I'm not sure how to answer that. Myown very first trade ever was a short sale and I turned $1500 into $6500 within 5 months. So being a newbie is not a total barrier. Personally I've always found it easier to tell which stocks will go down even in this bull market. Still, going short is a lot tougher than going long. Read the Motely Fool discussion on short selling and see if it appeals to you. Then if you decide to do it, start with paper trading and then risk only a little money. Stick with well known liquid names so that you won't be caught in a short squeeze. And finally, try to find companies that you think will go to zero rather than those that are simply over valued. Also (here is a big secret) I've found that as a general rule, the very very overvalued stocks that are in a down trend are terrible shorts. It is much better to short an average company in a down trend than a high flyer. If you want to short a high flyer, short them after they are fully broken. Look at the charts of SHVA, CLFY, EFII, SOC, SKS, and KTEL for examples. Try to see the traps.
Sun Tzu
P.S My favorit shorts are the multi-nationals like KO, G, and HWP. But you need to be extra careful with these guys. |
