Parabolic Short Strategy

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

  • Sharp intraday move of +50% or more

  • Multiple green candles in a row (often 5+)

  • High relative volume (3x–10x normal)

  • Low float or low market cap stocks

  • News catalyst or social media hype


Entry Signals

  • Blow-off top candle (long upper wick)

  • Reversal candle (e.g., shooting star, bearish engulfing)

  • Failure to break new highs after extension

  • Crack of key intraday support or trendline


Exit Strategy

  • First support zone or VWAP

  • Risk:Reward of at least 2:1

  • Stop placed above recent highs


Risk Management Tips

  • Avoid premarket shorts; wait for confirmation

  • Size down with high-volatility names

  • Do not add to losers

  • Ideal for scalping or short-term plays


Suitable Market Types

  • Overheated small-cap runners

  • News-driven pumps

  • 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

  • Low Float Stocks

  • VWAP Crack

  • Bearish Reversal Patterns


🔎 Related Strategies

  • Gap Fade

  • VWAP Bounce

  • Scalp + Tight Risk


🔗 Where to Use It

Use this strategy in The Next Trading Day under category:
📉 The Parabolic Short Strategy

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