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Twitter Groups and UITA

UITA kept popping up on twitter, I was watching it for a few days before I finally bought some.  I was trading away, following every different system I could find.  Trading one system for the next and looking for the next hot tip and pattern.  I bought just 250K shares at $0.011 for $2,700, I told myself I was limiting risk by trading small.

The following week I was up about $1,000, that’s better than 30% in a week, cash it out, take the money and run!  That’s what I was about to do, but that would be a much shorter story.  I was invited into a twitter group to trade that ticker.  I checked through and it was perfectly legal to trade as a group so long as there was no “inside information” all the info that was being shared was readily available in the public domain.  So I joined and read the press releases and filings.  I figured someone must have done their homework to find this much info.  I got it from strangers on the internet, of course, it was true!

The Influence

The stock was going to rise easily 400-500% they said, likely more, they were all in for the long haul.  I picked up another 20k share to be conservative, $275 isn’t much.  Just building a position, and helping the stock move by “slapping the ask.”

I waited a few more days as the price began to dip.  What an opportunity!! Who would’ve ever thought this would get back close to $0.01 again, this was it “loading time” get all the UITA shares you can at this price because we all see where it was, we can all imagine where it can go.  I more than doubled down, picking up another 500K shares for $5,500 more, I was averaging down, in for $8,200 of my $22,000 bankroll.  Here are public postings, you can read what people were saying.

The Fade

A few days later, the price fell further, people stopped telling me how great UITA was, my investment was suddenly cut in half.  I was told to “Slap the ask” this kept the price looking better because of the wide spread we wanted to keep it on the higher number after someone sold.  So a few quick slaps for 10K or 20K shares for $50-100 each is not too bad to help your investment along.

Somehow it kept fading and I was searching for anyone to tell me I was doing the right thing.  I found a profitable penny stock trader who said this could be the bottom, I’m buying!  I followed his lead and bought 200k more for $3,300.  My other trading has been suffering too so my bankroll was falling.  All said I was suddenly in for $12,000 and holding 1.5 million shares as the price continued lower.  I couldn’t sell for a loss now so I held.

That was May and the beginning of June 2018.  In July it was worth $1,200.  In December it finally actually bottomed out at $0.005, my investment being worth only $750 from the more the $12K I put in.  My bankroll near $8K, I was essentially starting over.  I had lost any chance of being on the other side of the PDT.

Cashing Out

At the end of January, something changed, there was buying again!! Good thing because I needed the cash, I was nearly broke.  I quick sold 500K shares around $0.004.  There was a filing everyone was talking about, new management, a new direction the company will be revived!  The twitter group came back to life!  I added new members and promoted it as much as possible.  This time was indeed different, I knew no matter what I had to sell everything I had.

I set limit sell orders at a few different spots so I would get bought up as the price approached $0.01.  But only 100K more got bought.  I slapped the ask again and bragged about it to the group, trying to get more to follow my lead.  Still holding 1 million shares, I wanted to cut that in half.  It peaked at $0.063 and the price began to fall.

The Investigation of UITA

I decided I couldn’t trust these people so I did my own research.  Searching names, phone numbers, reading old filing I was trying to connect the dots.  The company was an airplane manufacturing with a design for a cheap cargo plane for short trips in China.  There was even an engine manufacture listed with the engine model.  I found the manufacture and press release about that engine model mentioned, with a phone number at the bottom of the press release.  I called it.

To my surprise, a nice lady picked up the phone!  I told her I was conducting independent research and asked her to verify some public comments.  She politely informed me it was a Friday Afternoon and the east coast of Canada was shutting down.  She gave me her email and ask I send her the details.  I did with links and quotes in the email.  Monday morning I received a response from someone higher up the food chain he gave no direct answer but a name and phone number.

One phone call led to another, I had seen this name and number in my research too.  It was time to call.  Once again someone picked up, the CEO of UITA!!  I was a little shocked but continued with the truth, I was researching on behalf of stockholders (myself included).  He asked me for the names of those shareholders, I politely declined.  I asked if UITA was producing anything he told me the filing from the past year were all false.  I dropped a name from the most recent filing and said he needed to call that guy right away and hung up.

Bailing Out

Worried, I sold another 500k shares for $0.002, now down to my last 500k shares.  I waited another day and called the CEO back.  I asked what he talked to the other guy about, he said the other guy had no idea about it and didn’t have anything to do with the filing, it was all false.  A few hours later that twitter group and buying exploded!! Another filing, the CEO I talked to retook control of the company!  Steve Jobs has come back to Apple!!!

As excitement grew I sold my remaining shares in the $0.005 range.  I cashed out about $4,300 from the $12,000+ I originally put in.  Going back in the group I shared my story about the engine manufacture and talk with the CEO.  I left the group.  From here on out I will only trade my own game.

The market decides the tuition you pay.  This was an expensive lesson, but I have created another rule, no stocks under $1.  People can manipulate the system too cheaply.  You see when several million shares are only a few thousand dollars you only need a few thousand dollars to stimulate buying.

