Definition – What does Weak Shorts mean?
Weak shorts is a slang term for a group of traders who are quick to exit their short positions at the first sign of a reversal in a currency pair’s price action. The term is somewhat derogatory, suggesting that the traders aren’t able to stomach the risks involved and end up getting out early. Weak shorts are the target when traders attempt to gather in the stops.
ForexTerms explains Weak Shorts
When the weak shorts close their positions or their stop losses are triggered, it can cause a cascade of stop losses to be executed as the price action goes against the weak shorts. Weak shorts are seen as having a low risk tolerance, so they keep their stops very close to the price action (and thus, easy to trigger). The difference between being a weak short and being cautious isn’t always clear. On one hand, a trader doesn’t want to panic and exit a short position on a false signal. On the other hand, one of the central maxims of trading is to cut your losses and let your winners ride. Traders need to be able to separate trends from ripples, waves, and other market noise if they are going to be successful.