Shorting penny stocks.
Thought I should let you know there isn't any shorting of OTC stocks, that all the message board posters post about!
1st you can only short stocks (big board or OTC) from a margin account. Few penny players event have margin accounts.
2nd if they do it requires $2.50 for each share shorted, on stocks priced under $2.50.
If one did short say a .01 cent stock for 10000 shares or a $100 short investment, they would need $25,000 in their margin account.
Now try a double or triple zero stock. It just doesn't happen! People don't short OTC stocks !!!
Now I know someone is going to say what about the websites which report short sales volume. Short sales volume is NOT short volume. It's volume which was not cleared for the day. As I recall M&Ms have 3 days to clear their daily traded volume. And I think 11 or 13 days before it's reported as actual naked short on REG SHO. So basically short sales volume is temporary naked short volume until cleared. It never has anything to do with actual shares held short, betting the stock price will fall.
I will add, if you see anyone talking about a short attack on a message board, disregard their opinion about anything. Because they have little knowledge about the market they trade! IMO