I hope this helps and I hope this never happens to you.

If you want to know more about my trading and how I stopped losing money, check out my home page.  There is lots of free resources and information.

Trading Strategies, My Plan: Updated 9/13/2019

This is simply putting into writing recent decisions I  made regarding my trading.  I am setting forth a narrow set of rules that I will follow until they are no longer profitable.  While other strategies may work for other people, for me, my current day job, my mindset, time frame, and historical trades, these are what work for me. These are my only active trading strategies.

I have been using these rules since 7/22/2019, W-L is 20-7 as of writing on 9/13/2019.

Pre-Market

Meditation is my edge!  I take 8 minutes every day before the markets open and tune out the world and tune into my breathing.  I use this app as an aid.  If you are curious about meditation and the benefits to traders check out: Trader Mind.

Scanning

End of the day:

I run 2 scanners at the end of the day looking for potential plays for the next day.  First I search for Stocks between $1-$8, with volume of more than 1 million shares and a minimum of a 10% gain the previous day.  From there I look at the daily chart for the past year, I eliminate anything that is trading mid-range since I can’t predict the next turn.  The stock must be trending up.  The best are approaching resistance or just above support.  I use TD Ameritrade’s free trading software, Thinkorswim for this scan.

The second scan is I look for stocks in the same price range, with volume of at least 500K shares, that have closed at a 52-week high. I use Swing Trader Bot for this scan, they have a handy app too.

Intra-day:

I search in the same price range for a minimum of a 5% gain and volume of 150K shares.  I use this scanner for my “15-minute trade,” see below.

Entry: Higher-High

My entries are strictly between 9:30 and 11:00 AM only, 10:30 is the typical cut-off and 11:00 is firm.  This is the most volatile part of the day.  Positions may be held after that be not entered into.

Every single stock I buy must be making a higher high, there is no point in trying to buy the bottom, I have not been able to do it.  The higher high tells me there are buyers out there and likely more will be coming in.  I look for established resistance on daily, hourly and 5-min charts.  I prepare a buy order $0.01 above that level.  As soon someone else buys at the level one cent above I place my order and get executed no problem 98% of the time.  If my order doesn’t get filled I will wait no more than 5 mins to allow it a chance to get filled.  After that, I cancel the order and don’t look back.

The “15-minute trade” as I call it, I use my intra-day scanner to find stocks that are up and moving.  At 9:45 I will look at daily candles on a year chart to find stocks trading in new ranges.  I establish my entry $0.01 above the 15-minute high and place my stop below the dip that came after.  

Setting a Stop

Looking at 1-minute and 5-minute candles I can establish the bottom of the most recent dip, this is my stop, I set a hard stop-loss order as an insurance policy.  This stop must be no more than $0.25 from my entry.  I will continually move this stop up just below each dip so that way as long as the price continues to rise I continue to profit.

Position Sizing

My current bankroll is about $10,000 (and climbing, $10,666 at writing) so I limit my risk to 1% or about $100 per trade.  If my stop is $0.20-25 away I trade 500 shares; stop $0.10 away, 1000 shares; $0.05 stop will be 2000 shares.  I don’t use a spreadsheet or anything of this, just a quick calculation in my head.  I ways trade in intervals of 500, this is a guide more than a firm rule.

Taking Profits:

I will lock in profits when I am 3x my stop or into the second spike, whichever comes first.  Anytime the pattern becomes unclear I lock in profits.  When my entry is in the first 15-minutes I will usually sell into the first spike since those spikes are less likely to hold than one after 9:45.

 

All my trades are live Tweeted so follow me: @InvesTakeCharge

If you are just getting started check out my home page where there are tons of free resources and all my blog post from 2+ years in the market.

 

A Time to Trade

The time of day you trade matters.  I just finished looking over my trades for the past month, since I opened my SureTrader account.  They allow me to make as many trades as I want without any PDT restriction.  So naturally I am trading more often.  The results surprised me.  You can learn more about the Pattern Day Trader rule and how to avoid it here. When is the best time to trade?

The Numbers

Since opening the account, I have made more trades for sure.  I have lost about $500 total from various trades but the thing that stuck out to me was the time of day I lost the most money.  Pre-market and even the first 15 minutes can be the most volatile, but this has been the most profitable time for me.  Lunch trades, or midday trades have always ended up with me breaking even or losing money.  I did not have a single profitable trade in the midday hours of trading.

Let’s examine one of these trades that should have been an easy win and definitely had the potential to be profitable, but I ended up losing almost $300 instead.  MJ is an ETF that tracks the emerging weed industry.  The day was 11/6/2018 mid-term elections day!  With several measures on the ballots across the country to legalize marijuana in the medical and recreational fields, I expected the excitement for many of these stocks to be high the day after the ballots were cast.  This assumption was based on previous years’ elections.  Almost all similar measures were approved by voters with wide margins.

