Analysis of Reddit Discussion on Short Selling Strategies & Underemphasis in Trading Education

The Reddit discussion centers on short selling strategies and their underemphasis in trading education. A consistent trader notes missing up to 50% of daily gains by neglecting shorting, using a setup combining liquidity sweeps and inverted Fair Value Gaps (FVGs). Liquidity sweeps involve institutions triggering stop losses at key levels [1][2], while inverted FVGs occur when price rejects an existing gap [3][4]. Short selling effectiveness depends on market regimes—improving efficiency in normal conditions but restricted in others (e.g., Rule 201) [5][6]. Educators underemphasize shorting due to its advanced risk profile (unlimited loss) and profitable traders withholding strategies [7][8].

Cross-domain connections include institutional behavior (liquidity sweeps) creating retail short opportunities, the education gap between basic long strategies and advanced shorting, and regulatory regimes limiting shorting utility during market crashes. The setup aligns with Smart Money Concepts (SMC), requiring traders to seek specialized resources beyond beginner courses.

Risks: Unlimited loss potential for short positions, regulatory restrictions (Rule 201), and margin requirements [7]. Opportunities: Unlocking additional gains (per user claim), using inverted long strategies for shorting, and leveraging market volatility for high-probability setups [1][3].

• Setup Steps: Wait for liquidity sweep of key levels → enter short at inverted FVG [1][3].
• Market Regime Tips: Prioritize shorting in volatile/bear markets; avoid in strong bull markets [5].
• Education Gap: Beginners need SMC-focused resources to learn advanced short strategies [8].