Don’t Make This Classic Short Selling Mistake

Don’t Make This Classic Short Selling Mistake

– So sometimes it’s good to short sell, sometimes it’s very dangerous. I wanna go over the difference so that you do not put yourself in a dumb, losing, risky position. (inspirational electronic music) Make sure you subscribe to my channel and click the little alert notification bell so that you get alerted when I have new lessons that
are gonna change your life. What’s up, Tim Sykes,
millionaire, mentor, trader here answering your
questions, talking about recent trends, pitfalls, opportunities, everything that’s happening right now in the market and in the world. And yes I am debuting this
brand new Save the Reef merch, charity merch, click a link below. I’m gonna include the link to this. This is actually the first one of our new fully sustainable environmentally friendly collection. This is actually made
out of recycled materials along with plastic water bottles and it’s actually still
comfy, which is pretty crazy. So I’m glad to try to save the world, save the reef, and also educate you so that you can really enjoy
the world and enjoy your life. It’s really sad how bad short
sellers are doing in 2020, and I know this because I’m
not trying to rub in losses. I don’t wish losses on my worst enemy, but I can’t help when I see messages from all these non-students
and former students who are messaging me
now asking for lessons and saying like, “What am I doing wrong?” “I thought short selling
penny stocks was so easy.” Listen, you have to short sell only the proper kinds of charts. If you get away from
that and you just listen to like all the cynical
talk, it’s very dangerous. A lot of these short selling chat rooms, they’re run by newbies. They’re run by people who
are not fully transparent. They’re not showing you the fees that they’re paying for short selling. They’re not showing you their losses. They’re not showing
you their account size, their intraday risks. There’s so many things
and this is why I say short sellers are the new promoters. Click the link below. I’m gonna link a few other videos that I’ve done about short selling, because I really think
that this is a unique time with so many, actually
too many short sellers and that creates
opportunity but also risk. The opportunity is to go along a lot of these short squeezes where these stocks are going from like one, two, three dollars a share, to like $10, $20,
sometimes even $70 a share like VPTH in a few days when you catch the short sellers off guard. But that’s not to say
that all shorts are wrong. Most of these penny stocks
are fundamentally worthless but I think that too many short sellers just try to, you know, push prices down. They try to get others
seeing their cynical way. I kind of compare them to like lepers. You know like these people in movies. They have to wear like
hoods and they’re so ugly. They’re kept out of the public view. That’s like most short sellers. They’re a pretty ugly bunch, mentally, spiritually, physically, and so they sit in their little leper colonies
which are their chat rooms and they say, “Oh this
company has warrants.” “Oh, this company is worthless.” They might be right in
another market environment, but in this market environment, warrants are not the end of the world. You know, we’re in a strong
bull market so junk is rising and it’s just very dangerous
to be a short seller. You got to get out of that mentality that all these penny stocks are worthless. Penny stocks are worth whatever the market is willing to bear, and even though a company might not have great fundamentals,
it can still spike a lot. Case in point, a few years ago DRYS went from five to 120 in a few days. Terrible company, terrible fundamentals, but it became the strongest
stock in the market why? Because of too many shorts. They created a massive short squeeze. It actually would have
gone to 200 probably if the SEC hadn’t halted it that morning. Then it later crashed,
but even my top student, Tim Ritani, who is now taking
$1,500 of his own money, turned it into over nine million. He was shorting DRYS I think in the 40s. He covered like in the 70s. It was a crazy short squeeze. Long story short, and I say
that like I know it’s a pun, you just have to know when to
short and when not to short. DRYS or you know, a first
green day type play, do not short too aggressively. In the end they all crash, but
you really have to be careful because you don’t know how fast or how high they’re going
to go in the meantime. Those of us who are long
buyers are loving this. You can buy absolute junk and if enough shorts are getting
squeezed, it just runs and runs. Case in point, CPAH, terrible company and yet it kept running the other day. I don’t know why there
were so many short sellers shorting on the first green day. You set yourself up for big losses. Compare that to shorting
BLOZF which was a pump, a multi-day pump having
its first red day, right. So shorting the first green day on a low float runner
towards the end of the week, no, no, no, no, very dangerous. Shorting the first red day
on a pump that has already, I think it tripled or quadrupled and the momentum is fading,
the value is fading, and it looks like it’s about
to crash, which it did. That is a good short. So don’t think that all
short selling is bad, but too aggressive short selling, lack of preparation, you know, using leverage, using offshore brokers. First of all, I only use
E-Trade and Interactive Brokers. I know they’re not the
best brokers in the world. I don’t get paid by either one. I say that they suck the least out of all the different brokers, and that’s honestly what they do. But a lot of people are
trying to get shares using offshore brokers and like, they’re trying to scheme
their way to more shares. Very dangerous. You might find a few shares to short, but eventually it’s going
to come back to bite you. I don’t want to take any shortcuts. I don’t want any sketchy brokers. I’m not naming any names,
but any offshore broker, you have to be extra careful with. Why are they offshore? What are they trying to get away from? There’s all these loopholes and stuff. I just don’t want any of that. E-Trade and Interactive Brokers, again neither of them
pay me so don’t think this is like a paid endorsement, but they’re just big brokers that are safe compared to sketchy. If you are going to short,
short the first red day. Interactive Brokers oftentimes
has shares to short. I’ll give you an example. Tim Lento was actually shorting BLOZF. I was actually dip buying it, so don’t be afraid if
I’m dip buying a stock and someone else is shorting it. We can both make money, okay? I actually made money
on my dip buy on BLOZF but it didn’t bounce that
much on that first panic day. Tim Lento shorted it
using Interactive Brokers and he made four grand
during my live webinar when I was trying to
buy it for the bounce. And frankly I was wrong. I made like a penny or two and he made 10 or 15% on his short. He actually underestimated it. By the end of the day
it would’ve been seven or eight thousand, but he still made four thousand on the day. So long story short,
short the first red day and leave a comment underneath this, okay? Say it’s good to short the first red day on a stock that has already
tripled, quadrupled, quintupled over several days. That’s the key, okay? Almost all these penny stocks have this kind of mountain
that they go over, right? There’s a typical phrase, you
want to short the backside. Unfortunately you don’t
know when the backside is, but if you’re shorting the first day, yeah you might get a quick
spike and a quick drop, but you just subject
yourself to so much risk. If you’re shorting a
stock that is already up for three, four, five, six,
seven, 10 days in a row and that volume is fading,
it could still squeeze. Any stock can squeeze. You can be wrong at any time,
but the later in the pattern, the more that it’s already
up, the odds are on your side and that’s what successful
shorting is all about. That’s why I like saying
shorting the first red day after several green days,
after a big move is less risky. It’s higher odds, rather than
shorting the first green day which could deliver quick returns, which a lot of gunslingers like, but it also opens you up to so much risk. I don’t want that for you, okay? As a newbie, as someone
who doesn’t really know how fast these stocks move or how high or how low they can go, you don’t want to take positions that
can frankly blow you up. That’s what happens. With short selling never forget, you can lose more than you put in, right? If you’re shorting a thousand
shares of a stock at $3 and it goes to $20,
you’re down $17 a share. If you short a thousand
shares, that’s $17,000 on your $3,000 position. You’ve lost nearly six
times what you put in versus if you buy the stock
at $3 and it goes to zero, you just lose your investment of $3,000. So there’s more risks short selling. Understand those risks,
respect those risks. Don’t partake in them. Leave comments below if you
understand what I’m saying and leave the comment saying, “I will only short the first red day.” Do not short first green days. That’s a nice rule to keep you safe.