The Trade

Of course I needed to manage my risk; since any stock can go in any direction at any time, one must always budget the maximum loss one is willing to take.  Since I was looking for a 6-8% swing with a relatively low risk, I was willing to risk 2-3%.  I found that the last resistance level was at $33.98 and I decided to place my stop just below that price, at $33.95.  At 1:37 PM I placed my order for 300 shares for $34.70 each and the trade executed promptly.  The price held steady between $34.50 – $34.75 until 2:15 when the price began to fade.  The price fell rapidly until it broke down below $34, then quickly dropped below my stop, executing my sell order at $33.83, $0.12 below my stop.

The Time to Trade

Now, I had proper risk management in place and only lost about $270 total, but it also cost me a day trade when I had no intention of selling the same day.  So, I was pleased with my plan to the extent that it didn’t jeopardize a large portion of my trading capital.  But the fact remained, every midday trade I made lost me money, and this “easy” trade proved the point.  There may very well be money to be made midday, but it has not been working for me.

So, from here on out as a general guideline, I will not be trading between 11am and 3pm.  Before and after those times, the market is more active and the directions are better defined.  Long-term breakouts that occur midday are fair game, but swing trades and most day trades will be made between from 9:15 – 11 AM and 3 – 4 PM.  Few exceptions will be made.

Side note, I’m working on a guide to summarize all my rules.  I will make it available for free as soon as it is profitable.

What If…

What if I had used this rule with the same assumptions and plan but waited until after 3pm to buy in? Would I have fared any better?  Yes, without a doubt!  If you look at the chart below, you can see I would have had a much better entry point and used $33.50 as a stop.  It’s also worth noting that all my other assumptions proved true.  The votes on election night allow for more access to marijuana in both the recreational and medical fields.  The price opened at $35 and spiked up over $35.50 within a few minutes of the open.  Now, it didn’t hold it during the day, but I would have been able to exit the trade with a profit of $300+.

The key to looking at what could have happened is learning the pattern and looking for it again in the future.  Don’t sit around and beat yourself up for missing out on profits.  After all, there were literally millions of other trades that you didn’t know about that “could” have made you rich.  You don’t stress about those so you should not stress about these.  It is always worth learning from what could have been, just make sure you are constructive.

Final Thought and Notes

As the year draws to a close, it is becoming more apparent to me that I will not likely have the bankroll to quit my job and pursue a full-time career in day trading by the end of this year.  However I do fully intend to continue this quest.  Once I have the skills, they will never be lost.  Traders today are no better than they were 100 years ago.  It is truly one of the last professions that has not been figured out.  Please join me on this journey to financial independence. Follow this blog by signing up below.

All my trades can be found here: Profit.ly
Profit.ly is the social media for traders.  I encourage you to post all your trades as well.

Thanks for reading and happy trading!  Follow me on twitter for all trades, live!

FREE Resources for Traders

Being new to trading, one will quickly find a massive number of resources available through books, software and educational programs.  Most will tease you with a few “free” resources but before you make your first dollar in the markets, they start asking for payment.  While I have paid for a few courses and resources, I have discovered many of the best are free.  The only thing you will be required to give is an email address.  You can even setup a separate email for all these junk emails to go to.  There is an immense amount of free resources for traders of all levels.  You can stop looking, because you found them!

FREE Resources for Traders

Don’t crack open your wallet until you know you are getting a good value.  While you must spend money to make money, don’t overdo it at first.  Try to make sure your trading profits exceed your expenses.  Start with these free resources before you break the piggy bank open.

Trading Platform

Robinhood has free trades for everyone!  This link will take you to my full review of the platform.  They do sell your data to other trading firms so beware that you are not their customer in the traditional sense, but you are actually the product.  I don’t think it is the best platform for those with medium to large accounts above $2,000.  But for those just starting out, putting anywhere from $5-$2,000 in the market, it is a great place to get your feet wet.

Trading Software

TD Ameritrade’s thinkorswim platform offers free level 2 quotes.  While most other brokerages charge up to $20 a month for this, TD Ameritrade has managed to offer it for free.  Anyone can open an account and you can leave the funding of your account for later and still enjoy the free platform.  The software runs nicely on a laptop and they also offer an app, but I have barely used it.  If you do decide to trade with them, their commissions are $6.95 each.  I use them along with E*Trade for the majority of my trading.  When trading, I always have the thinkorswim platform up for the charting and level 2 quotes.

Education

The trader checklist is a free 11-hour education guide for those who want to get serious about trading.  The course concentrates on penny stocks and small accounts.  It provides a scoring metric to determine what stocks are worth buying and which ones you can ignore.  The course is given by Tim Sykes, who is well known in the industry for turning $12,000 into more than $5 million.  I am a student of his and fully believe in his concepts.

There is a small downside for some.  Tim, while being an expert in his field, can be extremely crude.  Being a Marine, my skin is thick and I happily let his cussing roll right off my shoulders.  However, if you are more sensitive you might want to find another course. If you have small children around, consider using earphones.  The information is excellent and I hope to demonstrate this with solid profits in the near future.

