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Trading Recap

Is This The End of Short Sellers?

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Written by Timothy Sykes
Updated 7/10/2023 5 min read

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

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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…

THEY’RE NOW SQUEEZING. 

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…

This is a stock that was a former Supernova…which is something I’m always interested in.

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…

Source: StocksToTrade

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?

  1. To spot a trend I am seeing
  2. You never know the outcome of your trades until after the fact. I had several good reasons to give this trade a shot
  3. 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.

Do yourself a favor and register to one TODAY. 

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”