bunch of wrong things above:
first, i've been shorting junky ones for a while, and learned from following someone else, way back when, on SI. and he wasn't the first. so it IS doable, when done responsibly.
however, it is NOT scalable. and it requires an incredible amount of discipline, or you can blow up. sykes even admitted it somewhere here on ET: he figured he could max out around 250-300k by trading it, or could make more marketing. now, 250k is real nice, but that should give you an idea of what would happen if several people traded "his" ideas at the same time. you'd have to carve up that theoretical 250k between several people, and all of a sudden it doesn't look so good.
in addition, since there IS a limit to how many shares of a stock can be borrowed at a time, the shares you'd like to get - if 5000 shares, let's say - will get divided up between the several people above. most retail brokerages don't have 50,000 shares to loan out of the high flyer which has traded 3mm shares, but only has 7mm shares in the float.
and if everyone enters with any size, and tries to exit at the same time - well, poof! you get a big momentary short squeeze, will get stopped out at a point well above the stop entry, and give back several of your gains.
fortunately, he's not that good a trader (even on the junkies) so giving away his methods doesn't hurt my trading much. his video is also terrible (but mildly entertaining, in a train wreck fashion), but that's neither here nor there, though i've detailed WHY in other posts on this site.
and, i have a bunch of other setups OTHER than shorting junk ones, so i'm not overly concerned about his marketing and sales techniques.
on TOS - they clear through penson. penson does NOT have the best available short list at all, and although penson sends out the list daily, it wont' send to individuals; you have to get the list from the brokerage itself.
your brokerage person (likely) gave you wrong information on the reg SHO list, which isn't uncommon; lots of misinformation out there about shorting cheapies. i think investopedia still has the (wrong) information that you can't short stocks under $5. however, some firms don't allow their clients to do that...some require you to sign additional paperwork...it is legal, just have to find a brokerage which allows it. mind you, some brokerages require you to put up $5 margin / share for under $5 stocks, so if you short 500 shares of a $2 stock, you need to have $2500 cash in your account.
find a brokerage which has their short list on their website, or will email you the list on a daily basis in advance of the market open.
quick summary:
-> shorting cheapies can be done but is *extremely* difficult because of the potential blowup factor. the most important part is discipline, discipline, and discipline. and it's not scalable.
-> most of the trading reps you deal with on the phone do not know how to deal with the cheap stocks, margin requirements, legality, etc.
-> if you do short cheapies for a living, and not a marketing tool to brag about making 15k in a year, you need to have other tools in your arsenal.
