How I Screwed Up These Two Near-Perfect Calls To Sell Short

Take a look at my latest two trades—shorting 1,200 shares of probable-fraud spam-happy BSHF into a morning dip at $2.55 and 1,000 shares of failing business-so-let’s-float-a-takeover-rumor VM into a nasty slightly negative close yesterday at $4.01—both of which tanked 15%+ within a few hours of market action of my shorting. Great calls to be sure, but I somehow managed to screwed both up–and judging from the comments, I’m glad many of you guys did better!

Unfortunately, the BSHF pattern appeared the day before this new website went live and since it didn’t tank in the early morning EXACTLY like I wanted, I covered for a $75 loss since I had a million things to do to make the launch. Didn’t feel guilty about it until later in the day when it tanked 50 cents/share in a perfect representation of a spam stock falling apart! Sad sad sad, but one of those rare unavoidable situations.

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Minimizing Trading Losses: Two Overnight Trades That Didn’t Go So Well

From a few days ago, just hadn’t gotten around to writing about it…as I mentioned HERE, I shorted 2,000 (KOG) at $2.75 near the market close when it cracked sideways price action so I thought it’d go negative on the day—I was right that it did go red, but I didn’t take my 10 cents/share gains cuz I wanted a big drop—not a pesky $180 profit. Unfortunately, I had a flight to catch the next morning…

Took a later flight to watch the market open—wasn’t comfortable at all since it opened above the sideways price action crack of $2.80, covered at $2.82, a $160 loss including commissions. Screw that, played I safe…I can take $160 losses all day long. Later in the day, it went decently red down to the $2.60 area, so I wasted $400, but when I play volatile stocks, I don’t worry about predicting every 10-20 cent move—I take my 20-50 cents-$1/share gains thinking stocks will make much larger swings (so I won’t have to be perfect in my timing) (such as THIS trade)

Three days later and KOG is still bouncing between $2.60 and $2.90, a clear sign that a big drop was never in the cards. So, my loss wasn’t that bad. Decent trade…glad to hear any of you timed it better and escaped with some profits!  

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How To Short Penny Stocks: Playing It Safe By Covering Short Positions Early

This is a profession where we know 90% of the players lose—you want to do everything you can to not be one of them. What’s worked for me is short selling weakening stocks that have a bunch of overhead resistance and if the price action doesn’t pan out EXACTLY like I want, cutting my losses quickly. I’ve proven both these points with my latest trades on COT and ASTI.

As I posted the other day, I shorted COT at $3.48, encouraged by a late afternoon crack of sideways price action, making em think it’d seen its top. Unfortunately, overnight good news caused a 15 cent/share gap higher—not much, but definitely not to my liking. Thought about holding, but when I see fading volume and 20k and 30k buy orders—whether they’re real or not—there’s the potential for a big squeeze, so I covered my 1,000 shares at $3.60, a $140-ish loss. Not bad, just playin’ it safe.

Minutes later, the stock was looking to go negative and I tried reshorting 2,000 at $3.55—order REJECTED. Too much trading for this under $25k trader, pesky SEC-Reign-Of-Terror-Rule (Pattern Day Trading Rule (PDTR) should really be ROTR) stopped me…stock drops nicely down to $3.25—annoying $500 gain missed, but this is why most traders play FX and use tons of leverage (SEC you realize you’re punishing the good guys and encouraging the bad ones, right? AKA any economic disaster is squarely on your shoulders). Gotta learn I can’t enter and exit as I please, like being on probation for a crime I didn’t commit—never gonna get more comfortable risking losses.

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