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◈ BOOK REVIEW · INVESTING

The new sell and sell short

Name: The new sell and sell short
Author: Alexander Elder

by Alexander Elder

Who this is for

For active technical traders — particularly those who have already read Trading for a Living — who want a systematic framework specifically for exit decisions and short selling strategy. Not appropriate for buy-and-hold investors or beginners who haven't established a basic technical trading foundation.

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◈ KEY TAKEAWAYS

What this book actually teaches

01The central argument is that exit discipline is harder and more neglected than entry discipline — most traders spend far more time on when to buy than when to sell, and fixing exits is the highest-leverage improvement available to active traders.
02The Impulse System — combining a weekly MACD histogram and daily exponential moving average to classify conditions as bullish, bearish, or neutral — is Elder's primary framework for exit timing, applied here to position-closing decisions rather than entries.
03The short selling section covers both mechanics (margin, borrow, squeeze risk) and Elder's analytical approach to identifying short candidates through distribution patterns, momentum divergences, and failed breakouts, with 2008 market examples throughout.
04Psychological barriers to selling — the disposition effect, price anchoring, hope-over-analysis — are treated as primary causes of poor exit decisions, with the prescription being predetermined technical exit levels set before entering any position.
05The Triple Screen and Impulse System parameters are presented as Elder's personal tools without systematic back-testing; the book is a practitioner framework, not an evidence-based parameter optimization study.

◈ THE SUMMARY

What's in this book

Scored against ClearValue's published methodology · Jun 28, 2026

The New Sell and Sell Short (2011) by Alexander Elder is a revised and expanded edition of his earlier work on trade exit discipline and short selling, updated to incorporate lessons from the 2008-2009 financial crisis. Elder, a psychiatrist-turned-trader and author of Trading for a Living, brings the same psychologically-grounded technical analysis framework to exit strategy that he applied to entries in his earlier work. The central thesis is that exits are harder than entries — most traders spend far more time on when to buy than on when to sell, and this asymmetry is a primary cause of giving back gains or holding through large losses. Fixing exit discipline is the highest-leverage improvement available to active traders.

The book is structured around Elder's core technical tools applied specifically to exit decisions: the Triple Screen trading system (introduced in Trading for a Living), the Impulse System, and the concept of value zones defined by moving averages and channels. The Impulse System — which combines a weekly MACD histogram with a daily exponential moving average to classify market conditions as bullish (both rising), bearish (both falling), or neutral — functions as Elder's primary timing filter. The application here is to exits: the system signals when the momentum that supported a position is deteriorating, providing a systematic rather than emotional trigger for closing a trade.

The short selling section is the most distinctive part of the book and the content that differentiates it from Elder's broader catalog. Elder covers both the mechanics of short selling — margin requirements, borrow availability, the risk of short squeezes — and the analytical approach to identifying short candidates. His framework for short identification focuses on stocks showing deteriorating fundamentals visible in price action: distribution patterns (heavy-volume declines without corresponding rallies), negative divergences in momentum indicators, and failed breakouts from prior support levels. The 2008 market provides extensive case study material throughout these chapters, with Elder analyzing specific shorting opportunities and the technical signals that identified them.

The psychological sections carry forward Elder's approach of treating trading as a discipline problem as much as an analytical one. He is direct about the cognitive biases that make selling hard: the disposition effect (holding losers too long while selling winners too soon), the emotional anchoring to purchase price rather than current opportunity, and the tendency to hope rather than analyze when a position moves against the trader. The prescription — predetermined exit rules set before entering a position, using technical levels rather than percentage losses as the trigger — is the standard professional approach and is explained well.

The weaknesses are consistent with Elder's broader catalog: the book is strongest on framework and discipline, less rigorous on empirical validation of specific indicator parameters. The Triple Screen and Impulse System are presented as his personal tools without systematic back-testing of the specific parameter choices he uses. Readers who want evidence-based parameter optimization rather than an experienced practitioner's framework will not find it here. The short selling content assumes a U.S. retail trading context and the specific mechanics may not translate directly to other markets or broker environments.

For active traders who have read Trading for a Living and want Elder's systematic treatment of exit discipline specifically — including the short selling mechanics and the psychological barriers to selling — this is the logical next text.

Summary as of June 28, 2026AI-assisted summary.