My apologies to shorts everywhere! Hehehe
$Silo Pharma(SILO.US$ I blamed you for drop! But i just seen a offering was dropped in EDGAR! Hehehe
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DaytradeSwing : Is there a difference between people selling and short sellers? Not sure there’s any difference on something like this.
Trytosaveabit OP DaytradeSwing : Yes a big difference! Take the offering out of it! SS’s don’t need capital up front! They borrow the shares and dump them into the market to drop the price! And to keep it from climbing! People selling are either securing profits. Or they are trying to cut their losses! They are not trying to, or want the price to go down! That’s the huge difference!
DaytradeSwing Trytosaveabit OP : When shorts “dump them” into the market they have to BUY to get out.
What you said makes no sense
Trytosaveabit OP DaytradeSwing : Shorts borrow the shares! Then they dump them in the market creating a huge oversupply! That drops the price! They then can wait as long as they want to then buy them back / cover! But when they buy them back at a lower price, if this is done slowly? It don’t really affect the price much! Then they pocket the profit! Ex: They borrow at 5.00 dump the shares and the price goes down to 1.50 over the next week! They then buy the shares back at 1.50! They pocket the 3.50 difference! Except for a daily fee they pay for the privilege of borrowing! That fee can be dirt cheap or super expensive! All depends on how hard the shares are to come by. So what don’t make sense?
DaytradeSwing : Most likely 50% in this drop are now naked short sellers.
They go hand in hand.
So how is this sellers and not short selling?
Explain
Seraphicall : Lols. But it’s direct offering. Not that bad
Trytosaveabit OP DaytradeSwing : That’s why I said take the offering out in general! But in this specific situation! It’s more than likely a combination of Shorts and just longs selling! The reason you have a instant sell off with offering is because the market don’t like the dilution it causes! Ex: large pizza cut into 4 pieces! Happy people with big slices! Now all the sudden that 4 slices has to feed 40 people! Diluted the amount of pizza! Yes this is a very crude example but it explains dilution and why people sell! But at the same point shorts will borrow and dump shares! Just like longs who jump on a price run up! Shorts jump on a falling price to ride it down to make profit!
Now when a stock is very heavily shorted and the price starts going up really fast! It’s just like people rushing to sell as it drops to keep losses to a minimum! Except price rising some shorts will cover to secure profits or minimize losses! This can cause a bigger demand and cause more buying and price continuing to go up causing more shorts to cover and sometimes it snowballs to the point of a squeeze!
Trytosaveabit OP Seraphicall : Right! But any offering causes some to overreact and sell! That causes a reverse short squeeze! Hehehe! Longs panic on the price drop and causes more selling pushing price down more and so on! Yes most times like this! It’s a overreaction
DaytradeSwing Trytosaveabit OP : What I’m saying is, the people selling shares have to sell to someone. So either longs are getting trapped into buying shares that other longs are selling…
The price drop is from selling… so there are new trapped longs, or a combination of short selling, regardless of the offering.
I hope I make sense now
Seraphicall Trytosaveabit OP : It’s ok.. prices usually recovers faster on direct offering and private placement than public offerings.
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