Best Online Discount Brokers for Shorting Penny Stocks | Timothy Sykes

The 6 Best Online Discount Brokers For Short Selling Penny Stocks: A Comprehensive Guide

UPDATE: The brokers below are still great, but THIS is my new favorite broker…subscribers of my 4 newsletters just made $65,000 in one week on this stock (I personally made $7,000ish) because only my new favorite broker had shares to short, when no other broker did, as the stock collapsed 60% in 5 trading days…

This may sound funny to you and my trading challenge students and I now laugh about it, but when I first began teaching my unique strategy outlined in these 7 free video lessons openly in late 2007, after making $1+ million from shorting penny stocks the past few years and another $1+ million buying penny stocks, people began sending me links from Investopedia telling me it was illegal to short sell penny stocks.

Hmmm, I didn’t think how I made my money was illegal as I used regular online discount brokers for years and this was the main strategy I intended to teach via my book “An American Hedge Fund”, newsletters, instructional DVD packages

…and blog, so it was frustrating to receive emails saying I was the devil…or a criminal profiting from “illegal practices”.

Little did they know short selling penny stocks was perfectly legal and logical and that I was dead on right, whereas giant Investopedia, which eventually sold for roughly $40 million, was dead wrong as this case exemplified the kind of misinformation that exists in finance…especially in the penny stock world which is full of self-admitted and protected-by-disclaimers-in-tiny-print promoters who use “reputable” financial websites like Seeking Alpha (see an example), Yahoo! Finance (blog post coming tomorrow which I’ll link later, someone remind please, how they have a giant ad for Jammin Java Corp. (JAMN) right on their homepage and Google Finance (see blog post) to promote worthless companies whose shareholders and insiders pay them (blatant conflict of interest) and sucker people, most of whom are gullible, lonely, and bored senior citizens.

Download a PDF version of this post.

I use disclaimers too but they basically just say I’m not a financial advisor, past performance is not indicative blah blah blah…I NEVER take compensation for my picks or research from people associated or invested in the companies as I believe that makes those picks and research dangerous/conflicted/unethical/should-be-illegal…even if “financial celebrities” on TV like Tobin Smith and Charles Payne, take bribes of hundreds of thousands of dollars, sometimes even millions of dollars, and have SEC records of past penny stock manipulation (notice these two scumbags have never come after me with cease & desist orders because what I write is the truth and they don’t want the public, especially upper management at FOX, to know how they use their celebrity status and TV following to enrich themselves on conflicted picks like FIRST CHINA PHARMA GROUP (FCPG) (down 75%+ off its manipulated highs) and NXT Nutritionals Holdings Inc (NXTH) (down 95%+ off its manipulated highs) which for better or worse will never end but which makes short selling penny stocks so profitable and predictable for those of us willing to learn how to profit legally via short selling the stocks pumped up due to this time-honored practice of penny stock manipulation.

For a while now every time a subscribers of my 4 newsletters asks which broker is best for short selling penny stocks, we’ve reefed them to this post “Recommended Brokers For Shorting Penny Stocks (Yes, It’s Legal & A Good Niche Strategy)”…which at the time of its posting in January 2010 was a comprehensive post on all the best brokers and some links to good articles regarding shorting penny stocks.

Well, times have changed and thanks to subscribers of my 4 newsletters BANKING off my strategy (see their profits HERE and HERE and HERE and HERE)…and my transparent trading success — my Thinkorswim brokerage account has now grown from $12,415 at inception in November 2007 to $191,975, a gain of over 1,440% in 3.5 years – (and yes to those who say they can do better, I spend most of my time emailing, teaching, blogging, researching, coaching, webinaring, instructional DVDing…trading is part-time for me, not to mention I’ve been a short seller in a strong multi-year bull market, do the math and understand why my returns are superior and I cannot wait for a bear market to truly show off my strategy) coupled with all the interest created by the bull market which means I now get 2,000+ emails/day from people who want to learn, many of them asking which brokers I recommend.

So here’s an updated and comprehensive broker list for short selling penny stocks as of May 2011 and understand I could care less whether commissions are $3, $5, $10 or even $50/trade…the key to achieving superior returns like these is not worrying about nominal fees associated with trading, it’s about finding shares to short on gimmes like these two pump and dumps Lithium Exploration Group Inc (LEXG) and Lithium Corporation (LTUM) with the same questionable law firm (hmmmm as I posted) on which we made $100,000+ even after mistiming both of them substantially.

