Shiming Pinjin: What is a short trap? How to identify and avoid short selling traps?

Short selling trap, also known as short selling market, often occurs when the market appears to be changing its trend and rising after a continuous decline and stabilization, but suddenly there is a faster downward trend. This situation involves multiple short selling markets, known as short selling trap.


Short selling trap, also known as short selling market, often occurs when the market appears to be changing its trend and rising after a continuous decline and stabilization, but suddenly there is a faster downward trend. This situation involves multiple short selling markets, known as short selling trap.


The reason for this is that if the price undergoes a long-term decline and releases the bearish force, the low volatility is actually a long buying process, with a high probability of rising in the future. However, the new round of rapid bearish traps is a means for traders and the market to wash out the weak bearish force and completely release the bearish force, resulting in a rapid and brief decline.


The bearish trap often involves investors with unclear trend judgments. Those who cannot grasp the direction and follow the trend are the biggest obstacles to the future market's rise. They will profit and leave the market at any time, becoming the main culprit in suppressing price increases. Therefore, before pulling up, it is necessary to eliminate this part of false bulls. At the same time, there will also be bearish savings during the low level accumulation process, Therefore, before pulling up, it is also necessary to hit the market downward to release the bearish force.


　　How to avoid short selling traps?


The best approach is to judge based on kinetic energy indicators, as short traps are often accompanied by large bottom deviation patterns(The price has hit a new low, but the downward momentum has not been able to reach a new low, indicating that the downward momentum is not enough to support the sustained downward trend of prices)When a bottom deviation situation occurs, it is necessary to beware of short selling traps.


The following figure shows a case of a bear trap, withgoldTaking price trends as an example, there has been a bearish trend in the green circle, but after reaching a new low, it suddenly rises, which is a clear bearish trap.

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Many investors chase short positions after breaking through the decline in the circle, leading to being trapped, and then the price bottoms out and rebounds, forming a living short position trap with a positive closing line.


In fact, in this situation, we can use kinetic energy indicatorsMACDJudging from this, the green circle in the indicator area in the graph shows that the momentum of this decline is weaker than the previous decline, indicating the discontinuity of the decline and the high level of false positives. On the one hand, the short trap can be judged by technical indicators, but sometimes there are no indicators displayed. More importantly, it is learned through the analysis of the buying and selling forces behind the market that rich trading experience is required. Once it feels like a short trap, do not chase the short and choose to wait and see.


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