Never leave money on the table.

A stock going down can only go to zero so, after a while, your risk to the downside is limited. So, if you say, buy XYZ stock at $2 and buy 200 shares, the most you can lose is $400 and your upside is many multiples of that amount. Contrast that by selling short by borrowing say 500 shares of ABC stock which you short at $50. Your risk to the upside is not limited to $25,000 but, unlimited. If the stock gaps up to say $150, you have to buy and cover those 500 shares that you borrowed, come hell or high water. Say you get out at $150 x 500 = $75,000. So, you got a huge $50,000 loss for your troubles. If you have only $30,000 in your account, congratulations, you still owe your broker that $20,000 difference.

 

True, although in practice, large cap stocks (over 50B market cap) usually don't double in a single day.

Even though the downside is capped at 0, I've always felt that there's more risk to the downside than upside. Fear is a stronger emotion than greed. I could think of some events that could cause the S&P500 to drop 1000 points tomorrow (ignoring circuit breakers). It's hard for me to think of a single event that would cause the entire index to go up 1000 points tomorrow.

 

Have you looked at AMZN? It will add/drop a couple hundreds faster than you can take a piss...

 

I only short during day trading, never overnight.

 

Smart, as if I remember correctly the market likes to move up bigly overnight on average.

 

If you filtered price you'd mostly likely be trading long most of the time. The market has trended up since 2020

 

For me getting into a position is easy, taking an entire move if correct is the hard part. In swing trading I have algos to do that that work fine, in day trading it is pretty hard even for algos due to the noise

 

Once the cluster of stops is taken out, there's no time to delay.
Gladly, it doesn't happen all at the same time. Say durin the covi lows, - there was oportunities for the whole month.

 

A $100 stock gapping up to $200 is the same in reverse of a drop to $0

Anyway out of the whole universe of U.S. stocks 6000+ only a tiny fraction gap up 100%, or thereabouts, in a any single trading day.

Not realistic to be concerned about it.

 

If it can happen, it will probably happen to me. Actually it has happened to me. Lesson learned, don't short individual stocks.