What's up everyone? All right. So in this episode, well, you know me. My name is Ross Cameron and I'm a long biased Trader and sitting next to me is I'm Chris and I'm a short seller So Today we're going to talk about the difference between going long and going short. All right.

So let's jump into this long short episode: I don't really like, you know, like catchy name for it. It's just just the name of the episode. We'll come up with a name later. So I think the topic here is um, long and short and why don't we? Why don't we start this by uh, you telling me a little bit because a lot of people you guys already know you know my strategy I traded alongside? You know how I trade.

So tell me a little bit about why you were attracted to trading to the short side versus sort of jumping on the momentum and training the long side. What? what? Drew you to the short side? Sure, Absolutely. And I started Trading long when I first started trading. um I think what eventually drew me to shorting was as I was, uh, trying to pick the stocks that I was trading each day.

I I felt like I spent a lot of time trying to pick which stock was going to be the one that was going to make the next move. Yeah, and I really struggled with that because I jump in a lot. you know I'm a really active Trader I like trading actively and I would just jump in a lot of stocks I went nowhere and I'll take small losses or just sit there and I was getting really frustrated. So what I noticed is um, you know after a stock had made a big move, right I'd be like, well, this is the one you know I'm not trying to figure out which stock is going to make the Mexican move anymore.

Now it's okay. Well this could be a good short right? See that that is so that that like explains how I started trading in so many ways because I would use scanners and I would see these stocks popping up and I'd be like oh, do I jump in this I don't know do I jump in this I'd maybe jump in five of them, none of them would go I'd lose on all of them I was like oh man, what's going on and then finally one starts to go and then next thing you know, unless you chase it, you've like missed the move right? and you're like I've missed the move right? But now of course you can short the way back down. I can short the way back down. Now they don't always go immediately right back down.

So yeah, a lot of it became developing a strategy and learning as much as I could about short selling to prevent me from getting stuck in a stock that's going straight up Yeah, right. So a stock that's making a big move, you know which is the one that's going to continue, which is the one that's likely to fade. So you know. the strategy became more about optimizing my timing and position and sizing.

um, my entry prices and all that. Uh, to to get the best shorting opportunity right, to find my risk. and uh, you know, go from there. I'm having this kind of vision of of the ocean right now and I'm thinking of the Waves right? And so you have a stock that's got these big waves going up.

like let's say like 10 15 foot waves. We've got a big range. This is a stock really ripping. You've got big waves up, but even on something that's moving up, you have these correction periods right? And they can be short windows where you have to move up and then you have the leg down which could be the formation of a bull flag, right? And that can be the opportunity if you're scaling in short to then cover as it's coming down to that support be all out and then you know you've got the next leg up and then you're waiting for the next kind of wave.

back down. Absolutely. So you're really like kind of trying to. And you're not just so.

I Understand, you're not like going into one entry, like trying to pick the top. You're slowly scaling in on the top of those waves, right? correct? Yeah, So for the most most part, I'm not trying to pick that top I'm scaling in size and trying to get a good average price for when it does wind up reversing at least in the short term, right? Um, I do have some setups where I'll have a little more conviction that I feel like we're pretty close to the top. Okay, uh, where I'll hit it with a little more size. Okay, but still.

Yeah, you know I need to give myself a little room right to develop a better price. So if we had a stock that was approaching like the 200 moving average and was already really extended on the five minute chart, it was. you know, way above V web and everything else. something like that might be a set of three and say okay, I've got a little more conviction that we're probably this probably is the top of this wave and we may not just pull back for like the leg down.

This might just be like an all-day kind of correct, like trickle-down fade. Yep, you've talked about how you are a bit more of a scalp. Trader So you're you're short selling, but you're not like swing trading these short side your yours. you're scalping right like you.

and I Today we both traded the same stock and we're both green on it right? I was trading the Le and actually yesterday we both traded the same stock and we were both random. We both lost that. so we were both trading the I was trading the leg up. you were trading the leg down and the one that we traded yesterday just happened that.

It was very choppy, right and confusing and so we were both. Clear Directions Think about this ocean where you've got very small waves. so we need the big waves to give us the range. It's a little more forgiving when we have the big movement, right? You've got bigger range, you've got more opportunity.

So there's sometimes this belief that oh, we're in a bear Market Uh, that must mean it's great to be a short seller. Would you say that's true? I would say that is not true I Think it's very difficult to short in a bear Market Because we don't have as many stocks moving, we we don't have as much range, right? So we can be just as limited as everybody else because we don't have as much movement. You need the volatility? Yeah, especially for my strategy because I am, uh, you know, scalping the front side momentum to the short side. I'm not looking for something to fully fade or something that's had a run up for four or five days in a row now.

