Trading

Trading for predatory short sellers usually falls into two categories:

First, quietly establishing a position while not disturbing the market. How to feed in your short line, without pushing the price down.

The market will either be going up rapidly from some promotional push by the longs or else prices will be marking time at a certain level.

The trickiest one is where the market is rising. Do we throw out stock as it goes up and risk damping the move or do we hold off until it looks like the stock has peaked?

This is a matter of opinion to be judged based on experience.

The factors entering into the equation are the amount of float in the stock, the public enthusiasm, selling by the existing holders and insiders that might come in, and to some extent the state of the market overall.

The second type of trading is bear raiding -- dumping stock to drive the market down. You want to create a panic -- like yelling fire in a crowded theater so the longs will run to the one small door to get through and trample themselves in the process.

There is no substitute in this process for letting the market know that you have have huge block to sell at higher prices and then having market makers hit the bids of other market makers. No market maker is going long when he knows there is a ceiling on the stock. When a market maker sees another market maker aggressively selling by hitting bids, he know this market maker is willing go give up the advantage of selling at the offering as the seller feels the stock will immediately collapse. This can create group panic.

Of course, prepping the market by loading the market maker up with high priced inventory won't hurt at all. Use up their money by loading them with stock. Then when you sell, it is all the worse.