Previous Post
Next Post

My Take On The Uptick Rule For Shorting Stocks

Posted by Timothy Sykes on Wed 11th of Mar, 2009 08:20:22 AM
  Tags:

A congressman said yesterday on CNBC that the uptick rule for Short Selling stocks will be restore din a month, so will that impact my trading dozens of traders are asking me?

No.

I’ve never cared about this rule whether it was there or not and it amazes me that this meaningless, literally meaningless rule, gets so much attention every time the incompetent SEC and govt. and co. talk about getting rid of it, restoring it and back again over and over.

Here’s what this time wasting articles says:

The uptick rule allows short sales only when the last sale price was higher than the previous price.

The rule was first adopted in 1934, five years after the 1929 stock market crash, to prevent short sellers from adding to the downward pressure on a stock that is already falling sharply.

The rule was repealed in June 2007.

“Mary is moving towards the uptick rule, which some people think is very important, some people think it’s not important, nobody thinks it does any harm,” said Frank who is Chairman of the House Financial Services Committee. “I think that will go back (into effect).”

The SEC has so far declined any official comment on Frank’s statements.

The uptick rule is different from the ban on “naked” Short Selling that was imposed temporarily last summer to prevent the downward spiral in financial stocks. The ban, which was lifted last fall, required investors to actually borrow shares of a stock they were shorting. This prevented “naked” selling, in which investors could put unlimited selling pressure on a stock.

First off, when I think a stock is going lower, I look to borrow shares and short it. If I can’t borrow or if I borrows but I don’t get the execution in time before the stock plummets, I say “next time” and look for another stock to short.

Right or wrong, I don’t chase stocks down because that opens me up to the risk of a rebound–I like shorting that initial crack, nothing more.

And, anybody with account sizes under $10 million shouldn’t care because your orders are small and this rule ain’t gonna make a difference one way or the other. People or funds with over $10 million probly shouldn’t even be Short Selling anyways because their massive size makes them easy targets for short squeezes and only a handful of people in the world have proven they can even make $ from Short Selling massive amounts of money.

Naked shorting is overblown–the entire Short Selling world is only $10 billion or so–so the illegal shorting part is probly under $500 million or so…possibly even under $250 million…

But people fear what they don’t understand so short sellers get blamed for everyone’s screw ups. This is classic example of the media hyping something so stupid, so meaningless, it’s almost laughable. Shows you how much CNBC/the financial media/the people making rules that govern the stock market know about the stock market.

Yes, it’s messed up…deal with it. There’s a lot of things messed up on Wall Street.

I encourage everyone, regulators, congresspeople and poor people alike to watch my ShortStocking DVD so you can actually learn from a profitable short seller. The other successful 12-15 guys in the world run millions of dollars and they ain’t about to teach you anytime soon.

Spread This Post:
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • MySpace
  • StumbleUpon
  • Technorati
  • TwitThis
  • Yahoo! Buzz

TIMstore Monthly DVD Specials:

See all TIM DVD specials HERE

Related Reading

Previous Post
Next Post
  • Reaper
    How to get around uptick rule, two great methods:
    1. Buy put options or sell single stock futures (for liquid stocks)
    2. buy 100 shares to create uptick, then sell 10,000 shares into bid ... this just increases your commission a small bit; a small price to pay to short at will.
  • shizzer
    The uptick rule is a joke. Way back when, when most bid/ask spreads were separated by a decent amount, I could see this maybe making a difference. Today where most bid/asks are the difference of a penny, this will not do a thing. It's another "feel good" tactic. On the other hand, maybe it will work for shorting GOE. ;)
  • Saadi
    Tim, GOE at 55 now! Were you able to get in on it? HUGE gain if you were able to.
  • Hey Tim- did you see this yet?

    http://biz.yahoo.com/ibd/090306/tech.html?.v=1

    Go Stocktwits!
  • shedivy
    does that work reaper, point #2, i thought the short sale had to be above the bid once the uptick is established
  • Reaper
    Shedivy - you're right; I misunderstood the rule. That would work though if someone else is using a pegged to bid order ... so you create an upbid with 100 shares, the pegged order joins you, and then you short sell into the upbid.
  • shedivy
    have you or tim or anyone encountered a finra rule whereby if you hold an overnight position, and then sell, that for the rest of the day you cant daytrade with your money? TOS tells me you're restricted to cash in the account at the beginning of the day, that the new rule is a few months old
blog comments powered by Disqus




Start Here

Who Is Timothy Sykes And Why Should I Care?

See Tim's full bio HERE. Tim turned a few thousand dollars into a few million by taking small gains time after time on hundreds of volatile penny stocks, discovering that his trading strategy, while consistently successful, works best for those with smaller accounts.

Determined to teach others this PennyStocking trading strategy (learn more HERE), he went back to his original $12,415 roots (already $58,000+ even though the stock market has crashed) to show everyone how to turn thousands into millions, even while having a life (somewhat) and making plenty of mistakes. Currently he is the #1 ranked trader out of 25,000+ on Covestor)

How Can I Consistently Make Money In The Stock Market?

Hard work, Determination and Know How.

Hard work to learn how the greatly misunderstood niche of penny stocks provides opportunities every now and then on which you should pounce.

Determination to seek those probable profits out and know how in order to actually profit from them.

Long story short, wait for stocks that are extremely volatile - for whatever reason - and then aim to take small profits (between 10 and 50% within a few hours, days or weeks) here and there, either from betting on higher or lower prices (yes, you can make $ betting on lower prices, it's called Shortstocking (learn more HERE).

Why Penny Stocks?

As Tim explains in several ALL-NEW instructional DVDs (see them HERE) and in over 2000+ blog posts, penny stocks are the most hyped and corrupt niche in the entire investment world. These two qualities make them the easiest to profit from (legally) because the vast majority of people who play penny stocks are suckers and all-around ignorant people. If you have any intelligence whatsoever, you have a clear advantage and it's like playing basketball against mental midgets.

Where Do You Find Stocks To Trade?

This is the #1 FAQ (see more HERE) and it is answered in THIS instructional DVD.

Of course, that's just a brief introduction - to receive a full education, there is Tim's book An American Hedge Fund which is the story of his remarkable rise and lessons learned.

To truly increase your odds at profit, Tim has designed an entire set of detailed instructional DVDs, covering all the variables that amount to over 24 hours of instruction (see them all HERE)!

TIM Trades

View All
Date Stock Buy Sell Net
Nov 6 QXM $4.31 $4.80 $1936
Nov 4 COT $8.66 $8.88 $642
Nov 4 QXM $4.61 $4.89 $822
Oct 30 DDRX $25.70 $26.53 $812
Oct 29 CTDC $4.00 $4.42 $781
Oct 26 AWSL $3.24 $4.10 $2516
Oct 23 RODM $5.27 $5.23 $301
Oct 22 AMLM $2.69 $2.97 $820
Oct 22 USEG $6.12 $6.09 $85
Oct 20 CBOU $8.93 $9.06 $243
Oct 16 VRMLQ $16.79 $18.65 $2773
Oct 13 YONG $11.05 $11.66 $1202
Oct 13 NPHC $0.59 $0.71 $583
Oct 12 IMGG $0.60 $0.70 $682
Oct 9 ZAGG $5.50 $6.10 $2380
Oct 7 GVBP $0.03 $0.27 $702
Oct 1 NPHC $0.70 $0.85 $1482

Total: $92,304 (644%)