Algorithmic Short Selling With Python - Second Edition

Master algorithmic short selling with Python by learning practical strategies, coding trading signals, and applying robust risk management to generate alpha in any market condition.

Key Features

• Build and test algorithmic short-selling strategies in Python
• Apply advanced trade execution, position sizing, and risk controls
• Harness regime detection, pairs trading, and portfolio management
• Purchase of the print or Kindle book includes a free PDF eBook

Book Description

Short selling is often seen as one of the toughest sides of trading, yet it offers unique opportunities for alpha generation and risk control. Algorithmic Short Selling with Python – 2nd Edition is a complete guide to mastering systematic short-side trading, combining financial theory, behavioral insights, and hands-on Python code.

You’ll begin by challenging common myths about short selling and understanding its unique psychology and risks. From there, the book introduces algorithmic strategies including relative long/short, regime detection, pairs trading, and trading edge formulas. You’ll learn how to code and test these strategies in Python, while also mastering stop-loss science, exit optimization, and volatility-based position sizing.

Later chapters cover portfolio construction, sector and factor exposures, mandate design, and execution techniques, ensuring your strategies integrate seamlessly into broader investment workflows. With coverage extending to equities, derivatives, and even Bitcoin shorts, this edition provides a practical, end-to-end framework for systematic short selling.

By the end, you’ll be able to design, test, and implement robust short-selling strategies, manage risk effectively, and enhance portfolio performance across market conditions.

What you will learn

• Understand the unique psychology and risks of short-side trading
• Code long, short and pairs trading strategies in Python
• Apply regime detection methods to define market states
• Master stop-loss and exit techniques to protect and compound returns
• Implement volatility-based sizing and advanced position management
• Evaluate risk with metrics like Sharpe, Grit, and robustness scores
• Construct long/short portfolios with exposure and mandate design
• Extend strategies to Bitcoin and global cross-asset short selling

Who this book is for

This book is for quantitative traders, portfolio managers, algorithmic trading developers, and advanced retail traders who want to master the short side using Python. A working knowledge of Python and basic trading concepts is assumed. Readers will gain not just coding skills, but also the strategic and risk management frameworks needed to build profitable short strategies.