Most people understand how to profit from buying a stock and selling it back at a higher price but did you know you can make money off a stock going down in price as well? To profit from a decrease in the price of a stock, a short seller borrows the shares and sells them, if the shares go down in price after you sell them you buy them back and keep the difference!
Press "insert" and enter a symbol, ex: USD.JPY Then watch for ideal selling conditions.
- Sentiment: middle and long-term sentiment pointing DOWN; short-term sentiment pointing UP.
- Perception: indicates OVER-BOUGHT.
- Equilibrium: displays +2 STD or higher.
- Commitment: at the top around +80.
Once the above four conditions are met, you will see all 4 red indicator lights lit and should SELL the security (in this case the US dollar against the Japanese Yen). When the perception returns to the middle or lower, you should BUY.
Next, let's get in-depth to see an ideal Short sell setup in Stealth Trader in Lesson 5