Should You Sell Short?

First rule in short selling: Don't sell short during a bull market. Save the short selling for bear markets. Your odds will be a little better. Never sell short a stock with a small number of shares outstanding. It's too easy for market makers and professionals to run up a thinly capitalized stock on you. This is called "short squeeze" meaning you could find yourself with a loss and be forced to cover your short. It does not feel very good when you are in that scenario. It is safer to short stocks with an average daily volume of over 2 million shares.

Do not short an advancing stock just because its price seems high to you.

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