Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market

6.4. CONCLUSION

As we've seen in the numerous examples in this chapter, short-selling can provide a source of quick profits in a bear market. However, playing the short side of a bear market is inherently more risky than playing the long side of a bull market because bear markets tend to have sharper upside "jerks" within their overall downtrends, which can run in short-sellers who come in late on a stock's decline. Timing your short-sales properly, waiting for that proper window of opportunity to develop in conjunction with a breakdown in the general market, is even more important than when buying stocks on the long side of a bull market. Investors who have little experience short-selling should start out with only small capital commitments relative to their overall portfolio value, say 5–10 percent maximum. As one gains great experience one can decide whether one is comfortable taking larger positions. Stay smart from the start!