so to speak, would they?

  2. So when you short a position you are forced to pay it back at a particular date or why can't you hold onto it until it fades back down? Do you have a video explaining what demands are put on a short?

  3. By selling short, he borrowed shares from a broker sold at the current price. The hope is that stock plummets and he can reimburse his broker for the 100 shares at a lower price. EX. I short 100 shares for broker for $30 a piece and sell them to make $3000 but I owe my broker 100 shares. The stock goes down to $15 dollars, I want to buy 100 at $1500 and give them back so, in turn, I made $1500.

    His problem is he had to sell his shares back at the high price because he called it too early. I bought and gave back 100 at $40 a piece so I lost $1000.

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