We want to look at shorting for a moment because here we have something that is quite profitable if done right, but can hang you out to dry if not. As you know, one of the problems with shorting is the "uptick" rule, where you literally have to wait on an uptick to jump on a short (this means the stock must have advanced some.) That's why you rarely, if ever, get the short filled right at the level you want. For instance let's say you like XYZ short below the $50 level. Well if it's sinking like a rock, and blasts belows 50, 49.95, 49.90, 49,85 and "then" finally bounces, you might get filled at say 49.90 or so.

This isn't really a problem, it's just something to keep in mind when searching for a short. You won't get that short right at the support line most times. But you can try and even out he odds in your favor. How? Suppose you love a short on XYZ at $50 because every time it's lost the $50 level, it sinks like a proverbial rock. Well if it plunges under 50 and you get no uptick to short, don't despair. If you sit tight, chances are the stock is going to bounce and try and regain that 50 level again. This is usually a good time to place that short.

Suppose it does fade 50 and hits 49.87, then starts bouncing. Yes, it's possible it reclaims 50 and keeps heading higher, but it's more likely that 50 level will now be a resistance level and if you short on the last hurrah push to hit 50, say at 49.95 or 96, chances are good it will not make the breakout and will fade back down. That failed reclaim attempt is generally the best short you can have since the market senses it couldn't retake 50 and lets the stock fall.

Now, ETF's don't have this problem and they are easier to trade on the short side. Take the BBH for example. It is very volatile and since you don't need an up tick to jump on it as a short, it's often fun to short it the moment it loses a significant support line. Even if it bounces shortly after, you can often pocket 30 cents or more on the initial fade and for the daytraders out there, that's fine money. If you are "new" to shorting stocks, it's a recommendation that you start with ETF's to get the hang of it. It will make shorting stocks much easier.