Successful strategy shorting penny stock pumps?

Say a penny pumped on no news, and was borrowable. This happens all the time when stocktwits pumpers get their followers to hop into some stupid trade. Initial thoughts on the following logic?

  1. Stock is under $4
  2. Stock has appreciated over 10% in the past hour
  3. Stock has no news
  4. Stock is marginable
  5. Short
  6. Cut losses at 5%

I fail to see how this wouldn't be profitable. Obviously, there are tail-risks with shorting pennies, but if you cut losses at 5% and ran it on pennies that aren't totally illiquid (e.g. over 50k volume or something) I don't see why you couldn't do this with like 15k for 2 or 3k a week.

Submitted October 29, 2020 at 11:22AM by newguysofly

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s