Professional Day Trading Short Sellers

Discussion in 'Trading' started by lwlee, Nov 27, 2021.

  1. lwlee


    Recently I've been fascinated with short sellers. Specifically the daytrading types. While there are a lot of big talking lambo owning con man types like Madaz, Verma, Sykes, Dux, Grittani, et al. Some of the strategies that they use have some weight, especially if they apply serious statistic analysis to back their trades ala Dux. I tried to search the web and even on ET but surprisingly come up short on information. Searching for FRD and GUS don't show up so they are not popular terms. I'll bet a lot of long time ET guys don't even know what those acronyms even mean.

    Some of the vernacular and strategies surrounding short selling daytraders
    - Gap Up Short (GUS) or First Green Day (FGD). Stock goes parabolic with large volume. Typically low float small caps that churn 50x, 60x, 100x volume than the float.
    - First Red Day (FRD). After the big GUS/FGD, the first day when the bubble bursts. Consider to be a high percentage play as stocks that are multi day runners will deflate rapidly resulting in >50% drops.
    - Dollar block analysis. Determing average consolidation price typically using VWAP on large volume days to determine if a small cap has exhausted its pump.
    - Market maker manipulation. As these are low float stocks, some as low as 2 mil float, some MM with large share size have great control over how strongly the pump up will be and also how sharply the drop will be. Continually pushing prices higher or lower.
    - Death candle. A big volume flush on the 1 or 2 minute chart. Typically signifying that a turning point is coming ie the pump is done.
    - Gamma squeezing. Using options to force MMs to buy or sell shares in order to be market neutral. This strategy gained spotlight when AMC/GME went parabolic. Simple short squeezing shares wasn't the only catalyst to make AMC/GME go supernova since short selling firms like Melvin Capital will quickly unwind their positions. Gamma squeezing proved effective in continually pumping even fairly larger cap stocks like AMC.
    - Share dilution. Part of the small cap game when pumping stocks especially biotech ones is to then have a secondary shelf offering. A way for cash strapped small caps to stay alive. So sketchy headlines like a successful cancer saving phase 3 trial helps pump up stock prices as eager greedy daytraders pile in.
    CarolSciurus and VicBee like this.
  2. thecoder


    This is not trading, but gambling, IMO :)
  3. lwlee


    Totally understand your mindset but the game has evolved. Some call cryptos "gambling" as well.
  4. traider


    Hardest part is locating borrows at reasonable rates. Try doing that.
    Also wait till you are short something that is HTB and it is halted for months. You lose a year's profits just paying the borrow fees.
    They make it look so simple cause they are mostly sim trading. Yawn I can also make 10B with a sim account.
  5. maxinger


    For investing, there are already thousands of well documented terms, short forms....

    For day trading, there are very few documents about it.
    So we have to develop our own terms, short forms

    I also created my own terms and short forms
    Last edited: Nov 27, 2021
  6. lwlee


    Point taken.

    - But truthfully speaking, what's the likely hood that something is halted for months? Halts generally happen for news or volatile action which is then resumed trading. Most daytraders will not hold overnight due to some places charging exorbitant amounts to carry.
    - Borrow fees are a real cost. Serious volume short sellers use multiple brokers.
    - Yep scam artists are the rule not the exception. But I think Dux is legit whereas Sykes is not. Not sure why Dux needs to teach. His analysis seems to be legit. Guys who do this professional think he's real, as well as Grittani.

    d08 likes this.
  7. GotherL


    Feel like you just label "con man type" since they're successful guru's on youtubers. Been following some of these names for a while and haven't found anything sketched about them. (I'd say my observation skills is fairly good.)

    Lookup Ricky Gutierrez. If you want the definition of a true lambo owning Snake Oil Salesman.
    Last edited: Nov 27, 2021
  8. qlai


    These terms are not common, they must be specific to a specific “guru” Educators usually re-brand well known concepts, maybe not even intentionally.
  9. lwlee


    You are correct. I have quite the dislike for these overpriced subscription fees touted by some of these daytraders. Perhaps we can call them the new age hustlers. Besides the short side, this applies to the long side as well, Warrior Trading, Humbled Trader, ClayTrader, et al. Lots of these new age hustlers are actual traders making so much money from their subscription services that even if they blow $10k-20k A DAY on losing trades, the subscriptions fee more than makes up for their "trivial" trading PnL. Ross said he has 20 employees. I've heard he makes $2 million/mth? With that kind of money, it's like playing 5c/10c poker when you are rich.
    If subscribers come away feeling that they got their money's worth from the expensive courses then that's really all that matters. Maybe label some of these traders as "entertainers" and you are paying to be entertained.
    It would be interesting to poll actual subscribers and see what they think.

    Last edited: Nov 27, 2021
  10. lwlee


    No, it's quite COMMON among the short seller's community. There are many "rooms" that understand the terminologies. I would be interested to know if anyone knows who coined the original phrase FRD and GUS. Dux? I would say that these terminologies have been around a bit longer than the WSB's terms like Apes, HODL, Stonk, Tendies, Diamond Hands. WSB came about in less than a year. While terms like FRD and GUS have been around since 2018 at least.

    You might be part of the "older" generation like me. Lol.

    Also there are a lot of serious daytraders employing these strategies putting serious money into it. Some of them are even smart enough to watch some of these rooms and bet against the herd, so to speak.

    Last edited: Nov 27, 2021
    #10     Nov 27, 2021