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Pro Secrets: Lesson Learned from Shorting Apple

On Wednesday February 22nd trader Joe Terranova dared to shortApple . It's now Tuesday February 28th and he’s been punished.

“It was the wrong trade,” admits the Fast Money pro. With shares up about 6% in the last week, Terranova also tells us that he’s covered his short position.

“Technically I thought there was a set up,” he says. But there wasn’t, and Terranova lost money. “I’m a big boy, I can take the financial loss,” he says. (Click here to go to Why Joe Terranova Dared to Short Apple Stock)

But we're not writing this post to Fast fire Terranova for a losing trade - well, that's not the only reason. Terranova also tells us there's an important stock market lesson to be learned here.

"Always, define your points of reference, especially when selling short," he says. In other words, stop yourself out.

Terranova thinks the rule is particularly relevant right now - with a growing number of traders expecting a broad market pull back.

In the near-term, there’s probably some fast money to be made on the short side. “I’m still short Google,” Terranova says with a wink and a grin.

But chances are, Terranova again knows when to pull the rip cord.

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Trader disclosure: On February 28, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova is long (VRTS); Terranova is long (MCD); Terranova is long (OXY); Terranova is long (IBM); Terranova is long (EMC); Terranova is long (LQD); Terranova is long (FXE); Cortes is short (XHB); Cortes is short (FXI); Cortes is short USD vs. JPY

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