What is the specific concept of short selling?

Thanks for the invitation. Short selling—also known as 'selling short' or 'bearish trading' (in English, 'Sell Short' or simply 'Bear')—is what gives rise to the terms 'bear market' and 'bull market' on Wall Street. A 'bear market' refers to a market environment favorable to short sellers, whereas a 'bull market' favors long-position traders. In essence, short selling is fundamentally a risk-mitigation mechanism. For example, suppose you hold shares of a stock at ¥100 per share, but anticipate that its price will decline sharply over the next week. You could execute a short sale: sell the shares immediately at the current market price of ¥100, while agreeing to repurchase an identical number of shares one week later at whatever the prevailing market price may be. If the stock price falls during that week, you not only avoid losses on your original long position but also profit from the price difference. Conversely, if the stock rises instead of falling, your cost basis increases—buying high and selling low results in a loss. So why do many people associate short sellers and 'bearish' institutions with negativity or even villainy? The reason lies in the fact that professional short-selling firms rarely employ shorting solely as a hedging tool. Since short sellers profit directly from price declines—and since falling prices allow them to acquire more shares for less money—such firms abroad often adopt aggressive, even ruthless, tactics. Typically, their strategy unfolds in five steps: 1. First, they accumulate large positions in the target company’s freely tradable (i.e., floating) shares.

What is the concept of shorting stocks?

Having observed numerous liquidations ('margin calls') in the cryptocurrency space due to short positions, we know that such liquidations stem from just two root causes: first, entering short positions at inappropriate timing; second, over-leveraging—or holding excessively large positions relative to available capital. The original poster here shares his personal approach to shorting—offering it as food for thought. First, select a suitable asset for shorting: begin by checking whether the weekly MACD indicator shows a bearish crossover; then examine whether the weekly candlestick chart places the price above or below the middle Bollinger Band. Assets trading below the middle band tend to yield higher success rates for short entries. Once a promising short candidate is identified, switch to the daily chart. Initiate your initial short position only after the daily candle closes below the middle Bollinger Band. For this first entry, allocate only 10%–20% of your total trading capital. Next, wait until the following day’s close. Observe whether volume has expanded or contracted compared to prior days, whether the daily candle is a small red (bearish) or small green (bullish) candle, and whether price has re-crossed back above the middle Bollinger Band. If volume remains unchanged (i.e., no surge), the candle closes bearish, and price stays below the middle Bollinger Band, you may add another 10% short position. Otherwise, promptly close your existing short position. Repeat this same assessment process on Day Three. Once your cumulative short position reaches 70% of total capital, suspend further additions. Hold your established short positions steadily, and begin gradually closing them in batches once the daily chart shows accelerating downward momentum.

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