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Author Topic: Can a person short sell penny stocks?
short selling
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I have spent quite a bit of time in the micro penny forum and it seems like 90% of the stocks on there go down. I'm thinking of shorting them. Can you? Has anyone done it before? What happens if it goes up 5000% and you had it shorted? Can you lose more than what you put into it?
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T e x
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yeah, one can short pennies...but for the average trader, the cost is prohibitive.

And, yes, it's possible to lose way more than 100% of your original dough if a short sell goes bad--especially for the individual trader.

--------------------
Nashoba Holba Chepulechi
Adventures in microcapitalism...

Posts: 21062 | From: Fort Worth | Registered: Apr 2005  |  IP: Logged | Report this post to a Moderator
PCola77
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See Tex's response for a short answer. Long answer is that what he means by cost prohibitive is the margin requirements. For example at the broker that I use, you have to have $2.50 margin per share to short a stock under $2.50. So if you short 1000 shares of a stock at $2, you have to have $2,500 in your account ($2.50 x 1000). If you want to short 1million shares of a stock at .0001, you have to have $2.5mllion in your account, and 1million shares at .0001 is only $100. So it wouldn't make sense to do. The bright side is that if you do short somethign down there, you won't get a margin call unless it exceed $2.50, which isn't very likely for a .0001 stock. But again, you'd never short $100 worth of a penny stock if you had $2.5 mil in your account.

Sorry.

Posts: 5508 | From: Southeastern PA | Registered: Jan 2006  |  IP: Logged | Report this post to a Moderator
short selling
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I'm still considering it. I'm concerned about losing tons of money if it goes up. I would want to use a stop loss, but I don't know exactly how they work. For example if I had a stop loss at 30% and the stock gapped more than that like 50% would it execute at the 30%?
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metal1
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LOL, might want to learn a little more before you start shorting pennies and end up getting squeezed to death. if a stock gaps up past your stop buy, you get executed at the higher price unless you make it a stop buy with a limit.
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PCola77
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The other issue to consider is that shorting means borrowing from someone else and selling their shares, so even if you find a great candidate for a short sale, if your broker doesn't have any to lend you, you're out of luck.

Is there a particular one that you were thinking about, or one that you would have sorted recently, and I can let you know if my broker has any available if you did want to short it?

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Ace of Spades
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Most penny traders that short penny stocks, only mess with the ones between .01 up to a few dollars.

This price range can make sense. and probably won't go nuts on you and go up 1000% in one day on fluff news or PR.

Any way traders that know what they are doing, wouldn't give themselfs a chance for a short to go wrong.

For example they will watching a few stocks that recently went up a few hundread percent of pumping or B.S. news....and wait for the day when it tops out...usually happens shortly after the bell one day, and drops by 30% or more and cover that day or the next.

I know many High Rollers and Players at Ihub short penny stocks, though few will admit or reveal their secrets.

Try using the advanced search option at Ihub for phrases like, "shorting Pennies" and phrases like that...and you will find some leads on this subject...but the tough part will be to get them to admit to shorting pennies and give you advice.

Here are a few posts I found.....

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=19477672

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=19589623

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=20176342

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=20314699

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glassman
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I know many High Rollers and Players at Ihub short penny stocks, though few will admit or reveal their secrets.

you might want to warn them that they are being investigated fairly closely...

specifically for fraud.

--------------------
Don't envy the happiness of those who live in a fool's paradise.

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beechwood
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Depends on the broker.
Most won't but a few will.
And those that do have a cap on same.
The MM, on the other hand, can short
anything w/o any caps, limits, or
major cash reserves.
This leads to manipulation of price action
by the MM's on the trading floor in most
penny plays.

Remember one thing - penny plays are highly
manipulated.
You don't make money in the .10 and under
unless the MM's let you.
Forget all the hype from paid pumpers over there.
With the market in the shape that it is right
now the MM's aren't giving back much.
With times what they are most of my capital
is in .999 gold & silver bullion.
Not certicates or stock - BULLION!!

I've been buying up same since gold was $500/ou.
and silver $8.40 or so.
Also bags of silver coins from banks while they're still available (stable in bad times).
I've got a bunch of each in a very safe place
(not the bank vault either...lol).
I'm currently on the sidelines in the market
until things regain some sort of stability.
I said a long time ago in here that theres a
financial collapse coming and its sure heading
in that direction.
One missle over the Straights of Hormoze will
will pull the final trigger.

If you missed the boat on gold then there is
still time to get on board with silver.
Its gonna skyrocket like gold did when the
bottom falls out.
The best site for same is: www.kitco.c_m
At any rate, thought I'd drop in to check
things out.
I still see the same ole crew pumping the
same ole crap (BKMP, etc.) .
I guess some things never change.
I hope they're getting more than minimum...lol
Later...

Posts: 669 | From: Gouldsboro, Pa. | Registered: May 2006  |  IP: Logged | Report this post to a Moderator
beechwood
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Now, more than ever, the sauce rings true from
my above post of three months ago.
The plane has spun out of control.
I predicted the current mess over a year and
a half ago.
Got outta the market way back then and into
gold & silver as said.
If you didn't see the writing on the wall
way back then you might be plum outta luck.

Most banks are out of pre-1964 silver coins.
Its getting increasingly difficult to find G & S
bullion at any price these days as well.
This might be it, folks.
The economy is up to its neck in quicksand
and gasping in desperation while clutching
at straws.
And you wanna jump into penny plays??

If you know a pink MM on the trading floor or
a large hedge fund huckster lemme know and
I'll throw my hat in with your own...LOL .
I'm sure Mr. Madoff does for all he's worth.
I guess the safest place for your coins
might be under your mattress after all.
The last place I'd wanna be now is in pennies...

Posts: 669 | From: Gouldsboro, Pa. | Registered: May 2006  |  IP: Logged | Report this post to a Moderator
   

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