Trading Education Guides Penny Stocks
- By Lucien Bechard
- Updated February 15, 2024
5 min read
SHARE THIS ARTICLE
Shorting penny stocks is a very popular trading strategy with small-cap stocks. It allows you to make money as the price of a stock falls. This is why there’s so much volatility with low floaters at the open. It’s the battle between the longs and shorts, creating a tug of war. The bulls push the price up, and the bears wait on the other end to short the reversals back down to support levels and then cover their positions. It’s important to have a good shorting broker like SpeedTrader, Interactive Brokers, or Centerpoint to get you shares to borrow.
Day Trading Course
In this course, you’ll learn how to read day trading charts, premarket preparation, gauge buy and sell zones, scan for penny stocks to trade, and prepare for live day trading action.
View Course
Table of Contents
- What Does Shorting Penny Stocks Mean?
- Broker Is Important
- Beware of the Pumper
- Is It Illegal to Short Sell Penny Stocks?
- The Patterns
- Technical Indicators
- Final Thoughts: Shorting Penny Stocks
What Does Shorting Penny Stocks Mean?
You can go long in penny stocks and shorting penny stocks—that way, you can make money on the pump and the dump. When people think of penny stocks, they think of the ones that are cheaper than pennies.However, if a stock is under $5, it’s considered a penny stock.
Volatility is very important when trading any stock. That makes the price movement head up and down. Without volatility, you can’t trade successfully or quickly.
Broker Is Important
When shorting penny stocks, having a broker that can find shares is necessary. Many brokers don’t allow shorting of stocks under $5. Hence, it is important to have a broker that does this.
You’re betting a stock will go down. When you go to short with your broker, they have to have customers who own the stock you want to short. If there isn’t a customer that owns those shares, you won’t be able to short it.
Beware of the Pumper
Penny stocks are full of pumpers. Always be careful when someone is promising big things. There’s always a possibility they’re correct, but nine times out of 10, they’re not.
They’re usually someone whose position isn’t doing well, so they need your help to get out. They promise riches, and once you’re in, they get out. They are usually leaving you to hold the bag.
Never take someone at their word. Do your research. Look at the news, the charts, and the patterns. They don’t lie. When shorting penny stocks, you can take advantage of the dump you know is coming.
That’s why charts and patterns are the foundation of trading. They save you from the manipulation of pumpers and allow you to capitalize on moves.
If something sounds too good to be true, it usually is. Do your due diligence. It’ll save your brokerage account.
COURSE | |  |  |
|---|---|---|---|
| DESCRIPTION | Learn how to read penny stock charts, premarket preparation, target buy and sell zones, scan for stocks to trade, and get ready for live day trading action | Learn how to buy and sell options, assignment options, implement vertical spreads, and the most popular strategies, and prepare for live options trading | How to read futures charts, margin requirements, learn the COT report, indicators, and the most popular trading strategies, and prepare for live futures trading |
| INCLUDED | Daily watch lists • Trade rooms • Trading scanners • Discord • Live streaming Day Trading > | Daily watch lists • Trade rooms • Options scanners • Discord • Live streaming Options > | Futures target levels • Trade rooms • Real time teaching • Discord • Live streaming Futures > |
Is It Illegal to Short Sell Penny Stocks?
Shorting penny stocks is not illegal. It’s a way to make money when a stock’s prices are declining, but borrowing shares from a broker and covering your position when the price starts to move back up.
The Patterns
Candlesticks patterns are going to be your saving grace when shorting penny stocks. It’s that way whether you’re day trading or swing trading.
Head and shoulders patterns are popular especially with penny stocks. These are perfect patterns for shorting penny stocks. The small two- and three-candlestick patterns are also going to help.
Tweezer top patterns and shooting star patterns tell you of impending short plays. There are many more where that came from, too.
Technical Indicators
Technical indicators are also helpful but are nothing without candlesticks and patterns. You need both to work together. Shorting penny stocks means you’ll probably be in and out pretty quickly.
You can couple patterns and indicators, such as moving average lines. The VWAP trading strategy is popular as it doubles as support and resistance.
