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When you have been trading in penny stocks for a while it's time to try a few different strategies. Instead of choosing the traditional 'Buy low and sell high' approach, you may want to choose to sell the stock short. This is a strategy for intermediate to advanced investors and you should be very careful while carrying out this trade.How It WorksFirst, lets clarify what its all about. In simplest terms this strategy involves selling stocks with the commitment to purchase them back at a future,Drew Brees White Jersey.As a trader, you are betting that the penny stocks in question will decrease in value between the time you sold the stock and the the subsequent repurchase,Baltimore Ravens Jersey. The profits will be the difference between the selling price and the price you buy them back at.The aim here is to make a profit between the two prices with a slight difference from the buying and selling approach,Cheap Cardinals Jerseys. This time, the goal is to sell high and buy low - a reversal of the common approach to trading stocks, whether we are talking about penny or blue chip shares.At this point you are probably wondering - "How can I sell shares that I have never bought in the first place?" Well, you have to think of it as borrowing the stocks from your broker. It's like being in debt till you close the position or selling the stocks back to the broker. To short sell stocks you have to have a margin account.How To Do It RightAs mentioned earlier, you have to be very careful when short selling penny stocks. Keep in mind that penny shares are thinly traded and highly volatile, two characteristics that make them one of the riskiest, if not the riskiest, investments in the market today. Plus, you cannot discount that with certain trading venues like the OTC-BB and the Pink Sheets, your risks are almost doubled because of the lack of reporting requirements for the companies listed on the board.On one side of the fence,Ravens Jerseys Women, you have traders who assert that the activity presents opportunities for profits if and when done correctly. Again,Pink Bears Jerseys, the profits come from the difference in the high selling prices and the low buying costs.One the other side, you also have traders who strongly caution against short selling penny stocks because of the unlimited potential,Eli Manning Captain Jersey, not for great profits, but for great losses. Think of this scenario: You will sell 100 penny stocks at $6.50 per unit, which will rise to $85 per share in the succeeding period. Since you are legally required to repurchase the penny stocks, you would need $85,000 to do so. This means that you have just lost a total of $84,350! Even in paper trading, that amount is still a considerable loss to your imaginary wealth. Related articles:

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