It doesn’t matter what kind of trader you are…
Whether you trade options, penny stocks, swing trade, or short sell…
The cream will rise to the top.
However, if you’re a short seller…or thought about becoming one…I have some bad news for you.
I’ll explain why and break down my latest Weekend Trade GTII.
The Market Is Constantly Changing
Nothing works all of the time.
And short sellers are finding that out.
For example, I think we can all agree that the MAJORITY of stocks that get promoted are junk.
And that the reason why they pay promoters is because they want their stock to pump so they can then later do an offering to raise more capital for the business.
It’s not really a secret.
But here’s the problem.
When you’re in a trade for a few minutes or hours do fundamentals matter?
No not really, right?
So we’re now seeing terrible companies getting promoted and instead of them having small spikes and then crashing…
And that’s because shorting has become a crowded space.
Instead of waiting a few days for a stock to get out of hand.
We’re seeing traders jump in and short over aggressively on the first green day.
That’s why I decided to get into GTII last Friday…
If it blasted off in the past…who says it can’t do it again, right?
At least that’s how traders think.
More importantly, the stock is getting heavily promoted if you go on social media.
Usually…that is a terrible reason to buy a stock.
However, overzealous shorts are turning these no-plays into plays.
We saw it recently in MULN…
And we’re seeing overaggressive shorts getting murdered in PWM…
Anyways, going back to the GTII…I knew this stock was a pump
All you had to do was go on social media and see everyone pumping it.
Also, it was featuring a pattern I’ve been liking lately, the First Green Day Setup.
Lately they’ve been working so I figured this was a low risk- high reward opportunity.
Despite me understanding that this company was crap, and that promoters were trying to juice the stock.
The way I saw it is if overaggressive shorts get involved it could do something silly like we’ve been seeing.
GTII was being promoted as one of those illegal naked short stories.
Meaning the company was “investigating” to see if anyone shorted its stock naked without getting a borrow.
It could be total BS for all I know…but that’s the story they were running with.
They were pairing this stock with FNGR.
Which actually had a nice move on Monday…in hindsight I should have traded that instead of GTII.
But you know what, even though I took GTII on Friday…
I got out on Monday at about break-even.
You might be thinking who cares, right?
Why are we talking about this trade if it didn’t make me money?
- To spot a trend I am seeing
- You never know the outcome of your trades until after the fact. I had several good reasons to give this trade a shot
- I felt the risk vs. reward was in my favor
Shorting stocks has become riskier than ever because the once considered layup trades that shorts could bank on are no longer there.
If you want to know more about why I think shorting is dangerous check out the video below.
Also, if you haven’t joined one of our live training classes you’re missing out.