If you read my penny stock watchlist on Wednesday you know that I was particularly interested in shorting DRL’s recent surge pointing out that a break on support at 4.22 would trigger a very good short entry. Well, on Wednesday morning we got that break at market open when DRL gapped down 4.10 and then further tanked to 3.70 in a matter of minutes. I wasn’t fast enough to short shares on the initial tank, and when the penny stock calmed down I still didn’t want to short it being down 15%+ already…fearing a short squeeze off the morning panic.

I was right on as the we got a short squeeze, but it really didn’t squeeze as much as I would’ve liked, but good enough for me to put in my order for 1000 shares short @ 3.94. I figured the odds were on my side for this penny stock to drop back down below the low of the day made earlier in the morning. I thought I was on the right track as it proceeded to drop to 3.82, but then quickly jumped back up to 4.00. It flat-lined at 4.00 for a few hours causing me to rethink my positioning in this penny stock especially since I had class within the hour. In my mind I was still confident we’d make an afternoon fade down to the low of the day or further…..

So I went to Spanish class short in a penny stock that I THOUGHT would have an afternoon fade. When class got out I figured I’d get back to my computer to see this sucker of a penny stock down to the low of the days. Yet the exact opposite happened…as I opened up my SogoTrade platform I saw that DRL 4.69! .75 cents above my shorting price! I got juiced! I quickly covered my position and absorbed my losses of $752.

This lose totally erased my nice $661 dollar gain on MDVX I made on April 7.

With all the bad that surrounded this trade, some good DID come out of it. Here’s a lesson that can be learned from my lousy trade.

Never have a short position (or any position for that matter) that you’re not confident in open while you’re away from your computer or can’t keep watch.

Also, another lesson I learned is that I shouldn’t go to class. Just kidding!

Hopefully with that lesson learned I can prevent this kind of mistake from happening again. For your viewing pleasure I’ve attached the chart I was looking at when I made & closed the trade.

Last 5 posts by Justin Bostwick

• SEC Charges 8 - May 23rd, 2009
• 6 More Penny Stocks Picks: “Buy The Hype, Sell The News” - May 22nd, 2009
• Penny Stocks To Watch For Friday The 15th - May 15th, 2009
• Six Penny Stocks To Watch That Could Make You Money - May 12th, 2009
• The Framework Of An Afternoon Fade And Why It’s So Essential To Short Selling Penny Stocks - May 7th, 2009