Having an opinion can be a very dangerous thing in the world of day trading, however having an educated opinion can be the difference between winning, and losing your wife’s trust fund! Its simple to start, if the market seems to be moving higher, unless you have a very, very good reason to go short, don’t. Keeping looking to buy the stronger stocks that are up on the day. There is rarely a compelling reason to short stocks on an up day unless you are very advanced and can identify individual stocks or sectors that move opposite of the trend. Basically, do not short stocks that are up, on an up day.
If you are going to short, find those stocks that are negative on an up day. When a stock is up on the day, it means that there are generally more buyers for that issue than there are those that are willing to sell. You can’t fight the trend! Once more for the guys in the back of the blog…You can’t fight the trend! Once you try, you will inevitably spend a good portion of time trying to dig yourself out of a hole. The market will tell you which way it wants to go, and you need only identify the strong stocks and buy on the pull backs, or the weak stocks to short on a rally. Just be ready to change your opinion if the market tells you too by reversing its trend.