How to Short Penny Stocks SAFELY? Penny stock short strategy for beginners $CEI $ELTK

How to short penny stocks SAFELY? We all know most of these trashy penny stock
companies are actually worthless and will go down to zero. But you cannot just short anything thats run
“up to much”. Or else you run the risk of being short squeezed
and get margin called. Yep, i’ve been there done that. In the game of day trading penny stocks, timing
is everything. So in today’s video. I will be going over the penny stock day 2
short strategy. Going over the psychological reasoning behind
the set up, SSR, and how to properly enter and set up your risk in order to short penny
on day 2 or day 3. So if you do appreciate videos like these. Please drop me a like on this video. Its absolutely free today, and studies show
that if you like humbled trader videos, you’ll make more money. Science! In a buyer’s market where all the low float
penny stocks are going parabolic, its always safer to short on day 2 or day 3. Which brings us to the first criteria of this
short set up. On the daily chart we must see a very clear
bullish extension candle to the upside with above average volume. This the daily chart on CEI. You can see this is a very typical dilutive
chart for a penny stock. This penny stock has done 3 1 for 25 reverse
splits in the last 2 years. So as we can see on July 9 CEI ran up from
$2.50 at the open to a high of $9.50 near the end of the day. The stock has a low float of 2 million shares
float and it was just squeezing shorts all day long. If you look at this intraday chart on the
10 min. The stock is trending to the upside all day
long. All dips and consolidations were bought in. The supply and demand was clearly skewed towards
the buying side. This chart is a clear example of why you should
not short a strong low float stock on day one in a buyer’s market. Now we all know by now this stock closed strong
on the day. But on day 2, is where the short set up came
in. During premarket the stock is slowly gapping
down from the the previous day close at $7.56. It dipped down to a low of 5.80 premarket. And thats the second criteria for this day
2 gap down short strategy. The premarket trading price, has to have gapped
down significantly from its previous day close. And why is that important? Now we have to put our trader psychology hat
on and think about who’s trapped. On day way the stock was squeezing shorts
all day long and attracting long traders. The chart was clearly bullish everyone and
their grandma who has a robinhood trading app is longing the stock. So what do you think these traders will be
feeling when they woke up and see that not only is their stock not going to the moon
like everyone on stocktwits and twitter is saying, the stock actually looks like is starting
to sell off from its highs. So all the buyers who bought in after $6 are
now under water. And they are panicking and thinking, holy
sh*t. I totally chased that chat room alert. I was anticipating a gap up to 20 dollars
but now i’m down a dollar a share. I should probably sell before the stock goes
back down where it came from at $2 the day before. ‘ Remember, when a stock is overly bullish,
and the herd is biased towards one side, and the common thesis fails to occur, the complete
opposite move tends to happen, and very violently. In this case, $CEI, everyone who was in day
1 who held the stock was very bullish, and their thesis was anticipating a gap up. And when that expectation failed to happen. The herd will panic all want to dump and get
out of the stock. So that’s the psychological reasoning behind
this day 2 gap down short strategy. And you as short seller, in this set up, is
taking advantage of the emotional selling by the crowd, and mostly likely the insiders
of this penny stock company selling and diluting their own shares. For the gap down criteria #2. I dont use a strict way of quantifying what
number counts as a good enough gap down for me to consider it short. So what I do to consider a pre market gap
down worth shorting, is simply pull up 10 min chart and see the gap down amount relative
to the previous day highs, And if the gap down was only 20 cents or even
50 cents. To me, thats not enough to cause an emotional
panic for me to shrot into. Then thats not a good enough gap down short
set up for me. Then i’d rather avoid, or wait. So how exactly do we enter, exit and put our
risk for this penny stock day 2 short strategy. There are 2 ways to enter. The first way is… smashing that like button
if havent already. If you get rich and buy 1 lambo is 10 years,
thats because you smashed that like button. Also make sure to call me. So to enter the day 2 gap down short. You must pull up the daily chart and previous
days intraday chart and have the previous support and resistance levels drawn out. If you don’t know how to do that check out
this video. There are two ways to start entering short. The first way, is to scale in your first position
short when the stock opens and pops into the major resistance levels you drawn out already
before you enter the trade. In this case, this line 6.65 is the premarket
high on day 2 and also day 1 intraday support. So i would start a position shorting into
any pop towards that level. The risk, would be the previous day close
at 7.50. So thats already a dollar risk so make sure
to size accordingly and manage that risk. But thats why this strategy needs that criteria
#1 of a clear over extension candle on the daily chart. Because that means the stock could potentially
give you a lot of reward to the downside. And the reason I say start shorting any pop,
and not start shorting on that exact lines is because. Many times, the stock may just pop to 6.50
and not 6.67 in this case, and just start dumping. Thats because… well, have you held a stock
long thats gapped down on day 2, i have done that, and I remember just wanting to get the
hell out at any pop possible. Right? Think for the other traders, if the majority
of people are under water $1 /share this penny stock, chances are, they’ll try to get out
on any pop and prevent losing even more. Now if you’re too scared to short the pop.
then the second way to enter this short is when the stock breaks the premarket low level
around 5.80. And the risk would be the reclaim of that
same level. Not a pop into that level, but a reclaim,
meaning the stock is consolidating above that support. And your potential profit target to the downside,
is at previous day major support level at 4.50’s. This is a safer place to enter than shorting
the pop at the open into resistance. Because the stock has confirmed that it cannot
push higher and break the premarket level on day 2. And thats a sign that its game over for this
penny stock. The second way to enter is safer, but it could
be harder to fill because of SSR, which stands short sell restriction, also known as the
uptick rule. This restriction simply means that when a
stock is down 10% from previous day close, short sellers can only open position on the
ask and not slam the bid. So thats why a lot of times on SSR, you may
not be able to get the size you want short. Also, There are cases where SSR can contribute
to a short squeeze and allow the stock to go red to green on day 2. Yes, that means this day 2 gap down short
strategy is not 100% guaranteed. There are no strategy’s or set ups that
is 100%. Anyone who claims that is trying to sell you
their koolaid. Its very important for me to present you guys
a realistic view of trading penny stocks. Ill never call trading easy or any strategies
to be 100% guaranteed because this sh*t is hard. ELTK was that perfect gap down short setup
that caught all the shorts off guard. You can see this stock gapped down to $6 from
previous day close at 7. So its down a dollar a share premarket and
opened at 5.90’s which triggered SSR, short sell restriction. now SSR is not a direct cause of a short squeeze
red to green move, because our last example CEI had SSR but it didn’t squeeze. But it could contribute to it, especially
when the stock like ELTK has such a low float of 1.5M. And thats why you must respect your stop at
either premarket high or previous day close. Risk management. If your stop line is hit, then stop out. Otherwise you could be squeezed to 11 dollars
like $ELTK. But i will say the key difference between
the gap down short set up on ELTK and CEI, is the buying volume. The buying volume on ELTK on the initial pop,
was comparable to its day 1 move. So that’s significant. While the CEI buying volume on that pop was
extremely miniscule. Doesn’t even show up on the 10 min chart. So always use relative buying and selling
volume to guide you when shorting penny stocks day 2 or day 3. Don’t be that guy who just short anything
that’s “up to much”, especially if in a buyer’s market. We all know these penny stocks are going to
0 eventually. But in day trading, you could be fundamentally
right, but technically wrong. Now if you haven’t subscribed, please make
sure to do so. And always destroy that like button. I post quality videos like these once a week. I keep it real here. There’s no lambos or private jets here. Also, If u guys haven’t added me on instagram,
check out my profile over there. I post there several times a week. Feel free to follow me and say hello there. Thank you guys for watching as always.