If a candlestick breaks below VWAP and can’t get above it, it’s a key resistance level. You can short the price down. You hear more often then not buy at support sell at resistance.
Shorting penny stocks is the opposite. You want to sell at resistance and buy at support.Candlesticks patternsand technical indicators all help with that.
Final Thoughts: Shorting Penny Stocks
Shorting is risky. That’s why knowing patterns is so important. Never listen to other people telling you when to buy and sell. Do your research and make your own informed trading decisions.
It’s going to take effort and time. You’ll need to study and practice to get comfortable shorting penny stocks.
If you need more help, take our day trading course.
Related Articles
Pink Sheet Stocks Meaning
March 18, 2022
What are pink sheet stocks? Many of you may remember hearing it inThe Wolf of Wall Street. Jordan Belfort, AKA Leonardo DiCaprio, made millions of
Read More »
What Is MOMO (Momentum) Trading?
March 17, 2022
What is MOMO trading? The answer is much simpler than you might think. Momo stands for Momentum Trading. Different strategies have become popular among the
Read More »
List of Meme Stocks
February 23, 2022
Meme stocks rose to prominence in early 2021 during the Reddit short squeeze event. There are conflicting thoughts on what a meme stock is in
Read More »
List of the Most Famous Penny Stocks
September 24, 2021
Some of us have probably heard of someone who invested in famous penny stocks and quadrupled their money. Or, what about that person making millions
Read More »
List of the Most Volatile Stocks
August 30, 2021
What are the most volatile stocks? Volatility is a measure of an asset’s historical price scatter. For day traders, volatility means profit potential. However, volatility
Read More »
Penny Stocks
Pink Sheet Stocks Meaning
Read More »
Lucien Bechard January 30, 2024
Penny Stocks
What Is MOMO (Momentum) Trading?
Read More »
Lucien Bechard February 3, 2024
Penny Stocks
List of Meme Stocks
Read More »
Lucien Bechard January 24, 2024
Penny Stocks
List of the Most Famous Penny Stocks
Read More »
Lucien Bechard February 16, 2024
STOCK TRADING SERVICE
Our chat rooms willprovide you with an opportunity to learn how to trade stocks, options, and futures. You’ll see how other members are doing it, share charts, share ideas and gain knowledge.
Our traders support each other with knowledge and feedback. People come here to learn, hang out, practice, trade stocks, and more. Our trade rooms are a great place to get live group mentoring and training.
TRADE ALERTS “SIGNALS”
The Bullish Bears trade alerts include both day trade and swing trade alert signals. These are stocks that we post daily in our Discord for our community members.
These alert signals go along with our stock watch lists. Our watch lists and alert signals are great for your trading education and learning experience.
We want you to see what we see and begin to spot trade setups yourself.
REAL-TIME STOCK ALERTS SERVICE
We also offer real-time stock alerts for those that want to follow our options trades. You have the option to trade stocks instead of going the options trading route if you wish.
Our stock alerts are simple to follow and easy to implement. We post entries and exits.
Also, we provide you with free options courses that teach you how to implement our trades as well.
STOCK TRAINING DOESN’T NEED TO BE HARD
Stock training doesn’t need to be hard. But it sure feels hard when you don’t know where to turn for legitimate knowledge. There are tons of places to learn, but what makes us different?
Well, for starters, we’re just real everyday people who like trade stocks. We’re not gurus portraying a fancy lifestyle of cars and jets and beaches. Can you obtain those things with what we teach you? Sure you can. Is that what motivates us when teaching you how to trade?
Nope. What we really care about is helping you, and seeing you succeed as a trader. We want the everyday person to get the kind of training in the stock market we would have wanted when we started out.
WHY WE’RE DIFFERENT
What else makes us different? When it comes to the stock market, we’ve won, we’ve lost, we’ve lived, and learned. We’ve been through the ups and downs in the market and figured out what really matters. The Charts…Candlesticks = PRICE ACTION! We’ve created a site that passes all this knowledge on to you.
We don’t charge you an arm and a leg for the stock training we give you. We charge a modest amount that goes towards running our day-to-day operations and paying for our invaluable team moderators that are passionate about teaching YOU!
