Sykes Interviewed on TraderInterviews.com

it's not hard to short stocks under $5.

you have to contact your broker, and make sure it's ok with their clearing firm.

if their clearing firm is penson or (i think, still) SWS the answer is likely a "no".

but more and more brokerages / clearing firms are allowing it, as long as you put up excess margin.

for example, i'm currently short a stock that's well under there, which i have to put up $2-5/share margin on.

(the stock is irrelevant, but the current price of it is well under what i'm required to post for margin).

 

No need to buy it

There will be plenty copies of his book in the givaway bin. His book is a waste of perfectly good paper.

 

Thanks for the info

 

That's why Larry Craig thrust his well manicured hand under the stall. He was looking for an advance copy.

 

Yup, that's pretty much it, clearing through Penson or GSEC has worked best for me

 

you misunderstood my post. penson is NOT good for an average person for shorting under $5 stocks.

if you go to almost any daytrading firm which clears through penson and look at their short list, the number of under $5 stocks is minimal, and tended to be huge float stocks like an NT (pre-RS), etc.

i started to try and work to find out if i could short it as an individual, and was told that my brokerage had to initiate all the paperwork, and then a decision would be made. but i'd have to call on individual stocks, work for a locate, etc.

by that time, other brokerages started opening up more, so i never followed through.


* this information was last confirmed within the last 12 months. if things have changed, please correct it.

 

Question.

It is my understanding that when shorting a stock under 5 and you have a position, when volatility hits the stock the broker can arbitrarily change the margin requirement, in doing so, some traders cannot meet the margin requirements and subsequently are forced to sell. If so, have you come across situations where brokers have changed the margin requirements more than once during the day? Again, assuming this is so, how would you chart any of this. We cannot know if/when brokers change their margin requirements and when throughout the day they might do so. Have you noticed any patterns in margin requirement?

Thanks.