37 thoughts on “Don’t Make This Classic Short Selling Mistake

  1. Love how clear this disclaimer is. Shame it was hidden behind the "click here" videos but I bet that was an honest mistake.

  2. It's good to short the first red day! I totally agree, which is why I like to go long after it's been at extreme lows for while. I short on paper after a high failure but with a stop in place. Thank you for sharing!

  3. Tim why do stocks move at 8am when you can't trade until 9:30am i feel its unfair but… Sucks 😂

  4. Tim. I watch all of your videos, and I think I am headed in the right direction. I have under 5000k in my account. I have had an amazing last 2 weeks. Plan is working, making consistant green and then today. I lost 17 pecent due to TOS stop loss not working. (Lost all of my profit from the last 2 weeks in a matter of seconds). I know you don't play with hard stop losses. I need your help brother. Teach me thy ways. I want to learn from you so bad. I watch all of your videos and you are my stock hero. Weird I know. Can you help me get in your program so I don't have to keep making these dumb errors. I want to know how you buy, sell ext. I am a sponge ready to learn, I also want to bypass some of the error I make on the daily. I have been learning for 5 months, but don't want to keep making these baby mistakes. I do work full time, but I am willing to study my rear off. Thanks for your comment in advance since you always respond to me.

  5. Hey tim how can you you tell when a short Squeeze is about to occurred. reading off a level 2 Would you mind doing a demonstration video on that? Thanks, Tim. You're the man.

  6. I haven't shorted yet. I just haven't found the option to click and short. I will call tomorrow to ask them where should I click to find the option to short.

  7. It's good to short the first red day. I never will because shorting scares me to death. I'll stick to long positions. Thanks for all you do Tim. You're the best.

  8. Short selling isn't scary as long as you master risk management! But you're definitely right about there being too many newbie shorts now.

  9. I'm learning going long before I learn the short side of the market. Working and trading has its challenges. I would like some swing trading strategies for people like me who have to work and can't focus 100% on trading. I study constantly for the perfect entries. The most of my losses last year were on biotech stocks. This year I have changed my strategies up to steer clear of bio plays and focus on earnings winners. It's totally changed the way I look at my next trade.

  10. Not all FGD spike or run even with good news, just don’t know why it fail, it just happens correct. Cut losses quickly on this scenario

  11. It's good to short the first red day!!! Newbie here. Just started this week with framework and spikeability, can't wait to be done to watch them all over again!! Thanks Tim!

  12. Ill buy anything your selling as long as u can guarantee that one day ill be able to make enough money to throw midgets at a giant dartboard

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