Watch-list

Dave Mabe tweets out a watch-list every morning to all his followers.  He provides many stocks that are moving or likely to move based on news or the previous day’s action.  Dave is a long time day trader who works for trade-ideas.com.  Not all the stocks will fit with everyone’s trading style, but it is a great resource until you can learn how to make you own watch-lists.

Dave does some tweeting about the markets, local running groups and occasionally a good beer.  I have never seen anything offensive in his feed so it is safe to say he is family friendly.  Please do remember that a watch-list is just that: a list of stocks to “watch.”  A watch-list is NOT a recommendation to buy, it is just a list of stocks that are “in play” and could move in a favorable direction throughout the trading day.  Typically for me, 80% of the stocks on my daily watch-list never move in the direction I want and 90%+ I will not trade.   A watch-list can and should evolve as the day progresses, I will typically add and remove several stocks from my watch-list throughout the trading day.

Chat Room

There are dozens of chat rooms available and most charge to get in.  One in particular, though, is completely free, has an excellent moderator and is open to everyone!  The moderator even shares all his own trades in real time.  Trade-ideas.com sells trading software but offers the chatroom for free as a marketing tool.  You will need to give them your email to create an account but the rest is free!  Make sure you have your sound on as, Barrie, a mild mannered Canadian, calmly watches the market and tells you what he is looking for in the market.  He is also very polite and I have never heard him cuss.  Those Canadians sure do things differently!

Even as a free subscriber you are welcome to ask questions and offer input.  If you want to see what it’s like to actually day trade full time, tune in around 9am each morning and just observe.  The perspectives and knowledge that is available in the room is incredible.

When to Pay

Now that I have given you plenty of free resources for traders, you may think you will never need to pay for anything.  That may be true but I don’t know any full-time day traders who don’t pay for something.  Whether it be special software or chat room access, you must treat trading like a business if you are going to take it seriously.  Like any business, you must invest in your business if you expect it to be profitable in the long run.  Just make sure you place limits on your spending and track expenses and profits to make sure you are getting a good value.

Final thoughts and Notes

This month the markets are in rough shape; traditionally, major crashes happen in October.  The great depression stock market crash started on 10/24/1929.  Black Monday was 10/19/1987.  The great recession started on 10/11/2007.  Be careful in these markets as things are choppy right now and history has a way of repeating itself.  I’m not predicting a crash or anything like that, just a reminder to be mindful, no one knows what the markets will do tomorrow.

The resources listed above are what I use and have found value in.  I’m sure there are tons more out there.  I try to limit the noise and keep my posts short and only provide resources that I personally use or have used.  Feel free to share your own in the comments below.

 

All my trades can be found here: Profit.ly
Profit.ly is the social media for traders.  I encourage you to post all your trades as well.

Thanks for reading and happy trading!  Follow me on twitter for all trades, live!

 

PDT Designation and How to get Around It

The PDT designation or Pattern Day Trade designation, simply put, is a law intended to discourage over-trading.  The SEC states that you qualify as a Pattern Day Trader if you make 4 or more day trades in 5 business days.  If you meet this designation, you are required to maintain at least $25,000 in your brokerage account.  As a result, brokerages have limited all accounts with less than $25,000 to a maximum of 3 day trades per 5 business days.

Q: Why Have a PDT Designation?

As stated above, it is to discourage over-trading.  New traders have a tendency to have FOMO and will over-trade and end up losing money.  Limiting the number of trades you can make forces you to be more selective and can help save your account from being depleted.  The laws in the US are far more strict than in other nations around the world.  In Canada, they require only a $10,000 account balance for unlimited day trades.  Some nations have no minimum whatsoever; we will come back to that in a bit.

A: For Your Own Good

I will not encourage anyone to work around this rule as it is a safety feature for your own good.  Over-trading is one of the easiest ways to lose money.  That being said, I have established a way to work around it for my own personal trading, with a few rules to limit my personal risk.  Every dime I put into the markets comes from outside my family’s budget and outside my retirement accounts.  It is fine to take risks but don’t risk what you can’t afford to lose.  I have funded my accounts with side hustles and gains from within the markets.

3 Ways to Avoid the PDT Designation

Hold trades overnight sounds simple enough, right?  A day trade is a position you enter and exit within the same business day.  After hours and pre-market trades are counted toward the business day on the calendar day they are made.  If you hold a position overnight, it is not a day trade.

One of my favorite strategies is look for stocks that are likely to “gap-up” overnight.  This strategy requires only a few minutes a day.  I run a scan for stocks around 3:00 pm each day, looking for stocks that have gained at least 5% during the trading day, cost between $1 and $10 per share and are closing near their high of the day.  If there is no expected news such as earnings being declared overnight, I will take a position near the close and plan to sell at opening the next day.  You can many times get a 5-10% gain, and even if it doesn’t work out you can usually at least break even or sell for a small loss.  For me, the reward outweighs the risk.  The most important thing to remember is to cut your losses quickly when a stock moves against you.