Because as I’ve highlighted in the past and will soon do an updated post with dozens more of example, this “million dollar short selling pattern” really does not change; you can make money buying these pumps on the way up (as I outline in my PennyStocking DVD and PennyStocking Part Deux DVD study guides and remember I bought LEXG at $1.39 on the back of its $3 million mailer which later went to $10+ inside of a month) and, like I prefer, on the inevitable downside via short selling the pumps as they turn into dumps when the insiders dump their shares into the artificially high prices…it’s just a question of finding shares to short anywhere around the top and being positioned properly when the odds favor a big crack day, on which these pumps dump 30% to 50% to even 70%, like when I NAILED this Shaquille O’Neal pump & dump (he sent me a cease & desist letter, but when we replied, he went away and the stock later dropped 99%) from Whole Foods on this trade…or like my trade from a gas station rest stop on this one…or when I played it too safely on this one

$5,938profitHHWWShort Stock
TY http://bit.ly/timtos for the borrow, now at $1.60 so I missed $35k profits 🙁

Posted by timothysykes /
http://profit.ly/1MmDls

(although one of my TIMalert subscribers NAILED it)

$60,800profitHHWWShort Stock
Multiple brkrs & trades. Avg pos size around 68K shrs. Will submit proof to admn

Posted by lx21 /
http://profit.ly/1MmDlu

…and literally dozens more over the past few years as it’s this one pattern that I have to thank for the vast majority of my $2.8+ million career trading profits

The brokers below are still great, but THIS is my new favorite broker…subscribers of my 4 newsletters just made $65,000 in one week on this stock (I personally made $7,000ish).

While I still fully recommend Thinkorswim for their ability to reserve shares to short for the entire day (call or pull up chat window to borrow shares at 7am EST, you don’t necessarily have to execute right away just put your sell short order at a limit price considerably higher than the current price so it doesn’t execute and you can re-use them throughout the day), low account minimum of just $3,000, their superior customer service, tools, educational webinars and executions, their borrows for shorting penny stocks have gone downhill since being acquired by TD Ameritrade so they are just one of the several brokers I currently use and recommend…although I will always keep an account there since they do have the ability to surprise every now and then like on this pump that later got halted, investigated by the SEC and whose stock price dropped 99% from my short or more recently on this pump I simply mistimed but still made $6k on.

TradeStation is a solid broker as they have had easy to borrow shares of stocks (but no reserving shares ahead of time like Thinkorswim as far as I know) like Prana Biotechnology Limited (PRAN) and Genetic Technologies Limited (GENE) and both have been great to subscribers of my 4 newsletters as you can see our profits of $125,000+ and $40,000+, respectively

Their specialty it seems are Nasdaq smallcap (old-timers remember plays like Zanett, Inc. (ZANE) and IFLG as TradeStation doesn’t do OTCBBs or Pink Sheet stocks. Their minimum account size is only $5,000 and if you contact my rep there, Peter Albino, he’ll hook you up with a lot of cool goodies…I HIGHLY recommend having an account here, even if it’s just small as you can literally make $1-2k on these kinds of play with just a $4-5k investment. Do that a few times/month or even throughout the year and you’ll see why I laugh at people who brag about beating the S&P 500 by 5, 10, even 50%…in this game you can use your small account size to your advantage and BLOW AWAY the S&P 500 every year.

Peter Albino
Registered Representative
TradeStation
Toll Free: 888-735-1222
Phone: 954-652-7403
Fax: 954-652-5403
PAlbino@TradeStation.com

SpeedTrader is a new broker I’ve just begun using as like Thinkorswim, they clear through Penson (Thinkorswim is apparently moving over to TD Ameritrade clearing, but nobody knows exactly when and depending on who you ask, their borrows will soon be better or worse for it…zzzzz, I despise guessing games), but SpeedTrader’s software costs roughly $140/month and the main reason to use them is due to direct routing to market makers on OTCBB and Pink Sheet stocks (better, faster executions) and Level 2 on Pink Sheets/OTCBBs (For charting and Level 2, I prefer $99/month Etrade PRO, and no I don’t use Etrade as a broker hence why I pay the software fees which I cover extensively in TIMfundamentals and TIMfundamentals Part Deux DVD study guides)…use THIS affiliate link for special goodies if you open a SpeedTrader account with $25,000 or more as I suggest is needed to best take advantage of their special tools and above average borrows.

I used to use Sogotrade for shorting stocks like IFLG and I made $100,000+ within a few months until they changed their rules and now the firm has split into two, something called Wang….weirddddddd…anyway, the borrows went away and I’m still trying to get $50k out, but I can’t seem to get through on the telephone….sketchyyyyy…I could never recommend them now.

