Thursday, February 28, 2013

How I have made 10k Shorting Penny Stocks thanks to Tim's Trading Challenge.

I am a 23 year old college student and here is how I made 10k shorting penny stocks.. I was once that lazy guy that said "Shorting is not worth it because shares are never available." Yes, my ignorance was strong then lol. Going into the TimChallenge I was already somewhat knowledgeable with penny stocks. I already had some knowledge of stock promotions from my experience being a stock promoter and being with prepromo for a couple months. However, I was far from a good trader. I was never really comfortable longing pumps. I wanted to try something new. I figured what better guy to learn short selling from then the grandfather of shorting penny stocks. I signed up to the Tim Challenge. Yes, the 5.5k fee is steep for some but I could afford it and I figured I would make it back. I was 100% committed and knew I could pick it up quick with all my prior knowledge. I watched Penny Stock Part Deux first. I then digged into the TimChallenge Webinars (my favorite and where most of my learning came from). I have to be honest I was more interested in Michael Goode's webinar and his type of trading(shorting crappy promoters pumps). His webinars tought me alot. Thanks Michael. In the first couple months I just wanted to get comfortable shorting. I only funded my IB account with small amount of $ (was waiting until I was comfortable to put more into it). Let's look at my early trading.

My first two months I made $2,791.72

I want to focus on some particular trades from these two months and the lessons I came away with that could help some of you.

My first successful short CUAU

CUAU

Why I shorted: This was a Stock Psycho compensated promotion, they dont tend to run for mutiple days. I was able to get shares I took them. My cover was decent considering it bounced back which was surprising.

Lessons Learned: ALFS on a Stock Psycho compensated promotion.

WNYN

Why I shorted: This was a Stock Psycho uncompensated pump that was up big.

Lessons Learned: I learned to be very cautious trying to short an uncompensated promotion on a low float stock. I ended up covering near the high. I also learned most his uncompensated promotion do crash hard. His best run for 2-4 days before the big dump. If you have a small position, it could be worth being patient if its squeezing because it will come back to reality when stock psycho moves on.

BRND

Why I shorted: Spam Pump by the Stock Castle Crew. BRND had a big market cap already at the start of the promotion.

Lessons Learned: When you get shares of a big "Spam Promotion" and it begins to dump stay short for couple days. It usually tanks big.

EMPO

Why I shorted: Hard mailer pump that was sideways for sometime. This was the most patient I ever was with a stock and then when it went in my favor finally, I didn't stay patient.

Lessons Learned: When stock starts to crash after months of sideways price action on a promotion the dump tends to be steep. When hen a pump and dump takes out prior support then trys to bounce and fails to take out that resistance very good sign for your short position.

GWYT

Why I shorted: Stock Psycho compensated promotions dont tend to run for mutiple days. When you can get shares you got to take them.

Lessons Learned: ALFS on a Stock Psycho compensated promotion. Yes if you are early you might have to withstand some pain. I was willing to be patient with this

CTLE

Why I shorted: RocketAlerts Pump. I saw how their previous pick acted. This was very similar. It had a big market cap to begin with. I also wrote my first report exposing CTLE here http://seekingalpha.com/instablog/5786461-penny-stock-realist/1310821-ctle-is-a-pump-and-dump

Lessons Learned: Always study previous plays by certain promoters. Yes, they won't always follow the same trend but sometimes they do and it's always good to know how the past ones performed.

Conclusion

Trading is not easy. However, shorting pump and dumps gives you an edge. No one knows when a promotion will eventually dump but we all know that it will eventually dump. Learning what signs, promoters history, along with few other things will put you in a position to make a big return in a short amount of time. There really is nothing else like it. I am 10x more comfortable shorting pump and dumps then going long them, being nervous about a dump that could happen any second. The Tim Trading Challenge gave me the tools and education to improve as a trader. I am still learning new stuff 7 months into this experience. I want to thank Tim Sykes and Michael Goode for all they have taught me. I will continue to do my best to make them proud. My account is growing and I believe when its bigger I believe my profit.ly chart might go parabolic ;)

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