Part 1: How To Short Overbought Stocks?
Knowing how to short overbought stocks short is a mystery to many. In this video I will walk you through my analysis of potential short candidates. As I write this article I have an open short position in Ebay which will serve as our focus stocks to illustrate the tactics I use to short stocks. This particular trade is what I like to call an “Extreme Overbought” short stock. I use the same process when I decide to buy “Extreme Oversold” stocks. This strategy has a success rate of 85% and I have done hundreds of these trades over the past 15 years. It was this contrarian strategy that I developed that made me realize that I was in fact a contrarian which is how The Contrarian Trader was founded.
I will be doing a Part II: of this exact trade when I close out my short position in Ebay. I will produce the Part II: edition even if I realize a loss because we can learn alot from our failures which can then lead to future successes.