It seems like if it’s a good short, the price travels too far down before an uptick occurs. Any ideas on how to deal with this p
A: As a trader, I believe in free markets. In my opinion, the uptick rule for stocks (there is no uptick rule in futures) is one more regulation that reduces market freedom. Your observation is correct: Stocks can get away from you on the short side if they don’t uptick. In general, less liquid stocks and more volatile stocks tend to move further without an uptick. Therefore, if you are having problems getting your shorts off (no pun intended), you might try to focus on more liquid or less volatile stocks–or change your methodology for thinly traded and volatile stocks. For example, you might find it easier to enter on a pullback instead of a breakout in these stocks. Even though shorting stocks does have its pitfalls, you must make it part of you trading regimen to survive in the markets long term.
–Dave Landry