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Short position

The short position tool plans a short sale: an entry, a stop above it and a target below it. A short gains when the price falls, so the profit and loss are signed accordingly; the tool shows the same risk/reward, quantity and outcome as the long version.

What it's for
  • Plan a short sale before taking it: entry, stop above and target below.
  • Compute the risk/reward ratio and the quantity from your risk per trade.
  • See the outcome on the chart, including when the stop is hit.
Plus and Pro toolTry it in Analyze
Points
1 click on the entry, then adjust
Plan
Plus and Pro
Shows
Target/stop %, R:R, quantity, outcome
P&L
Positive when the price falls

Example: a stopped short

A tool that only shows winning trades teaches nothing. Here the plan was reasonable (entry after a bounce in a downtrend, R:R 2), and the market proved it wrong.

Short position with R:R 2 where price rallies into the stop, status stopped with a loss of about 2%
Short entry at 107.40, stop about 2% above, target about 4% below. Price rallies into the stop first: the status reads “Stopped” with a loss of about 2% of the entry, which, thanks to the sizing, is 1% of the account.

That is the purpose of sizing from the stop: the loss was known and limited before the trade. With a 2:1 reward/risk, a trader breaks even (before costs) by being right one time out of three.

How it works

risk per unit   = |entry − stop|
reward per unit = |target − entry|
R:R             = reward / risk
quantity        = account × risk % / risk per unit

Account size and risk % are set in the tool's options and saved for your account. With 10,000 and 1%, a stop 2.33 below the entry gives a quantity of 100 / 2.33 ≈ 42.9 units.

  • Default plan. When placed, the stop is set one ATR(14) away from the entry (at most a sixth of the visible price range, so the tool fits on screen), the target at twice that distance (R:R 2), and the right edge about 18% of the visible bars later (at least 12 bars). Drag any handle to adjust.
  • Outcome. From the entry bar to the right edge, the position is filled when a bar trades at the entry price; after that, the first of the target or the stop to be reached closes it, and the status shows the result in percent of the entry.
  • Same-bar ambiguity. When one bar reaches both the target and the stop, the chart cannot tell which came first; Oyticker counts it as stopped, the conservative assumption, and says so.

Specific to short selling

  • The loss on a short is not capped by the price falling to zero: a squeeze can move far above the stop, and gaps make it worse. Size conservatively.
  • Borrow costs and the availability of shares to borrow are not modeled.

Limits

  • Results assume fills exactly at the entry, stop and target prices. A gap through the stop fills at the opening price, which can be much worse; liquidity and slippage matter on fast markets.
  • Commissions, financing and taxes are not included.
  • A backward-looking result on one example says nothing about the expectancy of a method; test many cases before trusting a setup.

Charts in this guide use simulated prices generated for illustration; levels and outcomes shown are examples, not observations of a real market. Educational content only, not investment advice.

Related guides

Long positionPlusHow to plan a long trade with Oyticker's position tool: entry, stop, target, risk/reward ratio, position size from your risk per trade, and the outcome on the chart.ATR (Average True Range)PlusHow Wilder's Average True Range is calculated from the true range, and how traders use it to set stops, size positions and detect volatility regimes.Trend lineHow to draw a trend line on swing points, why the third touch matters, how to read a break, a retest and a change of slope.