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Short-Selling with the O'Neil Disciples: Turn to the Dark Side of Trading by Chris Kacher, Gil Morales

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CHAPTER 10

Templates of Doom: A Short-Selling Model Book

In November 2013, Magnus Carlsen of Norway became the second-youngest World Chess Champion in history when, at the tender age of 22, he defeated then-reigning champ Vishwanathan Anand. Carlsen began his chess career as something of a child prodigy, giving former champions and chess “giants” like Garry Kasparov (who still holds the distinction of being the youngest World Chess Champion in history) and Anatoly Karpov serious runs for their money when he was as young as 13, and attributes a large part of his success to his phenomenal memory. At the age of 7, he had memorized all the countries of the world and their respective capitals. As an adult professional chess player, he attributes his meteoric rise to the top of the chess world to his ability to memorize and retain mental images of chess board positions from games between prominent chess players of the past, both recent and long ago. He can recall these positions and the moves that followed, and this gives him an edge when faced with similar positions in his own real-time games.

In the same way, studying and memorizing the chart patterns and positions of stocks that served as outstanding short-sale targets from the past can give one an edge in recognizing when a major short-selling opportunity is at hand. We have already covered a number of real-world short-selling examples in previous chapters, but this chapter represents what I view as the real meat of the book in terms ...

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