Open multiple accounts is another easy way to work around the rules, but can stretch your resources thin if you have a small account, say under $5000.  If you have between $5,000 and $10,000, you can split your cash between 2 accounts at separate brokerages and double your day trades from 3 to 6 per business day.  I have the majority of my trading capital in an E*Trade margin account.  Here is a link to the best brokerage to use based on your needs.

Open an off-shore account with SureTrader!

SureTrader.com is an international brokerage based in the Bahamas and therefore, outside of SEC regulation.  They are not allowed to solicit US based customers. They can’t even pay referral fees to people like me who steer new customers in their direction.  SureTrader does have some advantages such as no PDT rule and 6:1 margin accounts.

There are significant downsides that must be noted.  Sending money to offshore accounts is costly.  I funded my account using a Visa debit card linked to a business checking account with First Citizens Bank.  SureTrader charged a 3.5% processing fee and my bank tacked on another 2% as an international transaction fee.  I was charged $167.10 in processing fees to fund my account with $3,000.  In addition, I had to call my bank to set up a travel notification and extend my daily spending limit.  I have not tried to withdraw money from the account yet but have heard it can be difficult, too.  Follow this blog, I will update everyone when that time comes.

Another downside is very lousy executions.  Historically, when I trade with E*Trade, they will execute my trades in the best manner possible for me, their customer; SureTrader does not.  For example, with E*trade, if I place a Limit Sell Order for $3.50 but the price is currently $3.60, E*Trade will execute the order at $3.60 or very close to it.  SureTrader will execute the trade at $3.60 but only give me $3.50 and keep the other $0.10 for themselves.  You can’t complain to anyone because they fall outside of all US laws and jurisdictions.  They have higher fees than the mainstream US brokerages, too.  Commissions are typically between $5-$7 at most discount US based brokerages, SureTrader’s minimum is $5, maximum of $50, based on $0.01 per share.

Final Notes and Thoughts

The Pattern Day Trade rule is there for your protection.  After dealing with SureTrader, I recommend against them.  If you really want to trade, the best way is to open another account and use the gap-up strategy.  It is vitally important that you protect your account for a massive loss while you are learning.  No one trade will make you rich but one trade can bankrupt you.  You can read about me learning that lesson the hard way here.

I’m not yet totally sure of the tax implications of my new offshore account.  You’ll want to consult with an accountant or tax expert for that.  Just remember to answer all questions honestly, and keep in mind that gains made in the markets are always taxable.  US Citizens are required by federal law to report all income and pay taxes accordingly.

All my trades can be found here: Profit.ly
Profit.ly is the social media for traders.  I encourage you to post all your trades as well.

Thanks for reading and happy trading!  Follow me on twitter for all trades, live!

 

My Rules of Trading and What Happens When You Break Them

The past 2 weeks have been a bit rough and I am still a bit gun shy.  I am working to rebuild my confidence and start making profitable trades again.  First I will explain the rules of trading I established for myself.  I will then explain how I managed to break all of them and how much of my account I gave up while learning these rules.

The Rules

Rule #1, Cut Losses Quickly.  This is a rule from Tim Sykes and he makes no secret that it is the most important rule.  Everyone who has read or watched any of his free content knows this rule.  This is so important because when you trade lower priced stocks, almost all of them are eventually going to zero.  You never know when that is going to happen and you don’t want to be trapped in the trade when the stock does go to zero.

Rule #2, Plan Every Trade.  I keep a pen and paper at my desk and sketch out a basic plan before I make the trade.  The notes include the stock symbol, position size (number of shares), entry point, and 2 exit points.  I include 2 exit points, one is a stop, the price where I will get out to protect my account; the other exit is the target price, where I hope to sell and take a profit.

Rule #3, NEVER CHASE.  Plain and simple, if I miss my entry point that’s it, I missed it.  I will never buy above my entry point again.  It is better to keep my account intact and use it to fight another day.  There will always be another spiker, when you miss one use it as motivation to find the next one.  Never sulk and think about what could have been, because it is not what happened.

Rule #4, Stick to the Plan.  A plan is only useful if you use it and stick to it.  Not only must you make a plan but you must stick to that plan.

Rule #5, Cut Losses Quickly.  This rule is so important I listed it twice.  Everyday before I trade, I read all these rules and remind myself that they are the ticket to my future success.

A successful trade, in my book, is one that is executed according to these rules.

Sample Plan

Here are the actual notes I was taking on 10/8.

Note the top line is the only position I took, my position (P) was 1000 shares for $5.03 each.  My stop was $5, and my target was the top of the initial spike.  Given I had an issue selling and sold below this price, I made a plan and stuck to it for the most part.

Everything else on there was part of a watchlist for the day.  I keep a few notes on each one as the morning progresses.  I have noted some entry points for DNR and UUU.  Neither got to the target price so I didn’t trade either one.

