The differences between buying on a pull back (dip) and shorting a stock: Pull back waiting for the stock price to drop even if it goes up while waiting (patients) don't cost you any money out of your pockets if it goes up instead of down. There are pull backs and dips in every stock and move ups in many, but not all. Move ups has to do with volume demand, news, outstanding shares, authorized shares (dumping shares to convert to pay bills, exchange to convert for debts, exchange for employees pay, so on). You get the point.
Shorting, borrowing shares that you don't have from your broker, betting that the stock will go down instead of up. If it goes down you make money when you buy back in and cover that position, If it goes lower from the position you buy back in you get that as an extra bonus (money). In other words when shorting a stock you make money while you're waiting for the stock to drop (while it is going down). Mean while, when sitting on the side line waiting for the stock to dip (go down), you don't make any money or lose any money out of your pockets.
If the stock goes up while waiting on a dip you don't lose any money, but maybe miss a nice run up on the stock (That is damn I miss a run). But If you short that stock and it runs up and continuing to run up at the end of that day (I think) you've to cover for the difference. Meaning one loss money because he/she has shorted that stock now they has to come out of pocket to cover (That is Bad).
Newbie, I sure hope this help you. If anyone out there can explain it better, Please do so, thank you.
GLTY.
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