When I short my own stock

Currently and for most of the recent year I like to keep 45 - 65 % cash on hand.

Though saying this is a little misleading.

You see most of my cash sits in bids on stocks I channel trade or place on new picks.

As soon as I pick up the stock, I immediately put it up on the ask side at a 1/2 or 1 cent rise.

The days of longs are over for me.

Its a quick buck asap and on as many trades as possible.

The system works.

I'm up over 400% since my low of last October.

I'm waiting till I hit or pass my highest high of June 10, 2008 before I post my numbers.

My goal date to achieve this is the end of November 2009.

My lowest low was October 28, 2008.

The difference - 81% drop.

To make this back I need 527% return.

11 months later

The difference as it now stands is 18%.

I have yet to make 23% in order to return to my June 10, 2008 high.

I have made back 432% since my low of Oct 28, 2008

The above percentages are net of commissions -   1,086 * $6.95 = $7,547.70 (Trades since Oct 28, 2009)

So getting back to the topic - When I short my own stock

Because I insist on keeping a high cash % and I want to trade as much as possible I found that shorting my own stock works in keeping my trades up while still making cash.

Most of my trades are made on the same basket of stocks. I sell then buy it back. My bids are already in the bid queue and I'm selling. Some like to call this scalping.

But what happens when you bought a stock at .10 cents and the stock drops to .075 and trades there for days, weeks or longer between .075 and .085 or .08? I used to wait for the stock to return to the price I payed but that took time and time was money lost if you're out of the trading game.

Some mornings the stock would start at .085 and drift back to .07 or .075.

What to do - what to do

I decided to sell my stock at .08 and place a buy at .075

I ended up with the same number of shares at the end of the day and ended with my cash up from selling at the high and buying back at the low.

This has worked many times for me. Once, the stock did keep going up and my balance would have benefited from the rise but it never reached my original sell price and a few days later I bought the shares back at my bid price and still trade the stock.

If I had held out for my original sell price I would not have made any money in the meantime and have a balance showing the lower share price.

By selling my stock on the lower ask and buying it back at even lower price I did not need to risk putting more money out from my cash side and I'm still in the trading zone. Its just reset. I still make my .005 to .01 cent trades.

Had I not traded the stock previously I would be trading it now because it fits my channel trading criteria. Like everyone else who just comes in new on a stock and has no baggage with it. The old me would have been jaded about the fact I lost money and I'm gonna wait till the stock comes back up.

That thinking cost me a lot of lost dollars in 2008. Every stock I lost money on I sold back in Oct/Nov last year (which was all of them) and bought all of it back and traded it since daily - weekly - monthly.

If the channel trading resets, I reset as well and put new cash back into my account.

The system works.

Its called trading not investing.

Or is it a long term hold with me shorting my own stock instead of them?  


Related posts:

Why I trade penny stocks.

Why I trade penny stocks. Part two

Why I trade penny stocks - part three

Why I trade penny stocks - part 4

Why I trade penny stocks part 6

What to do with a reverse split?

Why I trade penny stocks part 8

To access my current posts, click the following link:
Notes From a Cyber Trader


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. Red Mars