Introduction
My name is Sellers Elkins, and I’ve made my living through small cap short selling for several years now. This isn’t a get-rich-quick story—it’s the opposite. After blowing through approximately $150,000 of hard-earned capital, I’ve developed a consistent approach that allows me to trade full-time after leaving my construction job as a welder. I’m sharing my raw journey to help you avoid the pitfalls that nearly destroyed my family’s financial stability.
Trader Talks QnA
What got you into trading to begin with?
When I was a kid, my dad traded a little bit and had a pretty good run for a while. After my parents got divorced, it kind of went south for him. Later, I worked construction for a long time as a welder and knew it wasn’t what I wanted to do forever. A buddy told me to invest in Bitcoin in 2017 and I did—put a few thousand bucks in and made about $12,000 with no idea what I was doing. That’s what got me bit by the bug.
After that early crypto success, what did you do next?
I really just used that money to put a little bit into a Robinhood account and played around, but I wasn’t convinced it would last. As another year went on of just playing around, I wasn’t really making or losing anything significant. I got tired of welding in the heat and started watching YouTube videos. I remember having a couple of big wins swing trading small caps overnight—stuff that was running up at the end of day—but it wasn’t until 2018-2019 that I got serious.
How did you start learning trading techniques?
I invested enough capital that it hurt when I lost it. It was a lot of pain—that’s been my whole story. I made about $4-5,000 in a year doing it off my phone at work, then looking at the computer at night. I tried to learn technicals, how to go long, but didn’t really know about going short. I just went through a lot of pain and money losing—that was my way of learning, though it was minuscule compared to what came later.
What was the turning point in your learning process?
I started really learning setups and technicals, trying to find an edge—though I didn’t even know to call it an edge at that point. I gravitated toward small caps and was really just being kind of a gambler. But after the pain, I started searching for what I needed to do. I watched Tim Sykes videos and everything on YouTube, tried strategies, journalled everything. I had old journals everywhere—paper journals at first, then moved to Excel and Google Sheets.
What specific strategies did you develop for small cap short selling?
I started with long strategies like morning dip patterns—buying small caps that gapped up then dipped to key areas, using RSI under 30 as oversold. But I transitioned to short selling because statistically it became more profitable for me. Now I look for parabolic moves on small caps, preferably into resistance with volume. I use a parabolic scanner to find big spikes up, look for lower highs, and short with tight risk parameters. Confluence is huge in my trading now—I need multiple factors aligning before entering.
Can you explain your RSI usage and limitations?
I use basic RSI settings—under 30 being oversold, over 70 being overbought on one-minute charts. But volume is critical—if something’s selling off with massive volume like Silicon Valley Bank did, the RSI reading gets buried. RSI alone isn’t enough; you have to consider the volume context and other confluences.
What was your biggest mistake early on?
Terrible risk management. I’d have a $50k account but trade with $90k of leverage. The worst was when I was shorting a stock like XTNT, it gapped up, I kept adding, and they liquidated me for $32,000, leaving me with just $12,000 from my $50k account. I froze, couldn’t handle the pain, and doubled down—that’s how new traders destroy themselves.
How did you develop proper risk management?
Risk management is the name of the game. I set broker max loss limits with Cobra Trading—I won’t tell you the exact number, but it’s no more than two or three days worth of profits from a good week. I’ve hit it several times this year and actually raised it because I’ve had a good year, but that safety net has saved me. If you trade small caps and don’t have this, you’re a ticking time bomb. Even great traders lose control sometimes.
What’s your favorite short selling setup?
My most profitable setup for the past two years is a low-volume parabolic move—20-30% spike up into resistance with prior volume. I like when it fails and makes a lower high, then I short risking 15-20 cents to make significantly more. For example, I recently had a huge win on a stock that halted up—fairly recent IPO with more volume than usual. There was clear resistance at a certain level with prior volume, and it tanked $5 that day. I went huge on that play.
What advice do you have for traders with families?