That’s about it. We could charge more, but we have a pay it forward, give back mentality. It’s not about the money. The best and most important thing for us is YOU. We want to feel good about what we do, and the results and reviews speak for themselves.
Those emails we get, the feedback, the success we see. That is what our educational trading community is all about. We hold no secrets back. Our trading edge is your trading edge.
STOCK TRAINING DONE RIGHT
We don’t care what your motivation is to get training in the stock market. If it’s money and wealth for material things, money to travel and build memories, or paying for your child’s education, it’s all good. We know that you’ll walk away from a stronger, more confident, and street-wise trader.
In our stock trading community, you’re going to get it all. Futures, options trading, and stocks. Not just penny stocks either. Small, mid, and large caps. Each day we have several live streamers showing you the ropes, and talking the community though the action.
There’s no catch, no smoke or mirrors. What you see is what you get. If you’re looking to change your life, or someone else’s, we’re here to help you reach that goal. Get started learning day trading, swing trading, options, or futures trading today!
Click Hereto start your 7-day free trial.
TRADING STOCKS IN THE BULLISH BEARS COMMUNITY
Yes, we work hard every day to teach day trading, swing trading, options futures, scalping, and all that fun trading stuff. But we also like to teach you what’s beneath the Foundation of the stock market.
Tell you the TRUTH about how the market works. The importance of controlling your emotions and having a proper mindset when trading. We’re really passionate about teaching you this stuff!
Money isn’t our #1 priority in life. YOU are. Our members come first. Making sure you get comfortable with trading is our priority.
We have members that come from all walks of life and from all over the world. We love the diversity of people, just like we like diversity in trading styles. It creates an environment much like a university or college.
TRADING ROOMS AND LIVE STOCK TRAINING
Each day our team does live streaming where we focus on real-time group mentoring, coaching, and stock training. We teach day trading stocks, options or futures, as well as swing trading. Our live streams are a great way to learn in a real-world environment, without the pressure and noise of trying to do it all yourself or listening to “Talking Heads” on social media or tv.
We will help to challenge your ideas, skills, and perceptions of the stock market. You will learn and grow as a trader. Every day people join our community and we welcome them with open arms. We are much more than just a place to learn how to trade stocks.
Feel free to ask questions of other members of our trading community. The Bullish Bears are a very helpful crew. We realize that everyone was once a new trader and needs help along the way on their trading journey and that’s what we’re here for. To give you a hand up along your trading journey.
Click Hereto try our trading community free for 7 days.
FREE ONLINE TRADING COURSES
If you’ve looked for trading education elsewhere then you’ll notice that it can be very costly.
We are opposed to charging ridiculous amounts to access experience and quality information.
That being said, our website is a great resource for traders or investors of all levels to learn about day trading stocks, futures, and options. Swing trading too!
On our site, you will find thousands of dollars worth of free online trading courses, tutorials, and reviews.
We put all of the tools available to traders to the test and give you first-hand experience in stock trading you won’t find elsewhere.
Our content is packed with the essential knowledge that’s needed to help you to become a successful trader.
It’s important to treat day trading stocks, options, futures, and swing trading like you would with getting a professional degree, a new trade, or starting any new career.
Invest the proper time into your Trading Education and don’t try to run before you learn to crawl. Trading stocks is not a get-rich-quick scheme. It’s not gambling either, though there are people who treat it this way. Don’t be that person!
STOCK TRADING COURSES FOR BEGINNERS
The Bullish Bears team focuses on keeping things as simple as possible in our online trading courses and chat rooms. We provide our members with courses of all different trading levels and topics.
If you’re a beginner, intermediate level, or looking for expert trading knowledge…we’ve got you covered.
We have a basic stock trading course, swing trading course, 2 day trading courses, 2 options courses, 2 candlesticks courses, and broker courses to help you get started. Free.
Just choose the course level that you’re most interested in and get started on the right path now. Become a leader, not a follower. When you’re ready you can join our chat rooms and access our Next Level training library. No rush. We’re here to help.
Click Hereto take our free courses.
