First Red Day
The exact strategy behind a documented $10M+ short trade — a calculated, high-conviction short position built on technical breakdown, fundamental deterioration, and market timing.
Full video breakdownFree access
Strategy Overview
This is the detailed breakdown of how a single $10M+ short position was constructed, managed, and closed. The strategy combines fundamental analysis (identifying overvalued or deteriorating businesses) with technical breakdown patterns to find the optimal entry and manage a large short position through volatility.
Market Focus
Large-cap stocks with high options liquidity and institutional ownership. The focus is on companies showing fundamental deterioration — declining earnings, revenue misses, or business model disruption — not yet fully reflected in price.
Timeframes
Weekly and monthly charts for fundamental price trend analysis. Daily chart for identifying technical breakdown. Position built over days to weeks and held for weeks to months for the full downside to materialize.
Core Idea
Short selling at scale requires patience, conviction, and precise risk management. The edge is in identifying the gap between a stock’s current price and its fundamental value, combined with a technical signal that the market is beginning to recognize the same disconnect.
Market Conditions
Best conditions: sector weakness, deteriorating earnings trend, broad market correction providing cover for the short. Avoid being short in strong bull markets without a specific catalyst. Macro tail risk accelerates downside.
Strategy Setups
Build the position in 3 tranches: Tranche 1 at the first breakdown, Tranche 2 on the first dead cat bounce, Tranche 3 on the next leg down. Use options for initial position to limit risk while testing the thesis.
Trade Breakdown
Total risk allocated: 3–5% of portfolio across all tranches. Stop: above the breakdown level and 10% above thesis-invalidation price. Targets: prior major support levels and valuation-based price targets. Cover in stages as price reaches targets.
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This page is for educational purposes only and is not investment advice. Trading involves substantial risk of loss. Past performance and any figures mentioned in strategy names are not a guarantee of future results.