Another firm I used to use for shorting penny stocks was Broad Street Trading which, yes, is a prop firm…they had great share availability on these kinds of plays for a few months, but when I told you readers about it, too many of you abused the rules regarding only trading intraday (welcome to the prop world) and their superior borrows quickly went away…this was a great Spiderman-like lesson that with great shorting power comes great responsibility and many of you untrained jackals simply aren’t worthy of such powers…yet.

I know some traders still use Broad Street, check out some Broad Street reviews and know that the guys behind the firm are awesome, but understand it is riskier since it’s a prop firm and shorting pump and dumps intraday is often difficult; I don’t like deadlines as often times these pumps don’t dump on command, but definitely consider opening an account with Broad Street using this affiliate link

The single best broker I have for shorting, which I’ve referred to as “my special broker” and contrary to some rumors is not a prop firm or Goldman Sachs, has the most penny stocks available to short, which can be reserved for the day, but costs roughly 3 cents/share per day to hold overnight (the fees here can really add up if you hold a position short for more than a few days) and because their minimum is $50,000 and at least 500,000 shares trader per month, you’ll have to contact me to find out their info so I can help guide you on how best to use them so we don’t waste their precious time on people who aren’t qualified and, more importantly, so you don’t screw it up for the rest of us (I learned the hard way with Broad Street…hence why I require a non-disclosure agreement and with this broker information as it’s not your typical broker)

The few people who I’ve introduced haven’t even met their active trading requirements so it’s not for most people, especially beginners who seriously shouldn’t have this kind of power or else they’ll break one of the many rules or end up shorting too early and blowing their accounts up.

(Remember it’s a bull market, you think my gains are impressive now, wait for when it’s a bear market and I can get more aggressive)

Interactive Brokers has the single worst customer service in the world, as you can see from customer reviews of Interactive Brokers, but they have the best borrows for shorting penny stocks (however they are first come first serve so be prepared to short at 8am EST…the tactics of shorting premarket are taught in many of my nearly 300 video lessons for PennyStocking Silver subscribers), especially stocks under $2 and even under $1/share, including OTCBB and Pink Sheet stocks…some unethical brokers like Scottrade (The broker of choice for penny stock promoters for many reasons, none of them good) lie to their customers and say it’s impossible to short stocks under $3…inaccurate and I don’t appreciate having to correct your lies Scottrade. Just because your brokerage sucks for shorting doesn’t mean others are as bad as you are.

Heck, even E*Trade has even begun allowing the shorting of stocks down to $1/share, but I haven’t had time to test out their borrows and from what I hear from others, it’s not good.

The main problem with shorting stocks under $2.50/share is that you have to put up $2.50/share in buying power no matter if the stock is 10 cents/share, $1/share or $2.50/share…so shorting 10,000 shares at any of those prices requires buying power of $25,000…100,000 shares short requires $250,000.

That’s why some furus knock my strategy when I profit $30,000+ on one trade using Interactive Brokers and risking roughly $300,000 of my assets even though shorting 120,000 shares of a 60 cents/share stock should really only be a $72,000 investment.

$31,532profitWLOCDShort Stock
Biggest gain in years, timed well for once, see research http://bit.ly/gnsi5K

Posted by timothysykes /
http://profit.ly/1MmGnV

That said, when a pure pump & dump like Willow Creek Enterprises Inc (WLOC), which now trades at 7 cents/share, is pumped up to an artificial 60 cents/share via propaganda and lies, it offers a superior risk/reward opportunity whether you want to short 1,000 shares or 1 million shares…see all the details of that trade here

And ya know what, the reason I’m a teacher and not a bigtime hedge fund manager is that whether or not I expose these pumps, there has NEVER been that many shares to short…welcome to my strategy that is both a gift up to six figures and a curse for those who want to make more than seven figures…the strategy of short selling penny stocks is not scalable into the tens or hundreds of millions of annual profits, the best anyone can do is a few million and most of my best students only earn five and six figures/year.

That’s why despite my superior track record and overwhelmingly logical and meticulously planned strategy, the cost of my 4 newsletters are all less than your monthly cable bill and they’re a good deal for you if you put enough time into learning everything and it’s a good business for me, the world’s only multi-millionaire trader with a non-truly-scalable strategy.

Even though there are a few shares to short each and every day, no matter how hard you try, even with these brokers, you’ll get rejected from borrowing shares to short because these pump and dumps are so obvious…that will never change…that’s why I made this video “No Borrow, No Cry”

But of course, it costs you nothing to try to reserve shares to short and if you find shares just one, two or three times, even if you screw up pretty much every trade the way I…you’ll still profit nicely…and that’s the beauty of my strategy: perfection is DEFINITELY not required.