Breaking the Rules of Trading

On 9/21 I was watching the market and all the weed stocks were continuing to blow up.  IGC, one I had traded last year was in play and moving fast.  It had closed at $2.14 the day before and opened at $2.70.  I decided that if it broke through $3 I would buy it and ride the spike as long as I could.  I placed a buy order at $3.05 but was too late.  Another order at $3.25, too late again, $3.50, $3.75 I couldn’t catch it as it was moving too fast.  Finally as it blasted above $4 I placed another order at $4.05, it executed at $4.03!  I bought 6000 shares for a total cost of $24,184.95.

I was happy to finally be in as this had the potential to keep running!  After the order executed I realized that I was actually too late again, my order had filled because the price had reversed.  I was suddenly staring at a $1,000 – $2,000 loss.  What a disaster I had created for myself!  Not wanting to just give up 10% of my account, I looked for reasons not to sell.  I got a nudge from someone on twitter encouraging me not to sell, they thought it would come back.

As the day progressed the price rebounded, I placed a break-even limit order at $4.03.  As the price moved quickly above and back below that price, my order never executed.  Not enough people bought at that level to take my shares.  As the price slipped further from $4 I was a wreck mentally.  I kept looking for and finding reasons not to sell.  In the back of my head I kept saying, the first loss is the smallest, but I managed to drown out this voice.

Planning Again

At the end of the day the stock completely crashed closing at $2.81.  I never sold and was looking at a loss of $8,000 on paper.  I took my time over the weekend and came up with a plan, I would sell at the first sign of weakness after the markets opened on Monday.

Monday morning rolled around and the stock opened at $2.57 and started dropping, I sold as soon as I could at $2.38.  The sale was $14,292.01.  This was a loss of $9,892.94, about 40%.  This was also about 1/2 of my trading account since I was using margin.  The rest of the week I kept my trade sizes small and cut my losses quickly.  I have begun picking back up again but am concentrating on trading based on the rules listed above.

As an additional reminder I have scheduled an automatic text from myself everyday at 9:25 AM.
“Cut losses // Make plan // Don’t chase
-Future self (you’ll thank me)”

Since this time I’ve had a few decent wins and several small losses.  I’m still a little trigger shy but I am conditioning myself to be a profitable trader by first minimizing losses; now I am working on maximizing profits.

Final Thoughts and Notes

I had a long delay between this post and my last, I needed time to get my head right and wait a few weeks before I revisited this story.  While I wish it hadn’t happened, I will use this as a learning opportunity and will hone the emotions in a positive energy.  90% of traders lose, I’m working everyday to join the 10% on the other side.  Check back often to see where I am on my journey.

All my trades can be found here: Profit.ly
Profit.ly is the social media for traders.  I encourage you to post all your trades as well.

In my next post I will tell you about the Pattern Day Trade rule and how to get around it.

Thanks for reading and happy trading!  Follow me on twitter of all trades live!

A Winning Trading Strategy

In the past few weeks I have looked at my trades for the past year and realized I don’t have a winning trading strategy.  I have been making a lot of trades with varied amounts of success.  The trades put me in the hole quite a bit and I knew I needed to change something.  I signed up for one of Timothy Sykes’ education courses and hit the books studying!  Follow the links to get more details about those items.  Here are some of my early trades as my education starts to show.

Losing Trades = Learning Opportunities

On 8/29 I watched as GOL, a Brazilian Airline, was on the upswing after bouncing off support around $5.  As the stock pushed higher, I decided to buy in order to capture the momentum.  I bought 911 shares for $5.55 each, total cost $4,997.23.  The price seemed to stall but I stayed optimistic that it would stay above $5 and soon make a move toward $7 or $8 as it had earlier in the year.  On 9/4, I saw the price drop toward $5 and decided to buy more in order to lower my average cost.  I bought 1956 additional shares for $5.12 each, total cost $10,014.00.  My total position was 2,867 shares with $15,011.23 invested at an average of $5.24 per share.

That same day the $5 support didn’t hold and I sold all 2867 shares for $4.98 each.  In hindsight I could have seen this coming.  See the graph below, notice the obvious downtrend?  Despite the $5 support level, when the trend is down it will eventually come to a point, quite literally.   When it reaches this point, it will either reverse direction into an uptrend or fall through support.  The thing to remember is no one knows what it will do.

So the only safe move is no move.  Sure, you could guess and maybe you’d be right, but maybe not.  Either way, it’s a gamble, and to me it’s not worth taking.  This lesson resulted in a loss of $737.66, about 5.3%.  In perspective, I paid $1900 for my educational material.  I now have a firm understanding of what can happen on a downtrending chart.

Ford: Downtrend with Good News

Ford (F) had a similar graph when compared to GOL.  It was downtrending in a similar manner but was slightly different.  They released earnings and the initial reaction was positive.  I believed it could reverse its trend.  On 9/4, I bought 1571 shares for $9.54 each, total cost was $15,007.74.  Turned out I was wrong, the trend reversal didn’t hold.  I cut my losses quickly when the price dropped to $9.35 the next day.  This resulted in a loss of $305.53, about 2%.  Despite being wrong I think this was still a good trade.  They had positive news and were bouncing off a support level.  But it didn’t go the way I thought so there was no reason to stay with it and hope I turned a profit in a few days or weeks.  Hope is not a strategy; I am committed to playing my strategy.