Have an emergency fund. Don’t trade money you can’t afford to lose—my family went through tough times when I was scraping to pay the mortgage. Keep substantial profits outside your trading account—don’t spend what you make immediately. If you’ve made $100k, keep $30k in your account but have the rest in savings. You never know when something could take you out of the game, so you need that nest egg.
Sellers Elkins Trade Statistics
After nearly $150,000 in hard-learned losses, I’ve developed consistent profitability through disciplined small cap short selling. These statistics represent my journey from reckless gambler to professional trader who protects capital above all else.
- Started with $1,500-$2,500 accounts, blew up multiple times
- Reached six-figure account within months after PDT status
- Experienced 64% drawdown ($50k to $18k in single trade)
- Primary vehicle: Small-cap stocks under $10 (AMEX/NASDAQ)
| Performance Period | Account Value | Key Event |
|---|---|---|
| Late 2020 | $9,000 → $26,000 | AMC sympathy play (GameStop event) |
| Early 2021 | $50,000 → $18,000 | Overleveraged short position liquidation |
| Current | Consistent profitability | Strict 2-3 day max loss protocol |
Key Trading Insights from Sellers Elkins
My journey through small cap short selling has taught me invaluable lessons that transformed me from a construction worker to a professional trader. These insights separate profitable traders from those who keep blowing accounts.
- Capital preservation is everything—every trade must serve this purpose
- Confluence beats single indicators—require multiple factors aligning
- Broker-imposed max loss limits are non-negotiable for survival
- Journaling reveals patterns your memory conveniently forgets
Sellers Elkins Trading Strategy
My approach centers around identifying high-probability short setups in small-cap stocks, primarily focusing on parabolic moves with specific confluence factors that increase probability. Here’s how I implement my small cap short selling methodology.
Parabolic Short Setup
I use a parabolic scanner to identify stocks that have made sudden, large percentage moves up (typically 20-30%+) on relatively low volume. I look for resistance levels with prior volume—preferably a level the stock has tested before but failed to break through consistently. When price makes a lower high after the initial spike, that’s my entry signal. I risk only 15-20 cents with a tight stop above the recent high, aiming for 3-5x that reward. This setup has been my most profitable over the past two years when all confluence factors align.
Sympathy Play Strategy
Sympathy plays occur when one stock moves dramatically (like GameStop) and similar-named stocks get attention from uninformed traders. For example, when GameStop was running, AMC became a sympathy play. I look for these less crowded opportunities that follow similar patterns but with less competition. The key is finding that psychological connection between tickers that drives irrational money flow.
Sellers Elkins Tools
After wasting money on physical journals, I’ve streamlined my trading business with these essential tools that support my small cap short selling approach. These have been critical in maintaining consistency and discipline.
- Cobra Trading – My primary broker for fast execution and excellent short locate availability
- Parabolic scanner – Custom scan for sudden percentage moves in small caps
- Google Sheets – Digital journaling system replacing physical notebooks
- Thinkorswim – Charting platform for multi-timeframe analysis
Common Trading Mistakes to Avoid
My $150,000 education revealed critical mistakes that keep traders from succeeding in small cap short selling. These aren’t theoretical—they’re scars I carry from real account liquidations.
- Trading with money you can’t afford to lose—it changes your psychology completely
- Not setting broker max loss limits—you will lose control eventually
- Ignoring volume context with indicators like RSI (SVB example)
- Chasing overnight success like my AMC trade rather than building consistency
Conclusion
My small cap short selling journey from construction worker to full-time trader wasn’t about finding a magic setup—it was about protecting capital while developing edge through painful experience. If you take one thing from my story, let it be this: risk management isn’t just important—it’s everything. Without it, any edge you find will be temporary. I’m now consistently profitable because I respect the market’s power to take everything from you. If you’d like to continue this conversation, reach me on Twitter @Short_sellers or Discord as sellers_e. Remember—preserve capital first, profits will follow.