And of course as you can see from penny stock promoter confession:

…there will ALWAYS be pump & dumps to short sell as the SEC is incompetent, there will always be stock market criminals and it’s just a question of how well prepared you are to profit from the next pump & dump

And definitely best of all, as these videos show the pattern is SO predictable and easy to spot:

Recap: The more of these brokers you have accounts with, the better your odds are of finding shares to short. I use and recommend each of these brokers and am an affiliate of all of them except IB which won’t even return my calls (welcome to their customer service)

TradeStation: $5k minimum, best chance at shorting Nasdaq pumps, contact Peter Albino Registered Representative, Toll Free: 888-735-1222, Phone: 954-652-7403, Fax: 954-652-5403, PAlbino@TradeStation.com

Thinkorswim: $3k minimum, highly recommended, but tough to get borrows on OTCBBs/Pink Sheets

SpeedTrader: same recommended as Thinkorswim, but $25k recommended minimum to get better executions on OTCBBs/Pink Sheets and with monthly fees if you don’t trade enough

Broad Street: prop firm which has good borrows, but you can only short intraday which SUCKS

Interactive Brokers: $10k minimum, best for shorting OTCBBs/Pink Sheets, but shares go fast, 1st come 1st serve, terrible customer service

Posted in Basics, Brokers, FAQs, Success Stories, Testimonials, Videos

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30 comments

Timothy Sykes

Hey Everyone,

As many of you already know I grew up in a middle class family and didn't have many luxuries. But through trading I was able to change my circumstances --not just for me -- but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!

Which is why I've launched my millionaire challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.

So when you get a chance make sure you check it out.

PS: Don't forget to check out my free Penny Stock Guide, it will teach you everything you need to know about trading. :)

  1. PD

    Tim – In the section where you talk about Speedtrader you mentioned to go to ‘THIS’ link if you will open account of $25K, but it was not linked and I DO plan to open an account with them for more than $25,000–How can I get this link? Great appreciated. 

  2. Pingback: The 6 Best Online Brokers Communist James Altucher-Style

  3. Lawrencekessman

    Tim, EXCELLENT blog.  Don’t know when you have the time to get it all out there, but MUCH appreciated!!! 

  4. Jimmy Davis

    Great info! Appreciate the time and effort. Been monitoring your site, blog, trades, and Fri videos. I’ll subscribe and jump in shortly. EXCellent info for us traders who are still open-minded, especially when your info is trial and error.  .. Thanks again Santa ..

  5. tk993

     Also, what are the special goodies? I’ve looked around on their site but I don’t see any information on what added benefits we get for an account with more than $25k.

  6. Jimbo Skales

    Tim: re: the under 2.50$/share rule..is that for all brokers?? Or is that just a Interactive Brokers rule?

  7. Barrymore99

    If you have 50-500k where can you go to HIT bids?  Can you go directly to a MM?

  8. 1mikecurtis

    TD Ameritrade states that “The stock must be marginable and available to short”,,,,,So how are you people shorting any stock that is less than $1.00 at TD Ameritrade…..I’ve tried it in the past and they simply won’t let me do it.

  9. Pennistoks

    TOS has bene so sucky lately, because of their clearing firm Penson. It just SUCKS! They never got any good shares to shorts.

    I know some good brokers, but why the heck should I tell their names as u may grab all my shares? Haha.

  10. EricMC

    I agree with Jarasta. I’ve taken the Pepsi challenge with most of these brokers, but I took the bong hit challenge long ago, and realized that Tim is a douche. 

  11. Vin

    Great Post Tim!! Thank you so much for your reviews & your blog. Much appreciated. I plan on getting in the Short game. But with the little capital I have, this is the list I needed to find brokers to short with small accounts. Hope to meet you one day!! Thank you!!

  12. Vin

    Great Post Tim!! Thank you so much for your reviews & your blog. Much appreciated. I plan on getting in the Short game. But with the little capital I have, this is the list I needed to find brokers to short with small accounts. Hope to meet you one day!! Thank you!!

  13. Angie

    Ok, I am just learning about all this and trying to get some basic info first. I read somewhere that you can get started with as low as $500, yet none of these brokers have a minimum that low. Where would I start if I wanted to just get my feet wet with a $500 initial investment?

  14. Mikeimbery

    $FMNL will have the BCSC saying how we get in after the probe on the 31st of this month!

  15. Keyama

    I am new… 3k minimum? Oh god… I can’t afford that much? Max 500 any good with low cost… I am gn research in to each one of them….

  16. Pingback: Shorting Penny Stocks Td Ameritrade | Great Stock Market Futures

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