{"id":10064,"date":"2022-02-21T04:25:10","date_gmt":"2022-02-21T09:25:10","guid":{"rendered":"https:\/\/morpheustrading.com\/blog\/?p=10064"},"modified":"2023-01-23T12:09:25","modified_gmt":"2023-01-23T17:09:25","slug":"fb-swing-short","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/fb-swing-short\/","title":{"rendered":"A Simple Strategy to Profit from Short Selling a Weak Stock Market"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large is-resized is-style-default\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/new.morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/AdobeStock_277330685-1024x677.jpeg\" alt=\"Sell short imag\" class=\"wp-image-10180\" width=\"718\" height=\"474\" title=\"\" srcset=\"https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/AdobeStock_277330685-1024x677.jpeg 1024w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/AdobeStock_277330685-300x198.jpeg 300w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/AdobeStock_277330685-110x73.jpeg 110w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/AdobeStock_277330685-768x507.jpeg 768w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/AdobeStock_277330685-1536x1015.jpeg 1536w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/AdobeStock_277330685-2048x1353.jpeg 2048w\" sizes=\"auto, (max-width: 718px) 100vw, 718px\" \/><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/fb-swing-short\/#Tired_of_losing_money_buying_stocks_in_a_weak_market_Heres_a_simple_strategy_to_start_profiting_from_swing_trading_the_short_side_of_the_market\" >Tired of losing money buying stocks in a weak market? Here&#8217;s a simple strategy to start profiting from swing trading the short side of the market.<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/fb-swing-short\/#Shorter_holding_periods_on_the_short_side\" >Shorter holding periods on the short side<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/fb-swing-short\/#Short_the_Bounce_Setup_10_gain_in_6_days_on_FB_short\" >Short the Bounce Setup: +10% gain in 6 days on $FB short<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/fb-swing-short\/#Keeping_the_riskreward_ratio_in_line\" >Keeping the risk\/reward ratio in line<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/morpheustrading.com\/blog\/fb-swing-short\/#Simple_summary_of_short_scan\" >Simple summary of short scan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/morpheustrading.com\/blog\/fb-swing-short\/#Take_it_to_the_next_level\" >Take it to the next level!<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"tired-of-losing-money-buying-stocks-in-a-weak-market-here-s-a-simple-strategy-to-start-profiting-from-swing-trading-the-short-side-of-the-market\"><span class=\"ez-toc-section\" id=\"Tired_of_losing_money_buying_stocks_in_a_weak_market_Heres_a_simple_strategy_to_start_profiting_from_swing_trading_the_short_side_of_the_market\"><\/span>Tired of losing money buying stocks in a weak market? Here&#8217;s a simple strategy to start profiting from swing trading the short side of the market.<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>Editor&#8217;s Note: We have just fixed the mobile view of this blog, which now looks equally great on desktop and mobile.<\/em><\/p>\n\n\n\n<p>As trend traders, the top rule of <a href=\"https:\/\/morpheustrading.com\/best-swing-trading-strategy\" target=\"_blank\" rel=\"noreferrer noopener\">our trading strategy<\/a> is to continually put the odds in our favor by trading in the <em>same direction as the overall stock market trend.<\/em><\/p>\n\n\n\n<p>As such, Morpheus focused exclusively on Buy setups when the Nasdaq Composite and S&amp;P 500 were in confirmed uptrends throughout 2021.<\/p>\n\n\n\n<p>However, with the Nasdaq living below its 50 <em>and<\/em> 200-day moving averages in recent weeks, we have flipped to <em>selectively<\/em> swing trading the <a href=\"https:\/\/www.investopedia.com\/terms\/s\/shortselling.asp\" target=\"_blank\" rel=\"noreferrer noopener\">short side<\/a> of the market.<\/p>\n\n\n\n<p>In this article, we show you our simple &#8220;short the bounce&#8221; strategy to help you profit in a weak market.<\/p>\n\n\n\n<p>Continue reading to discover how our recent <strong>$FB short trade quickly led to a +10% gain<\/strong>&#8211;with minimal and clearly-defined risk.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"shorter-holding-periods-on-the-short-side\"><span class=\"ez-toc-section\" id=\"Shorter_holding_periods_on_the_short_side\"><\/span>Shorter holding periods on the short side<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As with the long side of the market, we run several, rule-based <em><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Wagner Daily<\/strong><\/a><\/em> stock scans to locate low-risk swing trade entries on the short side.