What is the Parabolic Short Strategy?
The Parabolic Short strategy is designed to profit from overextended intraday moves that are likely to retrace. These setups often occur in low-float stocks or momentum-driven tickers that spike rapidly on news, hype, or technical breakouts.
When price action becomes unsustainable—going “parabolic”—traders look to short near the top of the move, aiming for a quick pullback or a complete fade.
Ideal Conditions
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Sharp intraday move of +50% or more
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Multiple green candles in a row (often 5+)
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High relative volume (3x–10x normal)
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Low float or low market cap stocks
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News catalyst or social media hype
Entry Signals
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Blow-off top candle (long upper wick)
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Reversal candle (e.g., shooting star, bearish engulfing)
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Failure to break new highs after extension
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Crack of key intraday support or trendline
Exit Strategy
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First support zone or VWAP
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Risk:Reward of at least 2:1
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Stop placed above recent highs
Risk Management Tips
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Avoid premarket shorts; wait for confirmation
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Size down with high-volatility names
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Do not add to losers
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Ideal for scalping or short-term plays
Suitable Market Types
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Overheated small-cap runners
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News-driven pumps
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Stocks featured on scanners or trending platforms
📘 Strategy Type: Momentum Exhaustion / Mean Reversion
📈 Example Use in Newsletter
Category: 🔥 High Volatility Movers
Strategy: Parabolic Short
📊 Related Concepts
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Low Float Stocks
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VWAP Crack
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Bearish Reversal Patterns
🔎 Related Strategies
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Gap Fade
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VWAP Bounce
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Scalp + Tight Risk
🔗 Where to Use It
Use this strategy in The Next Trading Day under category:
📉 The Parabolic Short Strategy