I'm looking for that big first red day to get a big move. Um, so yeah. I Need stocks that are moving up and and retracing one of the things that I used to say. um I Used to sort of believe that reversal trading was one of the easiest strategies to learn and I used to say like look, if you have a stock that's got five green candles in a row in the five minute or something like that five to ten green candles in a row and I would scan for stocks at consecutive green candles, minimum was five.

So when you have a stock that had eight consecutive green candles I just start looking at it for where's the reversal Sure Now of course in those days I didn't have availability of shares for most small caps and they didn't have enough range usually either. So I was trading that on large caps and inversely, if we had a stock that had five consecutive bread candles I was looking for the first pound to go green for the bounce and I always at that time felt it was easier to be a reversal Trader because you didn't have to chase it, you just waited for that obvious sign of you know, oh, curling it rolling over. Um. However, and and while I did find that I had a pretty good profit to loss ratio on that because you know usually you can keep a pretty tight stop and then when it drops you can get a nice reversal I did find that I never had really very big Winners and that kind of beat me down a little bit because then occasionally I would have the one where I got squeezed and next thing you know it's just continue to go and you're like oh man, are you serious like it's up a dollar a share I should have gone long? Yeah right.

So I I think for some Traders reversal trading uh counter Trend trading both shorting something that's strong and buying something that's weak can feel a little bit easier to read. But then what are some of the challenges that you face with being on the short side? Yeah, I mean especially on small caps? I would I would say that uh, you know we experience a lot of the same difficulties, you know? um, one if if I didn't get in with a good entry and I missed the move, you know and something's starting to dump, you know? I I don't want to feel like I'm chasing I'm so contrarian that you know I kind of want to get in before it makes that movement to the other side right? So once it already does, make a big flush or dump, you know I'm already at that point I feel like I'm chasing and then the bounce is coming already right? You know that that flush long that we talk about? That was a problem that I had with reversal trading as well. I I would wasn't scaling in I was waiting for the first candle to go I was watching five minute charts and then on the one minute I was waiting for the first candle to go green for a dip, for a bottom rehearsal, or the first candle to go red. but sometimes these mid or large caps would be like 70 Cent candles.

so I'd I'd be like oh, this does still have another two dollars of room but I'm in like you know, 70 cents off the high, sure. and then the times where I would start just sort of scaling in as it was going up I had a hard time with that because I feel like I'm just shorting something that's like a moving train right? and I don't I had a hard time as a beginner really reading like is this the right spot to start shorting? You have some of these stocks that go parabolic that go up four, five, six, seven, eight, ten dollars a share, right? And the stock doesn't always go parabolic immediately. There's almost like this fake out uh Peak before it. sometimes.

where are you thinking okay, you know it's starting to roll over a little bit, you get short and if you don't cover in time that that parabolic movement can come on very quick. Yeah, it just starts grinding and then boom. So do you have a set of rules of maybe the type of stocks that you would avoid because they maybe have a little bit more Wild Card Risk of going parabolic? Absolutely Okay, so what's that and it's really, just, uh, you know, something that might be a little lower float for sure is definitely something along. More careful of of something that's SSR short sales Okay, I'm wary of easy to borrow stocks also.

Okay, yeah, I mean well. it's nice enough to pay for locates. One of the issues that I think we see is a lot of people will jump in because they don't have to pay for locate. so we have a lot of people that aren't usually shorting.

uh, and they'll short the stock because it is easy to borrow. so they'll get in a little early too early. Premature. And then they're having a market order cover right? And then that's Fuel And then we'll see a massive squeeze and these easy to bottles that'll also, uh, just tend to grind up slowly without taking a breath, right? See that a lot as well with the easy to borrows.

Yeah, those, and that's funny. Those Grinders are hard for me to trade as well as a breakout Trader because they're not really like they're not pulling away. So I I Feel like as a breakout? Trader To the long side: I'm looking for. you know, entry at the half dollar and a 15 20 cent move and grinders don't really do that.

but then if you're shorting into strength, it keeps not giving you that reversion. Yeah, you don't get the chance to cover really. And by the time if you're not patient with your sizing, it's just gonna. The average price is gonna get far away from you.

So what can start to happen is that curling, that sort of grinding? and then you get that sort of Ascension where it just starts to pull away and that's the the movement that we all hear. Yeah, Short. So yeah yeah yeah because I could have gotten out, you know, 20 cents ago. um I Probably haven't defined my risk as well because it is kind of grinding a little bit.