ALERT!

On the morning of 9/5, I received an alert from the education program I bought.  WATT was flying upward and Tim Sykes himself had bought in.  In pre-market trading, I bought 361 shares for $13.94 each, total cost $5,036.97.  I didn’t have any other reason other than the alert to buy this stock.  I did take a smaller position, around $5K instead of my usual $10K – $20K, to limit my risk.  As 9:30 approached, the price jumped all over the $13-$14 range but never went above $14.  Tim had sold out only a few minutes after buying in but I held until the market opened.  After a few minutes the price continued on a downward spiral and I sold when the price reached $13.  Total loss was $349.03, about 6.9%.  The lesson I learned here is not to go blindly into any stock even if it comes from an expert alert.  You need a plan to make a trade, I had no plan.  $350 to learn that lesson.

The WINS!

OK so I’m down $1,392 after making those trades and learning those lessons.  Not everything went wrong, after enduring those losses, two of them completely avoidable, I hit a stride and started making money again.

NLST is a penny stock that had been moving quite a bit this week.  Twitter and chatrooms were buzzing and there was plenty of volume to support a quick trade.  On 9/7 the stock opened at $0.36 after closing at $0.16 the day before.  That is more than double in price!  It quickly moved up to $0.40 before going back to $0.30 in the first 10 minutes of trading.  After touching $0.30 it hovered around $0.31 until it began an upward move.  I bought 35,000 shares for $0.315 each, total cost was $11,029.95.  The chart moved up slowly and seemed to stall at $0.35, when the price retreated I sold.  I sold all my shares for $0.345 each, total sale $12,065.72, a profit of $1,035.77, about 9.4%!  All this happened in the first 20 minutes of the market opening.  I had ideal conditions, no one was bothering me at work.  After this trade I went on with the rest of my day!

This trade was on my watchlist of 6 stocks in the morning pre-market.  As 9am rolled around I checked again and 4 of those stocks weren’t acting like I wanted.  As 9:30 hit, NLST was moving quickly so I ignored the other stock I was watching.  Had this pattern not emerged I would not have traded.  Here is the chart I was looking at as the market opened:

It doesn’t matter that some people held overnight and doubled their money.  It doesn’t matter that the stock now trades at $0.38, so I “could” have made even more.  What matters is that I saw a pattern and took some profits from that pattern.  Don’t get greedy and don’t get scared.  Keep emotions on the sideline and take predictable profits when they are available.  This is the winning strategy of a day trader.

More Victories

With a similar mindset as the trade above, I typically select a few stocks to watch between 7am and 8am, before the market opens.  As it gets closer to 9am, I check on all those stocks again for a strong open.  At 9am I typically cross off any stocks that are not acting favorably.  As 9:30 arrives, the markets open and this is when I look for patterns to develop; the one above held support at $0.30 and began moving up.  I don’t try to predict the move, I wait for the move to show itself and then capture a portion of it.  If the stock moves against me I get out immediately.  No “hoping” because hope is not a strategy.  If you are hoping for a stock to go in your favor, you are better off buying a lottery ticket and hoping you win.

9/11 CVSI was just one of these stocks on my pre-market watchlist, and survived multiple list reductions to be the sole survivor.  I bought 3,000 shares for $5.25 each, total cost $15,754.95.  Within a few minutes I sold them for $5.37 each, total sale was $16,104.48.  This was just another disciplined trade.  Total profit was $349.53, about 2.2%.

The Gap-Up Strategy

Another strategy I am using is the Gap-up strategy.  This is a simple move that is relatively safe.  All you do is look for a stock that made a large move, 5% or more, and see if it closes near or at the high of the day.  The next day, after a strong close, you will typically see a strong opening.  Even when you don’t get a strong open, you will usually have a chance to get back out even.

9/12 No trades in the morning but as 4pm neared I bought 50,000 shares of SGMD for $0.1175 each, total cost $5,879.95.  I was attempting to use the gap-up strategy.  The next day it worked!  The stock opened at $0.1190 and began inching upward.  I got distracted in another trade and missed an opportunity to sell above $0.13.  I did manage to sell at $0.1227 per share, total sale $6,126.52.  Total profit $246.57, about 4.2% a solid profit!

The trade that was distracting me was NIO.  Today I worked from home as hurricane Florence moved toward North Carolina, so I had plenty of time to prepare a watchlist and narrow it down as the market open came close.  I was still holding the SGMD I discussed above so I had to pay attention to that, too.  NIO is an IPO (Initial Public Offering) that claims to be challenging Tesla (TSLA).  The day before it made gains but failed to break through $7.  Today it moved through and rocketed past $7.  I made a typo on my first order and ended up buying higher than I hoped at $7.20.  I bought 1,000 shares for a total of $7,204.95.  A few minutes later I sold as it was rising and distractions from house guests increased.  I sold for $7.49 per share for a total sale of $7,484.83.  A profit of $246.57, about 3.9%!  I made over $500 before 10am!