96 Replies to “How to Short Penny Stocks SAFELY? Penny stock short strategy for beginners $CEI $ELTK”

  1. also gotta look at it the other way, shorts STUCK all day from day 1 covering into every wash they possibly can at open lol

  2. Ok….. I liked your video, and I'm totally ok with making Lambo money, but id be perfectly happy just to take a ride in your FUTURE Nyan Cat Lambo!!! That would be worth every trade I've ever made!! Lol

  3. Im afraid shorting penny stock after watching your video, too burned shorting on it before.
    so i just shorted LYFT on earnings , almost got a margin call on it, lucky it went down again. ๐Ÿ™‚ did your advice on ROKU earnings, small green …
    still learning from your video and trying to apply it in small amount
    thank you humbled trader

  4. The only way I can short anything is though options "puts"…. & …. I like Kool Aid … don't remember the last time had any.

  5. Funny how when I tried to short the โ€œbacksideโ€ after selloff i would still get smoked. For example shorting DGAZ on August 1, shorting WKHS on August 2.. ๐Ÿ˜“

  6. I never short because I don't want to deal with taxes. All my trading is done in a TFSA. Only way is for me to buy puts (for option-able stocks)

  7. I love your videos and getting into trading. Could you recommend a trading platform or an app for International traders? I reside in Portugal. My next question is what steps do you take to chose the penny stocks you want to trade? Thank you!

  8. As always, great video! But I did not understand your point about the insider dilution? Why do the insider/board members sell?