I'm a little comfortable adding right because it's not moving away from my price too fast. I'm not getting nervous. Yeah, so I tend to hold those a little longer and it can be dangerous. So you know one of the reasons that there's a couple reasons that I don't short very often.

One of them is, uh, for a long time I've been trading in a retirement account. You cannot shorten a retirement account, right? So no shorting retirement accounts. One of the second is availability of shares to borrow a lot of your regular. Brokers like TD Ameritrade E-Trade They don't have shares available to borrow of most small cap stocks.

There are some Boutique Brokers out there, but some of them have higher minimum balance requirements and then even if you find the shares available to borrow, it's the cost of paying for it. So all of that for me kind of created a little bit of an obstacle where I felt like as a beginner Trader when I was getting started, it was just too difficult to short small caps and in a lot of ways that the strategy I've TR that I trade I kind of continue to sort of cater to beginner Traders because those are so many of the students that are part of our program, right? So I've wanted to trade a strategy that is relatable that they can understand which is why I'm not trading like tests on Amazon But it's also why I'm a little bit more cautious on the short side. Sure. So how do you kind of overcome those obstacles or what I see as maybe obstacles.

Yeah, and they are obstacles you know to be fair. Um I think for me I look at it as the cost of doing business and the price I pay for my Edge Okay, right so it is where I see the edge in the market is where I found consistency and uh, it just feels natural to me, you know. and I feel like when you find a strategy that just feels natural, it feels like it aligns with your personality. Yeah, um, you know it makes things a lot easier.

Yeah, so that's true. It's easier than also to overcome the hurdles because it just feels like a good fit, right? Yeah, and and not abandoning When I get a bad trade or a series of bad trades, or you know, a bad week or even a bad month, you know, I still have a lot of conviction and faith in my strategy over the long term. So I look at it as the cost of doing business and uh, you know the fees do add up. but uh, as long as I'm profitable and doing well, you know I was previously a business owner and I had expenses is you know, and just like that business, this business has expenses for me as well.

Sure, Okay, that makes sense. Now what about uh, and people ask me this all the time. Ross You're trading the the Upside move? Why don't you flip and go short off the top? So do you flip-flop I Do Not flip-flop I Don't flip-flop No. I Find it very difficult because I'm looking for particular setups.

Yeah, and uh, when I'm sitting and waiting for my setup. Yeah, you know I don't want to be distracted with trying to figure out other setups, especially one that's completely inverse of what I'm used to. Yeah, it's funny with us trading here side by side. we're talking and watching the same stock and I'm trading it on the move up and I'm saying okay I like this micro pullback and this and that and I can tell you're looking at it and you're thinking about okay, when is this going to be a Shore and it's really hard I think I think it'd be very hard to keep both those perspectives in, you know, in the front of your awareness at the same time being because sometimes when I'm maybe scaling out of a long position, you might be starting to scale into a short position.

so some there's some overlap there of periods where we're both in the trade right and then that's where you. If you were going to try to flip flop, you'd have to choose the point where you go totally flat, long and then go totally unsure which is not how you sure? no, and that's not how I Trade law right? I don't go completely flat. I'm scaling in I'm scaling out so where do you draw the line right? And one of the things that I I've noticed in myself: I've tried to flip-flop sometimes there'll be a stock that's easy to borrow and I'll say oh well I won't trade in my retirement account I'll trade in my main account I'll go ahead and try shorting this and I I find that if I if I lose on it short, there's a quick Instinct just to be like, cover the short flip long and then if I lose on it long and short I Feel just so frustrated, right? Absolutely. And there's another Dynamic too of the scaling in process or averaging in and averaging up.

Yeah, I Feel so much more confident comfortable averaging up and it tends to work out a lot better for me. yeah, with the fade than it does to the long side, that's interesting. Essentially, you know I have more faith in a stock taking a flush or at least breaking a certain level. More so then I have the faith of the stock will reclaim or continue to go up.

Interesting. So if I'm averaging uh down as a sock is, you know a big momentum stock has just made a big move. it's coming down and I'm averaging in. you know I Feel like just that always is exacerbated my losses when I tried to trade long in the beginning.

Interesting, and my experience on the short side has been very different. Yeah, yeah, there's definitely with the momentum. Um, when when things lose their steam, they can. Really, they can really fade hard and averaging down on a long position that's going down against you.

Um, I mean the thing is, if you were trading a reversal that was selling off like 40 and you were starting to accumulate, then I think averaging down in that context for the curl back up would be more in line with the way you're trading right which is trading the extremes. But for a Trader you know, like me, that is buying mid-range and then it goes up and then immediately knifes down trying to average down on that when you're in this range and now it's just showing you this nasty false breakout that's a really hard place to average it to be averaging down. That's a place where a lot of times your losses are going to get bigger, right? It's so important that it stays strong that it keeps hitting the scanners that it keeps moving high. This, the chart keeps looking good and as soon as it's like a broken chart, then you know the shorts are really kind of like in control.

