Frequently Asked Questions

Short-Sale Set Ups
How do you decide to go in very heavy (up to 400% intraday) when shorting?

Q: I just have a general theory question on the short side and how you (Gil) would approach it. I know you tend to be a plunger and can go in very heavy at times. I'm just wondering how you decide when to go in very heavy (up to 400 percent intraday), or if you just send out a test position of say 25% or so. What factors in the general market or in certain patterns or volatility of stocks makes you trade a 150% percent position to say a 25% position. I have found through trying to learn how to effectively learn to trade, especially short, position sizing is tough to decipher. I understand the theory of adding to a short that is rallying up weakly and into resistance, but what makes you come after a stock super hard or 400 percent intraday or even 100 percent rather than throwing out a normal 25% position.


A: Instinct, a decent set-up, a low-risk entry point, a close stop, and a lot of courage! Sometimes you can sense the "cadence" of the market and a particular stock as it begins to break or as a rally begins to wane as well, but that's something that cannot be explained in mechanical terms. You also have to be persistent, as it can take a few days to catch the exact break, such as SINA's low-volume rally right before it split wide open in early June, and thus be willing to accept several small losses before your ship comes in, so to speak. I think doing this right requires a certain temperament and deep pockets, of which I have plenty. You also may just have to be a little crazy.

Published: Jun 17 2011