I am new to this and dumb. And yes I am doing my own research. But this is a super specific question.
Say there’s a stock with a wave of momentum due to a news story that came out the night before. Of course it will have a huge bump. But let’s say it’s only a $2 stock.
I watch that $2 stock until around 10am so I can see if the fervor wears off and the trajectory. Then I buy 2000 on margin and short it later that day as long as I’m not greedy.
Is there an issue with that? Of course there’s always risk it will keep going up, but EVENTUALLY it will go down. Why not hold it until it does? What’s the downside besides of course the inherent risks?
Yes I know anything short selling has risk of stock going up irrationally. But most stocks, especially small companies, will eventually correct.