hey everyone thank you for checking out this video my name is Travis rose I'm
the creator of the master the market trading education that you can find link
below in the description I wanted to put together this quick video to go over the
basics of short selling now short selling for me personally was a game
changer to my trading when I first got started trading it seemed like pretty
much every time I bought a stock it would go down immediately from there so
once I learned that I can actually profit from stocks going down again it
was a game changer for my trading and it helped me think more strategically about
the market and allow me to become the trader that I am today and has actually
allowed me to become a full-time trader so with that being said what is short
selling sure it selling is a trade type that again allows you to profit from a
stock going down rather than up many people also refer to this as a shorting
or going short or really any variation of those things and so when your short
selling one thing to remember is that in the market you always want to buy low
and sell high but when your short selling you simply sell high first and
then later on buy back those shares ideally at a lower price allowing you to
profit the difference between where you bought and where you sold and the way
that this works is when you place an order to short sell that order is
automatically going to request to borrow those shares from your brokerage and
then when you believe that the stock price is going to go down you sell those
borrowed shares high later on buying back the shares again ideally at a lower
price and when you buy them back this is called buying to cover or covering your
position and when you cover your position you're going to be returning
those shares automatically back to your broker and again you're gonna profit or
lose the difference between where you sold short and where you covered
multiplied by the number of shares that you sold short and the number of shares
that you covered so to give you an example of this if we take this diagram
here you can see that we have what looks to be a level of resistance up there by
that Red Dog where we're gonna sell short so if we sure it's out there 1000
shares at let's say $3 then the stock price fails to break above that
resistance it comes down and we buy back those shares or in other words we cover
those shares at $2.80 that means that we made 20 cents on our
1000 shares giving us a two hundred dollar profit and to give you a
real-life example of short selling this is an actual screenshot of my executions
in the market showing where I sold short and where I've bought to cover it shows
the number of shares how much I invested into the short position and how much I
made in profit so in this example we're looking at the stock symbol SR ne and I
got to a total of 10,000 shares short 3500 filled ads two dollars in twenty
four cents and then the other six thousand five hundred shares filled at
two dollars and 26 cents so my average on these 10,000 shares was about $2 in
25 cents that means that my total investment was 10,000 shares multiplied
by about two dollars and 25 cents or in other words twenty two thousand five
hundred and sixty three dollars and thirty cents now later on in the same
day the stock came back down and I was able to cover three thousand five
hundred shares at two dollars and eleven cents and then I covered these six
thousand five hundred shares at two dollars in eight cents and not only
costed me to buy back those shares 20 thousand nine hundred and thirty nine
dollars in sixty five cents so that means that I profited 1600 to twenty
three dollars in 65 cents alright so as you can see you can make great money as
a short seller just like you can as somebody that is buying and selling
shares on a regular basis for that reason when I teach traders and I've
actually taught over 1,700 traders at this point through the master the market
programs that are linked in the description
I teach not only how to buy and sell and profit from stocks that are going up but
I also teach strategies on how to short sell and how to profit from stocks going
down as well and one of the very simple ways to look
to short sale of stock is to use simple lines of support and resistance to
indicate where to short sell and where to cover now if you don't know about
support and resistance by now I really recommend you check out some of my
earlier videos because in those ones I do cover what support and resistance are
in detail but for this video I want to stick more to the strategy itself so if
you do need to go back feel free to do so but for those of you who know about
support and resistance already we know that resistance is an area that the
stock has a difficult time breaking but now because of that many times a
stock is going to pull back or reverse to the downside once it runs into that
level of resistance in other words that can be a great opportunity for us to
enter into a short position and profit from that reversal to the downside now
on the other side of the spectrum support is an area where a stock has a
difficult time breaking below and because of that many times stocks will
get to a support level and they'll bounce back up so if we're in a short
position and we want the stock to continue down if it runs into a level of
support that can offer us a great opportunity to cover or exit our short
position all the way down at the lows before it does bounce back up
and we can use this simple diagram here to show us how this works and what this
may look like on a chart itself so you can see up towards the top of the
diagram there's about three different Peaks showing us that there is a level
of resistance in that area so that would offer us a good opportunity to enter
into our short position with a very small level of risk because we know if
the stock breaks above that resistance we would want to cover an exit our short
position to minimize our risk because there is no longer a level of overhead
resistance but in this example the stock does fall from that resistance level and
it allows us to cover our position all the way back down at that key support
level that was formed even before the resistance was formed so you can use
these very simple lines of support and resistance to find where you have high
probability entries and exit areas on your chart another example if I actually
go over to my Twitter just today there was a stock symbol M REO that was
spiking up pretty significantly and I mentioned earlier in the morning that it
was worth watching for another move today because it was a runner yesterday
and it may have another push if it's able to break through the 250 area with
volume so what we see is the stock does breakout above that 250 area and I
tweeted to watch out for the $3.75 area because that is the next line of
resistance now if we pull up the chart here on M REO we can see that here's the
breakout down here through that 250 area that I was talking about the stock
spikes all the way up to about $3 in 30 cents before pulling back down I mean
this time it actually does bounce right off that 250 area that was past
resistance and one thing that I preach is that pasture resistance can become
support and this is a perfect example of that and from that past resistance that
is not support the stock bounces all the way back up and actually hits a high of
three dollars and 74 cents which of course is only one penny below that 375
resistance level that I tweeted early on in the morning so that just goes to show
you how effective these simple lines can be I mean if you were in a long position
in this case you could have used that 375 area to sell out of your position
and mocking your profits otherwise if you want to show
sell to profit from that reversal you could have used it 375 area to short
sell your position all the way up here in the eyes in the three 60s or three
70s and profit from that reversal when when I took this screenshot it was all
the way back down to 3:30 and later on in the day it actually fell back below
$3 per share all right so if you're new to trading I hope that explanation
helped you to understand the basics of short selling and how you can actually
profit from stocks going down rather than just up and if you want to learn a
little bit more about the market itself with long strategies and short
strategies as well as just how to do general analysis whether you're day
trading swing trading or investing I highly recommend you check out the first
link below in the description to visit my website master the market you have a
total of 8 courses with over 15 hours of content 70 practice quizzes and access
to our chat room with well over a thousand traders you can go to the
courses page to see all the different courses we have available we have ones
for day trading swing trading investing technical analysis and there's actually
one specifically dedicated to short selling and then you can actually get
all of these courses together in an eight-course bundle and that's going to
save you 50% by doing so you want to learn more about them again check out
the link below you can read some of the reviews on the reviews page and you can
see some of the frequently asked questions over on the support page but
anyway thanks again for checking out the video I have plenty more planned for the
near future so make sure to subscribe to the channel if you don't want to miss
out on those and I'll see you in the next video good luck with your trading