The #1 Explaination Of What Short Selling IsYesterday was more like a movie as
I began to reflect on the days when I did
not understand capital markets
-
The time I would have given up on myself
and not known the power of understanding how
to trade the capital markets.
Sadly the capital markets are very
hard to understand but with a lot
of patience, you will know them
Today I want to show you how
to short sell.
And to show you that
You don't need to fear short-selling
its just that I prefer to accumulate
not distribute
If you are a beginner you may not
understand this
but as a trader, you have to choose
One side...think of short sellers
like the away team, and long buyers
as the home team
In order to play the capital markets you
have to choose your team
and stick to it
Because this will
give you a better understanding of the
capital markets
Now look at this price action
the price is overbought
meaning there are a lot
Of sellers, because the stock
of the product is too much
hence they have to sell at
a discount price.
Because of this, the buyer is forced
to buy insurance on his losses
to cover the cost of inventory
does this make sense?
You are selling insurance to the buyer
so that he can cover his cost
to buy more inventory
inventory is an expense
so the buyer is not making a
cash profit on this trade
instead, he is making a loss
with the plan to sell the inventory
at a higher price in the future
to cover this loss.You on the other
hand as a short seller
you are making cash profit
Because your insurance contract
price has increased
Look again at this chart CAPITALCOM:EURUSD
the price on the stochastic
RSI is overbought
That means the buyer has to
much inventory
and he needs to
insure it against damage.
Your role as a short seller
is to sell him insurance.
Explaining short selling
can be a challenge but to cut the
long story "short"
You are selling insurance on the inventory
that the buyer holds.
If you short-sell this Forex pair
remember
to not use more
than x5 margin and take at least 20%
profit.
Also note that this week
is the unemployment rate FRED:UNRATE
will be announced in the news on friday
Which in my opinion is a huge catalyst
for this currency pair CAPITALCOM:EURUSD
Trade safe
full disclosure am not participating
in this trade.
Also this chart reminds me
of the rocket booster strategy
from the short side:
1.Price has to be below the 50 SMA
2.Price has to be below the 200 SMA
3.Price should gap down.
check out the references below
to learn more about this strategy
about the rocket booster
strategy
Rocket boost this content
to learn more
Disclaimer: Trading is risky
please learn risk management
and profit-taking strategies.
Also feel free to use a simulation
trading account before
you trade with real money.
