How to Stop Short Selling Your Stocks
Short selling a stock is a technique employed by speculators who attempt to make money from a stock declining in price. To be successful the speculator must time the market correctly. For the retail investor, short selling can stunt the growth of your stock, since every time it starts to take off it hits resistance in the form of short selling. However, there are ways to choose stocks that effectively eliminates the adverse impact of short selling.
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Instructions
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Select a stock that has tremendous fundamentals with great sales growth, strong cash flow and impressive return on equity. Choosing a stock with great fundamentals keeps short sellers away, because they are looking for bad companies with anemic fundamentals to do a short sell.
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Select a stock with an attractive technical profile. This should be a stock that has an overall "up" trend and has pulled back to a "support" level. A good technical analysis picture is not what the short seller is seeking. Short sellers are looking for overpriced stocks hitting "resistance".
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Acquire a stock with either no options market or an illiquid options market. Since short selling is a very risky endeavor, they often employ options to reduce their risk if the stock goes against their position by taking off to the upside. If there is a liquid options market, this allows the short seller to purchase an options call position to protect their short stock position, which gives them more of an incentive to short sell that particular stock.
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Select a stock with little trading volume. This broadens the bid/ask prices and makes it difficult to get in and out of trading positions with a profit. Short sellers do not like this scenario and typically shy away from these types of stocks.
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Tips & Warnings
Choose fundamentally superior stocks to purchase.
