How to tell a correctly shorted stock versus a sho
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Posted On: 06/29/2017 7:27:02 AM
How to tell a correctly shorted stock versus a short attack bluff
To use poker terms to explain how you can determine whether a stock is shorted for good reasons or just a bluff.
If you believe you have a winning hand in poker, you want everyone else to put in as much cash as they possible can. You don't want to tip them off in any fashion that you have the winning hand. You want the pot to as big as possible when you show your hand. If you don't have a good hand and are bluffing, you need to be sneaky putting in bets when you really know you don't have a good hand hoping that the other players fold their winning hands. You don't even want others to put more cash in the pot since you want them to drop out of the game.
If you knew a company's share price was really overpriced for any reason, you would not do anything to tip anyone else off until you had shorted all the shares you could. Then, given the right opportunity to show your hand, you would explain your position as to why the shares were over priced in a logical fashion. Yes, there would be other shorts jump in to help drive the share price down but it wouldn't necessarily be about driving the share price down based mainly upon high volume trading. You would be ok with longs coming into the market to drive the share price up (more cash in the pot) since it would give you more of an opportunity to short at a higher price before your real prediction came true.
OBVIOUSLY THEY DO NOT HAVE VALID HAND TO PLAY
To use poker terms to explain how you can determine whether a stock is shorted for good reasons or just a bluff.
If you believe you have a winning hand in poker, you want everyone else to put in as much cash as they possible can. You don't want to tip them off in any fashion that you have the winning hand. You want the pot to as big as possible when you show your hand. If you don't have a good hand and are bluffing, you need to be sneaky putting in bets when you really know you don't have a good hand hoping that the other players fold their winning hands. You don't even want others to put more cash in the pot since you want them to drop out of the game.
If you knew a company's share price was really overpriced for any reason, you would not do anything to tip anyone else off until you had shorted all the shares you could. Then, given the right opportunity to show your hand, you would explain your position as to why the shares were over priced in a logical fashion. Yes, there would be other shorts jump in to help drive the share price down but it wouldn't necessarily be about driving the share price down based mainly upon high volume trading. You would be ok with longs coming into the market to drive the share price up (more cash in the pot) since it would give you more of an opportunity to short at a higher price before your real prediction came true.
OBVIOUSLY THEY DO NOT HAVE VALID HAND TO PLAY
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