<\/p>\n\n\n\n<p>When scanning for Buy setups, we look for gains of 20-40% or more, with an average holding period of several weeks to months (depending on strength of the trend).<\/p>\n\n\n\n<p>But when scanning for Short setups, we target<strong> smaller gains of 10-20%, with a shorter average holding period of just one to three weeks.<\/strong><\/p>\n\n\n\n<p>Markets tend to fall much faster than they rise because <a href=\"https:\/\/www.investing.com\/analysis\/the-4-most-dangerous-emotions-for-stock-market-traders-133532\" target=\"_blank\" rel=\"noreferrer noopener\">fear is a more powerful emotion than greed<\/a>.<\/p>\n\n\n\n<p>As such, we typically focus on a much shorter time horizon when trading on the short side.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"short-the-bounce-setup-10-gain-in-6-days-on-fb-short\"><span class=\"ez-toc-section\" id=\"Short_the_Bounce_Setup_10_gain_in_6_days_on_FB_short\"><\/span>Short the Bounce Setup: +10% gain in 6 days on $FB short<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>We recently alerted <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\"><em>Wagner Daily PRO<\/em><\/a> members in the Swing Trader Room of an ideal short setup in $FB (Meta) after a two-day bounce off the lows.<\/p>\n\n\n\n<p>Our recent short setup in $FB was a simple trade setup that looks for weak, downtrending stocks that can only manage to bounce for 2 to 3 days before resuming their downtrends.<\/p>\n\n\n\n<p>$FB first grabbed our attention as a potential short candidate when the stock closed 26% lower in reaction to earnings on February 3.<\/p>\n\n\n\n<p>Normally, such a huge gap down would <em>not<\/em> immediately put the stock on our radar for short entry because massive gap downs often just chop around for a month or two while the stock price digests the move.<\/p>\n\n\n\n<p>But in this case, $FB continued selling off for several days <em>after<\/em> the gap down, before eventually bouncing.<\/p>\n\n\n\n<p>The $FB short setup entered our radar while scanning for weak stocks in a two to three-day countertrend bounce.<\/p>\n\n\n\n<p>We then shared details of the trade setup with <strong><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\"><em>Wagner Daily<\/em> <em>PRO<\/em><\/a> <\/strong>members in the chat room.<\/p>\n\n\n\n<p>The daily chart of $FB below shows the exact setup that led to our short entry point:<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/220217FBBLOG.png\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/220217FBBLOG.png\" alt=\"$FB daily\" width=\"691\" height=\"583\" title=\"\"><\/a><figcaption class=\"wp-element-caption\">Press image to view full-sized chart<\/figcaption><\/figure>\n\n\n\n<p>Point &#8220;1&#8221; on the chart shows the first day where $FB started to bounce after its huge gap down.<\/p>\n\n\n\n<p>Point &#8220;2&#8221; shows the stalling action and closing price near the intraday low (on the second day of the bounce).<\/p>\n\n\n\n<p>Notice that <strong>volume declined during both days of the bounce <\/strong>attempt (bearish).<\/p>\n\n\n\n<p>Point &#8220;3&#8221; shows the $FB short entry point, after the price fell below the prior day&#8217;s low of $226.70.<\/p>\n\n\n\n<p>The weak close at Point &#8220;2&#8221; is the key to this setup, as our short scan only returns stocks that have closed <em>in the bottom half of the day&#8217;s range.<\/em><\/p>\n\n\n\n<p>After triggering on the short side at Point &#8220;3&#8221;, $FB swiftly resumed its downtrend.<\/p>\n\n\n\n<p>$FB fell back to its prior low just one day later, then broke down to form another &#8220;lower low&#8221; last week.<\/p>\n\n\n\n<p>So far,<strong> $FB has dropped 9.7% over six days<\/strong> since our February 12 short call.<\/p>\n\n\n\n<p>This is in line with our previously mentioned goal of short setups&#8211;<em>a +10-20% gain within 1 to 3 weeks.<\/em><\/p>\n\n\n\n<p><iframe loading=\"lazy\" width=\"580\" height=\"680\" src=\"https:\/\/4966a6ff.sibforms.com\/serve\/MUIFAOyl4S5Qdajs7q3LemJKudDbMHB24p2SAorKuWWuauy3e1eFPtLgTh5BoPCh3XzIz3rZE_YyIqvc9IEl_xMkRg3MTlG0Zn5eqY3J2eKMjOE-jPuS43ZXewKssUaGt1kllR56wV2u1lBXoYfKSzEgeeTjLyjdSao87VmqsbDtgcy4jNwHMSzf0Rl346rIoBjtZwf-DX0V6tbn\" frameborder=\"0\" scrolling=\"auto\" allowfullscreen style=\"display: block;margin-left: auto;margin-right: auto;max-width: 100%;\"><\/iframe><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"keeping-the-risk-reward-ratio-in-line\"><span class=\"ez-toc-section\" id=\"Keeping_the_riskreward_ratio_in_line\"><\/span>Keeping the risk\/reward ratio in line<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Although we look for gains of +10-20% when trading on the short side, each trade is different. <\/p>\n\n\n\n<p>For example, the initial stop price on the $FB trade above was roughly 3.5% wide (above the high of the second bounce day).