A trader explains how he grew $27,000 to $50 million shorting small-cap stocks under $100 million market cap. He watches for pre-market volume above 50 million shares, then enters short positions in the afternoon after morning consolidation breaks, when trapped buyers fuel sharp declines.
The story of $27,000 to now over $50 million. Where should we begin? So let's start with the very first gap-up short. We see a stock typically gaps over 100%, 70%. The very first thing you want to approach is select by the market cap. If the market cap is over $200 million, it's not doable. It has to be under $100 million market cap. Whenever there's volume sections, so it's between 1 to 10 million, when pre-market volume exceeds over 50 million, that's where you have to pay attention. Because if in the pre-market trades over 50 million, that means after market open, we're going to trade more volume. Now, majority of the time, volume concentrates between 9:30 after market open to 11:30. If we see a mass consolidations, maybe there is a way to short in the afternoon because volume dies out and most of the volume that people traded are in the morning. Soon as something cracks, there's more people are stuck on the top and will cause a chain reaction for stock to drop.
