Short · Margin

Margin.
Short Sell.

Sells borrowed stocks to profit when prices fall. Uses a margin account to sell shares you don't own — if the price drops, you buy them back cheaper and keep the difference. This is how the system makes money in declining markets.

The same scanner that finds long setups also identifies weakness patterns. Instead of buying strength, it sells into weakness. When the market turns bearish, short positions act as a hedge against your long equity holdings.

Short selling carries unique risks. Losses are theoretically unlimited if a stock price rises sharply against your position. The system uses strict stop-losses on every short trade, but gap-up risk exists. Only allocate what you can afford to lose.
▼ Short
Direction
sell first, buy later
2 – 10d
Hold time
equity trades
Stocks
Instruments
US equities
How short selling works

Plain English.

What is short selling?

Short selling means selling a stock you don't own by borrowing it from your broker. If the price drops, you buy it back at the lower price, return the borrowed shares, and pocket the difference as profit.

For example: borrow and sell 100 shares of XYZ at $50. Price drops to $45. Buy back 100 shares at $45. Return the borrowed shares. Profit: $500.

The risk: if the price goes UP instead of down, you lose money. There's no ceiling on how high a stock can go, which is why stop-losses are mandatory on every short trade — the system exits automatically if the price moves against you.

Long vs Short

How they compare.

Equity · Long
Direction▲ Buy low, sell high
Account typeCash account
Hold time2 – 10 days
Best inRising markets
LeverageNone
Margin · Short Sell
Direction▼ Sell high, buy low
Account typeMargin account
Hold time2 – 10 days
Best inDeclining markets
LeverageNone used
How a short trade works

From signal
to exit.

1
EOD scan — weakness detected
After market close, the scanner identifies stocks showing breakdown patterns — falling below key moving averages, weak relative strength, increasing selling volume.
2
Regime check — is shorting appropriate?
Short signals are only promoted in Neutral or Risk-Off regimes. In strong bull markets (Risk-On / Super Trend), shorting is blocked — the tide lifts all boats.
3
Pre-market — order placed
At 9:25 AM ET, a LIMIT sell order is placed via Alpaca. The order sells borrowed shares at or above the trigger price. If the price doesn't reach the trigger, the order expires unfilled.
4
Position managed — stop + trail
Once filled, a stop-loss is placed ABOVE the entry price (protection against the stock rising). If the price drops to TP1, 70% is bought back for profit. The remaining 30% trails with a ratcheting stop.
5
Exit — buy to cover
The system buys back the borrowed shares — at the trail stop, time stop, or target. The difference between sell price and buy price is your profit (or loss).
The risk — in plain terms

What can go wrong.

When you buy a stock, the most you can lose is what you paid. When you short, there is no ceiling on how high the price can go — a stock can theoretically rise infinitely against your position.

The system mitigates this with strict stop-losses on every trade. But overnight gaps (the stock opens sharply higher the next day) can cause losses beyond the planned stop. This is rare but it happens, especially around earnings and major news.

Short selling also requires borrowing shares from your broker. Most liquid US stocks are "easy to borrow" with zero borrow fees. But some stocks may become hard to borrow during high demand, which can force position closure.

Understood the risk?

Currently paper trading — no real money at this stage. Join and explore both equity and margin strategies.

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