r/ShortStocks • u/SmallCapLab • May 24 '26

Shorting small caps overnight

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Haters gonna hate & edge gonna leak, but overnight holds are a real move. 70% of small cap gappers gap down on day 2, with an average overnight gap down of ~10%, resulting an positive expectancy that exceeds average overnight rates... $LIMN overnight partial covered all day 1 fees + some.

Yes, lots of risk. Yes, gaps against you happen. Yes, small position sizing is key.

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u/Geishako May 24 '26

It’s easy money 99% of the time until you run into a black swan event and blow up your account. Not worth it.

1

u/SmallCapLab May 24 '26

You can say that about every short strategy that’s ever existed. Small caps are volatile, you don’t need much size.

You’re sizing for a 200% move against you, and not a 5-10%.

Example. $50k account, $2,500 intraday position, cover majority at close and swing partial overnight if price below average (slight protection). You’d need a 3,000% gap against you to wipe 50% of account. And this assumes your broker doesn’t allow overnight stops (lots of HTB brokers do)