  9. I'm curious, besides YT, do you have other income sources as well? Or are you making your living off of this? I'm just trying to gauge if this could be what I live off of eventually. I'm not after Lamborghini money haha, at least right now, but I'd love to live that elusive lap top life style! Thank you! ๐Ÿ™‚

  10. TRADERS: This video actualy has some good info. Seen some WHACK ASS HYPE on zip trader… This chic is heads up for best information… We are not going to comment on her joke ranks… jk

  11. Great video, I always appreciate your content! Do you run statistics on the patterns you trade by any chance? I know some successful traders who make tons of spreadsheets with data and other successful traders who don't, do you think its worth putting in all the time?

  12. Found you by chance, love the content!..and subscribed…do you check out "levels of market maker"..before deciding on a trade?,. esp longs?

  13. You named 3 Companies which are known for Manipulating the Stock ( H.C. / Max/ Jeff / ) . … are they other one like them ? If yes, can you name them ? …. How can i figure out / find how much more of these exists ? .. Thx smashed that like button for an hopefully helpful answer ๐Ÿ™‚

  14. I've spent 2 weeks looking for a video to show my cousin, to give him a clear understanding on short selling.. The way you explained it was simple enough for him to understand..

  15. I REMEMBER CEI. from a few weeks ago was't that the pump and dump that had everybody going Crazy. It reminded of ICG. from last august.. I did a few scalps on CEI made profit and got far away from that thing i just remember saying a lot of newbies are going to lose their shirt and pants once this stock sells off.

  16. And it also allows for the chance to sell off at cheaper positions. What I've noticed is, a dollar something down to about I'd say 30 cents are very safe price ranges. And in these prices, a 70 percent to a 110 percent increase within the day, then watch for the decrease and enter after the support is broken in the downtrend to secure in.

  17. I watch most of ur videos
    I just started with a small account and learning everything from all ur strategies n trying to apply on my plan

  18. Youโ€™re cute. U have great content but sometimes I just watch cuz youโ€™re cute. Married? Got a b/f? ๐ŸŒน๐ŸŒน๐Ÿฅฐ๐Ÿฅฐ

  19. You're real-ness is really funny & awesome at the same time! Keep up the great quality content ๐Ÿ™‚

  20. Great video, great information, great personality, great educator, great sense of humor– great trader. Your the complete package ๐Ÿ‘๐Ÿ‘๐Ÿ‘๐Ÿ‘๐Ÿ‘

  21. Great video, very informative and makes a lot of sense. It will be great if you can share strategies or trading videos for large cap especially TSLA, NFLX, AMZN etc.

  22. Thank you. I was Technically right on CEI when it was in play but could not short it because I had software issues. I,m learning. I highly recommend reading Technical Analysis Using Multiple Timeframes by Brian Shannon. It focuses on the psychology behind TA and not necessarily patterns. It was a major major turning point in my understanding of what is going on in this crazy world of stock trading.

  23. I need more content!! I want to learn more so I can buy a LAMBO!!
    Just kit-ding. Hope all is well, and thank you much for all the great content! It has helped a tremendous amount

  24. This might sound weird, but I suspect what youโ€™re teaching here is similar to what Stephen Dux is teaching. I suspect, but who can be sure? The guy is impossible to understand. I donโ€™t mean his accent, I just mean the words he chooses to use donโ€™t make as much sense to people. Your explanations are so straight forward and simple, and you cover all the logical steps between the main points. Itโ€™s a gift. If you ever want an idea for a new video you could do a comparison between what Dux does to short, and what you do.

  25. hello humbled trader! I have a question for you. Right now i am using a margin acct and i have not done over night holding yet only day trading. How much does it acct for holding your acct over a day if you have a holding in a stock. i am afraid the margin will put me in the red that why i have not done it yet.

  26. Great video thanks. Can you make a video about your trading history, like from beginner to full time? How you transitioned to being a full time trader? Thanks! Just a suggestion.

  27. i'm going to give this video at least 10 views, I love your content, curious how long you've been trading. I know you started in some of the similar chat rooms i've been in. I'm identifying more with some of the ways you teach in your videos as i'm moving away from those chat rooms to focus on my own process. !

  28. 7:24 the PM low is marked at $5.80 per your suggestion, but how about the other lower red candles around the $5.00 area, do we disregard those?

  29. Great video. The only thing I would say is that risking one dollar is too much risk. The safest way to attack is to wait for the stock to break below the support level where longs got in and wait for the stock to bounce and retest the support level that is now resistance and if it rejects then attack short

Leave a Reply

Your email address will not be published. Required fields are marked *