<\/p>\n\n\n\n<p>When trading in the direction of the trend, we aim for a profit target of at least 2 to 3 times initial risk (minimum 2:1 reward\/risk ratio).<\/p>\n\n\n\n<p>Accordingly, a decline in the 7-10% range (already achieved) was a valid profit target for $FB.<\/p>\n\n\n\n<p>After your short trade is showing a gain of +7-10%, you may then decide to exit the full position <em>or<\/em> lock in gains on partial size and continue holding the rest as long as the price continues trending lower.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"simple-summary-of-short-scan\"><span class=\"ez-toc-section\" id=\"Simple_summary_of_short_scan\"><\/span>Simple summary of short scan<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>When scanning for short setups in our <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\">daily trading report<\/a>, we only consider<strong> stocks greater than $15 per share, and with an average daily volume of at least 1.5 million shares.<\/strong><\/p>\n\n\n\n<p>These stocks should also be in a confirmed downtrend, with the 20-day MA below the 50-day MA.  <\/p>\n\n\n\n<p>Current price should also be below the 20 and 50-day MAs.  <\/p>\n\n\n\n<p>The short entry <strong>trigger is a move below the low of the second bounce day, with a protective stop placed above the high<\/strong> of the same day. <\/p>\n\n\n\n<p>The best short setups generally tend to follow through right away, and our initial stops our typically tight.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"take-it-to-the-next-level\"><span class=\"ez-toc-section\" id=\"Take_it_to_the_next_level\"><\/span>Take it to the next level!<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Everyone&#8217;s a genius in a bull market.<\/p>\n\n\n\n<p>You can basically throw a dart at a stock and make money when the Nasdaq and S&amp;P 500 are ripping steadily higher.<\/p>\n\n\n\n<p>But as the market has shown us in recent weeks, <strong>profiting in a weak market is a completely different game!<\/strong><\/p>\n\n\n\n<p>Want to learn how to score consistent trading profits in both up <em>AND<\/em> down markets?<\/p>\n\n\n\n<p>If so, be sure to attend our <strong>upcoming, live webinar with <a href=\"https:\/\/new.morpheustrading.com\/blog\/deron-wagner-podcast\/\" target=\"_blank\" rel=\"noreferrer noopener\">Deron Wagner<\/a> <\/strong>(founder of MTG), where he will share his <strong>proven strategy for swing trading on the short side<\/strong> of the market&#8211;<em>including inverse ETFs.<\/em><\/p>\n\n\n\n<p>Be on the lookout for our upcoming announcement in this blog soon!<\/p>\n\n\n\n<p><strong>You definitely won&#8217;t want to miss this special event!<\/strong><\/p>\n\n\n\n<p><em>Tired of losing money buying stocks in a weak market? <strong><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\">Become a Wagner Daily member now<\/a><\/strong> to start profiting from lower-risk short setups while stocks are trending lower.<\/em><\/p>\n\n\n\n<p><em>Trade crypto (or would like to)? <strong><a href=\"https:\/\/morpheustrading.com\/services\/crypto-picks\" target=\"_blank\" rel=\"noreferrer noopener\">Sign up for Morpheus Crypto PRO<\/a><\/strong> to learn how to start trading Bitcoin and other cryptocurrencies&#8211;the RIGHT way!<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tired of losing money buying stocks in a weak market? Here&#8217;s a simple strategy to start profiting from swing trading the short side of the market. Editor&#8217;s Note: We have just fixed the mobile view of this blog, which now looks equally great on desktop and mobile. As trend traders, the top rule of our [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-10064","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/10064","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=10064"}],"version-history":[{"count":25,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/10064\/revisions"}],"predecessor-version":[{"id":15638,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/10064\/revisions\/15638"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=10064"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=10064"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=10064"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}