The Daily Interview: Tips on Trading in the Twilight Zone

For many investors, having to navigate late-breaking news and to-the-minute trades can make trading after hours mind-boggling.

Michail Shadkin Head Trader TraderPulse.com

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Nevertheless, there are those who have been successful at it. One of them is Michail Shadkin, head trader at TraderPulse.com, a subscription-based Web site catering to personal investors. His personal portfolio of 25 stocks, which he posts and updates on his site, has gained about 46.8% in the year to date, sharply trumping the major market averages, which are all in the minus zone.

Shadkin was the winner of Ameritrade's $1 million stock-picking contest in 2000, turning a hypothetical $50,000 into $328,000 in just one month. TheStreet.com caught up with Shadkin just hours before Cisco's (CSCO Quote) earnings release last night for some insights into his after-hours strategy. Extended-hours trading, Shadkin says, isn't for the ill-informed investor. Look beyond the headline earnings figure, he says, and above all, be familiar with the stocks you trade.

TSC: How would you describe your trading strategy?

Shadkin: Right now, I'm very balanced between shorts and longs, though I'm slightly favoring the short side. My strategy is very simple. I buy the champs -- what I think are value stocks -- and I short the chumps. They are stocks with very poor fundamentals, that are losing money and that I feel have a very poor business plan. They are those with a very high probability of being bankruptcy candidates.

TSC: What's in your portfolio right now? ...