Is shorting penny stocks a good idea? // Short selling penny stocks, Penny stock trading tips, Short selling stock explained, short selling strategy explained, short selling Tim Sykes, penny stock basics 101, Timothy Sykes scams, Penny stock scams, penny stock trading, penny stock basics, trading stocks 101, penny stocks for beginners, penny stocks for dummies, penny stocks 101, penny stocks explained, penny stock basics welcome to looking at the markets with David Moadel today we're going to talk
about short selling or shorting penny stocks is it a good idea you might have
heard that Tim Sykes does it or you might have heard jason bond does it or
one of those guys and maybe figure that penny stocks are garbage anyway and so
you know why not short them when they go up you know you figure they'll go down
if there's such trash right well let's take a look and see if that's a great
idea
you know I I i pulled up some
penny stocks here about five of them i could have pulled up a lot more examples
and I purposely chose penny stocks that made big big down moves single day down
moves
here's an example and this is a great illustration of why i don't i do not
recommend going along penny stocks buying penny stocks because look at
these single day down moves here here's an example ticker NVA ex went down
almost eighty five percent in one day so that's pretty strong argument for not
buying penny stocks but what about shorting them well if you short them at
the wrong time you can get in big trouble financially for example this one
if you had shorted it at the wrong time when it was four dollars and
thirty-three cents and then it just from there went up and up and up relentlessly
it went up to five dollars six dollars
alright six dollar seventy cents
alright and that that's you know that's approximately fifty percent gain in a
short period of time and then went sideways then went up more to seven
dollar 77 cents a massive massive moved up and then at one point it kind of went
sideways a little bit and then it went over eight dollars that's almost
doubling in price
and and this is over a long period of time yes it had a big drop after that
but you know while this was happening you had no way of knowing it you didn't
have a crystal ball
you didn't know is gonna drop like that and so you know it
who's to say you would have had the patience and the tolerance and and the
defined the funds the capital to withstand this kind of this kind of up
move in the stock price also who's to say that your broker would have would
have put up with it would have tolerated it because remember if if if your
position goes against you long enough and and far enough your broker can-can
margin call you forcing you to cough up a lot of money to to fund your losing
position or they can force you to liquidate your position they can force
you to to cover your short position
at any time brokers can do that and they will do that if your position just keeps
losing enough money so that's one example let's look at some more
this next one is cos I
and these are all penny stocks because they're they're under five dollars in
value and i consider those to be penny stocks so let's look at the chart here
let's go back let's say
let's go to a one-year view here and yes it went down almost twelve percent one
day but what if what if you had shorted it at let's say 54 cents
okay well from there just went off and sideways and up up and away peeking out
at 96 sense
alright so almost doubling their in price and yes we know in hindsight that
it went down after that but while this was happening you didn't know for all
you knew it could have gone up more and more and more could have gone up to over
a dollar to dollars five dollars you didn't know
and who's to say you would have had the patience or the capital to withstand
that kind of move and it was to say again that your broker would have
tolerated it without margin margin calling you or forcing you to liquidate
your position
let's look at CMLS went down over eleven percent in one day so you might think
this is a great thing great penny stock too short but again you do at the wrong
time I mean if you had shorted it back when it was twenty-five cents and then
it went up to you know over fifty cents more than doubling in price and and you
didn't know it's going to come down after that for all you knew at that
moment it might have gone up and up and up because at one point it had been over
a dollar
let's look at let's try a CST
went down over two percent in one day
and we'll look at the the one year chart just look over all and yes it had a big
plunge their big plunge so you might think this is a great candidate for a
penny starr penny stock shorting but you know what if you had shorted it when it
was a dollar 32 and then went up to over $MONEY dollar-fifty you know i mean it
is just you don't know you don't know what's going to happen at any given time
hey what if you had shorted it it had a big big massive up move there as well
what if you had shorted it at a dollar twenty-five and then boom it went up to
two dollars eighty-one cents huge up mode all right yeah
again it came down somewhat after that but you know you just don't know
here's a r RG s ii went down almost 41
dollars forty-one percent in one day but if you look at the big picture there
were times when there was a time when it went from three dollars and fifty-one
sense if you have short sold it there and it went up to six dollars and fifty
nine cents almost doubling in price so i think you get the idea is shorting penny
stocks might seem like a great idea but if you do it at the wrong time you know
you can get in a real financial problems there so if you want help putting
together a real trading plan and investing plan that works for you and
does not really does not rely on speculation
please send me an email anytime my email address is David Modell @ gmail.com if
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updates on my financial educational content i hope this was helpful thank
you so much and i'll talk to you soon
yeah