New Topping Formations List and New Entry & Exits
Selling short is a trading style few retail and technical traders use even during major Bear Markets. The reason is because it is often far more challenging to understand the technical patterns of the downtrend which include 5 Tips for Selling Short Success.
How stocks move down, where support levels create bounces or rallies, and how to know when to enter and when to exit a sell short trade for maximum profits is a challenge for most traders.
Here are 5 Tips for Selling Short Success:
1. Learn to recognize the new topping formations which are:
a. Flat tops
b. Flat Shoulders variation of Head & Shoulders
c. Rounding Tops
d. Sheer Cliff Tops
e. Ripple Tops
Topping action has changed dramatically in recent years due to the new orders that are used by Dark Pools, High Frequency Trader activity, the return of the Professional human trader to trading floors, changes to regulations for the Buy Side and Sell Side Institutions, new Stock Derivatives, and the fracturing of the Market Venues for processing orders. These newer tops are not in the older Technical Analysis books, because were not occurring on markets before 2010. These new tops are often mistaken as continuation patterns rather than a top, which puts traders at higher risk of a whipsaw trade.
2. New types of Entry and Exit Signals for Selling Short include the following:
a. Inverted Reversal
b. Black Sandwich
c. Black Nesting
d. Bounce Exhaustion
Candlestick sell short signals have changed, due to the variables available to the Professional Traders for where and how they place sell stop orders. Institutions are using Stock Derivatives rather than Swaps and Exotic Derivatives or Hedge Funds. This makes the sell side more active. Controlled bracketed orders are used by many professional Market Participant Groups now.
Martha Stokes CMT
TechniTrader technical analysis using StockCharts charts, courtesy of StockCharts.com
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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