I Mean it's just because as long as they're going to look at them, they're like no, I can't trust it. So if you're trapped along too high, that's when I think you can get that long fade where people just kind of keep throwing in the towel, throwing in the towel, and reality sets in that this stock probably doesn't make sense being up 200 on the day, right? So those that's when you get the all-day fade, Um yeah. I I The flip-flopping is a tricky one. I've seen some Traders really the uh, go like Full Tilt with the flip-flopping yeah, where they're just like trying to catch both sides of the move, getting more and more and more and more frustrated.

Yeah, so what would be for a beginner? Trader that's thinking about dabbling on the short side or is maybe wanting to learn that strategy? What? What's some words of wisdom that you would share with them? Yeah, absolutely for myself. I Found you know two of the most influential uh aspects of My Success where one was sticking to the one strategy and sticking short not trying to do both like we had just talked about. yeah, um, but also sticking to a particular strategy and setup. You know it's easy to get convoluted with so many setups and so many different patterns.

Um, which you know can be confusing to start right. But the second aspect of that is that we lose track of the variables. You know what is working, what's not working? When you're doing all these different patterns, different trades and setups, you know, it became a lot easier for me to focus on and optimize a particular setup. Interesting, Yeah, so that was one main aspect of it.

Yeah, that's a good one. I Think that and you don't trade multiple stocks at the same time. Usually right? Sometimes I will when it gets really hot. I will get into multiple positions.

Okay, but for the most part, I'm sitting around waiting for one. Yeah, as of late? Yeah, but if there's a couple things moving, I will take more than one? Yes, Okay, yeah. I always find it difficult to focus on more than one, but I guess I'm the same way. My kids also tend to pan out a little longer than yours.

Yeah, yeah, yeah. so I could put orders in I often do put in profit taking orders I tend to not put in a hard stop, but I will. Yep, uh, if I have too many stocks going on more than one. Yep.

I'll put in a hard stop, and I'll put in some orders just so. I Don't miss a good flush. Now, theoretically, what is your maximum downside on a short? Uh, I Mean technically it's unlimited. it's infinite, right? The price can go up infinitely, right? And that's the problem we saw HKD go from like 40 to 2500.

Which is, you know, And it's infinitely more risky with a small cap because these prices are so low, right? So if you think about it, a two dollar stock, what's your best potential it goes to zero. Yeah, so you're only losing two dollars eight to twelve to Fifteen So 10x multiple risk margin calls owing your broker more than what you have? Yeah, Yeah. So so there's really There's real risk. Uh, with shorting.

Now, because you're shorting and you have to buy back potentially at a higher price, there's also going to be different margin requirements to short, right? I Mean you can't put 100 of your account into a short only for it to go up and then immediately be pushed to a margin right? I Mean even if it's only a ten thousand dollar? Margin Call just to settle the trade because you have to buy it back for a higher price than you have the buying power for? Yep, So then your broker does it. Uh, do they automatically require like a certain amount of of uh, buying power to take a trade? Like basically, like they restrict you so you have to. They do. Yeah, and it's different.

Uh, you know, different. Traders have different risk? sure settings. beginner Traders will have tighter risk settings Yep. Um I really haven't changed my risk endings all that much.

So let's just started on the the tighter beginner settings I am just to keep it. so keep keep me honest? Yeah, yeah. I Really? I I don't want to get into trouble with uh, you know, with how risky a short can be. So and I've been able to make really good money? Yeah, with these tight risk settings.

Yeah, so I said hey, you know why am I going to mess with it? The other thing that's changed is obviously the equity in my crown has grown significantly since I started right? So I keep a decent amount of money in there. So I stay cash? Yeah! and I really don't trade on margin because of it. Right now, our metrics vary a little bit. Um, although I suppose I'm probably making more money I've been doing this for a while.

Yeah, um, for sure you have much higher accuracy than I do. My accuracy right now is about 69 to 72 percent. It kind of is right in that range. You've been in the 90s.

I'm usually well into the 90s. That's incredible. I've been well over 95 over the course of a month. Right over the course of 200 trades.

It's incredible. Um I have traded 176 consecutive green trade profitable trades in a row. And what's your average hold time? would you say 12 minutes? 12 minutes? Yep, those are relatively quick scalps. Yeah, so you're you're shorting as they're going up and then you're covering us are coming back down.

