It was another quiet day in penny stock land yesterday morning ... You may be wondering if it's time to look for short-selling opportunities…
But is short selling a good strategy?
Personally, I'm a market optimist. There's usually at least one long setup per day. We saw some nice runners before the end of the day yesterday…
And I think new traders should focus on gaining consistency going long before they dive into short selling.
But if you're an experienced trader and have developed consistency going long,
there's nothing wrong with expanding your trading playbook.
And if you want to learn, I'd rather teach you a safe way to short sell than have you try to short any stock that's up like idiot fintwit short sellers...
Sounds simple enough, right? It's basically the opposite of going long.
But some annoying hiccups can come along with shorting, including massive risks…
First, your broker has to have the shares for you to borrow. And they won't always have them.
Second, you need a margin account to short sell. And your broker can have a margin requirement that can limit the position size you can take. That's not always great for traders with small accounts.
Third, there are fees for borrowing the shares. Typically, you're only charged if you hold a stock overnight. But check with your broker first to be sure of any potential charges.
Lastly, shorting is risky. There is the potential for infinite losses. And your account can blow up faster than you think when a low float stock starts spiking...
So never short a low float stock on its first green day. There are potentially safer ways to short sell stocks…
What Does a Short Pattern Look Like?
Yesterday, the Breaking News Chat team alerted me to two short reports on stocks...
Kerrisdale Capital claims that Lightwave Logic, Inc. (NASDAQ: LWLG) stock rose 10x over the last year…
While the company only "generated a total of about $6 thousand in revenues" and "hasn't ever come close to commercializing anything."
The next short report was from The Bear Cave. Their investigation claims that RCI Hospitality Holdings, Inc. (NASDAQ: RICK), which owns gentleman's clubs, "faces allegations of illegal behavior."
It also claims that "the company continues to have accounting concerns." Get all the details here.
Despite the negative report, RICK bounced back and made new daily highs yesterday…
You can see from those mixed results that just like a "good news" PR doesn't mean a stock's an automatic buy, bad news doesn't mean a stock's an automatic short.
Just like when you go long, your shorting edge should be with your pattern and strategy and checking all the boxes…
Stick to higher float stocks that move slower than low floats. That way if it goes against you, you can get out and hopefully avoid an account blow up.
And if bad news, a short report, or bad earnings hit, make your trading plan based on key emotional levels.
Listen, a lot of these big tech stocks are heading back to realistic prices after two years of gains.
And with the right strategies, you can potentially capitalize when stocks break through key emotional support levels and traders become fearful.
Watch the video below to see my breakdown of how to short sell a tech stock with bad earnings…
Have a great day everyone. See you back here on Money Monday.
Every market-open, this proprietary scanner (with an 85% win-rate on the year) filters through thousands of stocks within seconds to create a list of 20 potentially big-movers.
Imagine the hours of research this powerful algorithm can save you every morning.
Your next big trade could be alerted to you by this scanner as early as pre-market tomorrow…
(As an Amazon Associate, we earn from qualifying purchases.)
13809 Research Boulevard, Suite 500, Austin, TX 78750
*Please note that these kinds of trading results are not typical. Most traders lose money. It takes years of dedication, hard work, and discipline to learn how to trade, and individual results will vary. Trading is inherently risky. Before making any trades, remember to do your due diligence and never risk more than you can afford to lose.
This is for informational purposes only as StocksToTrade is not registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund.
StocksToTrade cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing.
StocksToTrade in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, StocksToTrade accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.
Post a Comment
0Comments