Shorting is dangerous. Here are some good trading lessons that will teach you how to short.

Shorting Strategy - Learn how to short a stock in three easy steps by Amateur-Investor.Net

Shorting a stock is the exact opposite of buying a stock. When you short a stock you are hedging your bets that the stock will go down in price unlike when you buy a stock and believe the price will go up. In order to short a stock you must have a margin account with your brokerage firm. In addition you also have to short individual stocks on an up tick but can short the Exchange Traded Funds (ETF's) on a down tick. Thus as an investor you have more of an advantage shorting the ETF's than individual stocks.

Many investors try and short a stock way to early as they believe the stock price is way overvalued. However many times a stock that is overvalued in price may become even more overvalued especially when the stock market is in an extended upward move. The proper time to short a stock is after it has encountered its first strong downward thrust and bounced for a short period of time which sets the stage for a second move to the downside.

There are a few things as an investor that you can look at to determine a stock target price. These include previous resistance zones, longer term moving averages and Fibonancci Retracement Levels.

Let's look at an example. Amazon (AMZN) completed a longer term Cup over a 2 year period and then developed a 4 week Handle (H). In this case the projected longer term stock target price for AMZN would have been in the upper 40's which coincided with its longer term 38.2% Retracement Level calculated from the early 2000 high to the Summer 2001 low. Notice that AMZN broke out of its 4 week Handle in April of 2003 and than rallied up to its 38.2% Retracement Level (point A) where it began to encounter some resistance. One of the hardest things for investors is to determine a stock target price. Once a stock does breakout from a favorable chart pattern the question is how high will it go? That is usually a very hard question to answer.