Um, but but but there is a but my profit to loss ratio is about one to one about. Uh I don't know what it is in cents per share, but it's one to one. I Think it's like about eleven hundred dollar winners and about Eleven Hundred Dollar losers. and a lot of that is.

you know it's just it's just one-to-one That's kind of what it is for. I Think scalp trading momentum to the long side. We're often buying high so we're selling a little higher. Don't usually get huge huge wins I mean occasionally I do.

But uh, sometimes I get big losses. your profiless ratio is drastically negative. Yeah, because every now and then when you get the one that blows you out, it can be a big loss. Yeah, so if something sounds too good to be true, Yeah, it's usually too good to be true.

But but it's your credit. you're verified profitable. Yes, it is profitable. It is a profitable strategy.

It's just that there's this component so you know and and some of it. I Think you could probably if you wanted to make the conscientious decision to keep tighter stops which would then, uh, increase the number of losers you have, Correct, but those losses would become smaller and so your profit loss ratio would decline as your accuracy sometimes. So you know it. In some ways, some traders who can be a little bit more stubborn or who just have more conviction can have very high accuracy because they hold things that are red that aren't working right away.

but in the end they end up working except for the couple times they don't and then they have huge losses, right? So, and that happens quite often. I mean a lot of my great, my best trades start off red right because I'm shorting into strengths, right? right? And they're still strong when I'm taking a position right? And that's very different from Trading The long Side: When you're trading the long side buying breakouts, you want to be green on that trade within the first like 30 seconds. That means you time the breakout correctly. I Mean if you're buying a dip, you want to bounce spring off if you're buying a bounce off V Web dip off V-wap a break if you want.

These are all break bounce spring type of breakout traits. It needs to work almost immediately, so we don't really have to condition ourselves too much to be comfortable holding red. So I think momentum Traders tend to as soon as it goes red. It's like maybe average down like once.

but if it doesn't go from there just like cut it right. so we have We we were pretty. you know, ruthless about just cutting those losses. Those of us who trade Momentum who have become successful first, but with you, your strategy has required you to be comfortable being read first.

probably I'm the majority of your trades. Yes, because once it starts working, it starts working right. That could take a while because if you think about it, you know we're experiencing momentum on the front side. it'll hit a level and for whatever reason, it will start to form a little bit of a top right and we'll trade up there for, you know, five.

Ten minutes, maybe longer sometimes. Um, and that's where I'm starting to build my position. you know, into that strength and hopefully getting filled on the ask. Um, and normally it's in this channel that can go red for me for a while.

I might even test those tops, right? Uh, break out, come back into that range, right? and uh, so that leaves a little bit of emotional gray area like for me. this. as soon as my P L is read, I'm just like uh-oh probably time to cut it I mean again, it depends on the market, but generally speaking, you you have. you were comfortable being read, but then there's a gradient there where it's like, okay, I'm getting a little more red than I like right, you know.

But I'm used to being red. That's okay. and now I'm like five times more red than I'd like. but but then it almost looks like an even better Shore right? because now it's even more extended so when it does reverse, so then so I can see how you can have that temptation to kind of just keep adding and I've done the exact opposite when I tried to buy huge washouts.

Yeah, and I'm looking for a bounce and I'm like, okay, this looks really good at six and then it halts down and it's at five and I'm like, well, it looks even better now at five right then I add more at four and then I'm like oh my gosh, did I just lose 50 on that trade? Yeah, like this thing just keeps going lower. The market can be irrational, so stay a lot more irrational and we could stay solvent as yeah. right? right? So yeah. and and to me, it really becomes just a giant math equation in my head.

Okay, you know, I'm thinking, you know if I add up here, you know what is my price going to be? How far back down do I need to get to get that even to get to profit? Is it worth it? Should I stop out now and reposition? Yep, you know. and these are all the variables that are going through my head at any given time in a trade. It's a lot to think about. Yeah, and like anything, the more I experienced it, the more I watched it, the more different scenarios I've been in the better I got yep so well.

I'm sure you guys have a lot more questions for. Chris You'd like to learn more about training the short side and what I would say is make sure you check out more episodes right here and come over to where you're trading because Chris is trading every single day side by side with me and he's got great ideas, he's sharing and you know we're all in this together. So whether we're long or short, you know this is part of the journey we we learn. together, we trade together, we do all right.

So thanks for tuning in I Hope you check out some more episodes on the channel. We'll put some links down in the description and we'll see you for the next one. Hey I Want to thank you for watching this episode I Hope you really enjoyed it. This channel has crossed over 1 million subscribers and it's thanks to viewers like you.

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