Final Thoughts and Notes

From all the trades above I netted a profit of $519.53.  Including all my trades since beginning the training course, my profits are $1,558.60!  I have nearly recouped the entire $1,900 cost of the course.

Contributions of $450 in side hustle income.

Contributions from my paycheck totaled $200, $100 each week.

I am finally beginning to feel more comfortable trading!  I am confident in my plans and the profits are proof of concept.  There is still much more studying to do.  Please follow my blog to learn with me and get inspired yourself!

Check out all my trades here at Profit.ly, the social media for traders!  You can keep your account private to create an easy to use trading journal.

Follow me on Twitter for live trades!

Thanks for reading and happy trading!

Trading Education Begins

Read my last post here to get up to speed on my new game plan and direction.  I took a hard look at my success, or lack thereof, and redirected myself to better align with my goal of full-time self-employment by the end of  2018.  There is way too much to review here so you will need to go read it if you want to understand the drastic change in my trading.  Basically I know I need a trading education, so I have begun a course!

Pre-Education Trades

Here is a look at my trading account, where the majority of my losses have come.  You can see I am holding many losing positions that I have held way too long.  Take a look at the right hand side of the table.  These losses are not helping accomplish anything.  The account value dropped all the way to $15,300 at it’s lowest point.

Please feel free to browse my previous blog post to read all about these trades.  Here is the only trade I had not yet discussed:

HIPH, is another weed stock.  They are currently producing a sports heath drink that contains CBD (cannibus oil) and has been endorsed by Ice Cube himself.  The company was being promoted by a Twitter account that is providing free penny stock picks.  They were also promoting the fact that their success rate was better than 90%, with only one loser since beginning the free service a few months earlier.

I have decided not to share that Twitter handle because I don’t trust them.  They might be legit but I have no way of knowing.

The trade:

After seeing the alert on Twitter on 8/8/18 I purchased 72,000 shares of HIPH for $0.0131 each.  The total cost was $948.15.

Education Begins, Cash Needed

I did pay for my educational materials, and for copyright and ethical reasons I can’t share the information from that material here.  Tim Sykes’ business is selling trading education, posting it for free would be wrong.  I will, however, share the new rules I created from Tim’s teachings.  The first thing I needed to do was free up some cash from all the trades that weren’t serving me well.  Without cash I can’t trade.

On 8/21 I sold the shares of HIPH from 8/8 for $0.0135 each.  Total sale was $960.58, a profit of $12.43, about 1.3%.

I had no reason to believe this was a good trade with a positive upside, so I sold them.  The price did rise more than 100% in the days following but since there was no indication, I have no regrets.  I need to focus on trading profitably, not buying lottery tickets.

On 8/22 I sold 120 shares of Lowe’s that had been purchased in 1999 for $14.23 per share, the total cost was $1,707.60.  They sold for $106.76 each after a good earnings report; total sale was $12,805.07, a profit of $11,097.47, about 650%.  Now that I had a plan, it was time to liquidate this position and eliminate any excuses for not selling.  I knew when I sold this one there would be a tax bill, but now I have no tax bill excuse.

On 8/27 I sold my position in RIOT for $5.78 per share.  I waited a few days to sell because it was on the rise following Bitcoin’s lead.  Once it started to turn back I sold, the total sale was $3,751.92, a loss of $1,865.47, about 33%.

Trading the Charts

As I began my new chapter I decided to stick with the stocks I knew and trade the charts, not the companies.  You invest in companies, you trade charts.  I will only trade stocks that show a good technical chart that has promising short terms gains.

8/23 I bought 400 shares of MU for $50 each, total cost $20,004.95.
I sold these shares on 8/24 for $50.24 each, total sale was $20,134.73, a profit of $134.73, about 0.7%.  After this stock showed signs of an upward move it reversed direction.  I sold out to preserve my profits.

8/28 I bought 120 shares of WWE, yes professional wrestling.  It was the trade of the week from Trade Ideas and was moving toward all time highs.  The shares were $82.83 each, a total cost of $9,945.57.  This trade worked well and I watched for several days as it moved upwards with a moving average or MA.  Once it dropped below that moving average I set a stop-loss order.  It continued downward and on 8/30 I sold for $85.97 per share.  The total sale was $10,311.30, a profit of $365.73, about 3.7%.

On 8/28, as weed stocks continued to rise I bought 500 shares of ZYNE for $6.80 to try and capitalize on this.  This stock was making an upward move after bouncing off support.  I sold it the next day for $7.13 per share, total sale was $3,558.94, a profit of $153.99 about 4.5%.  This stock is currently trading above $8 per share but I have no regrets as I took a solid profit and didn’t get greedy.

Long Hold: Cash Out a Loss

On 8/29 I sold the last 30,000 shares of SGMD the stock that gave me a $5,000+ profit last year.  I realized there was no guarantee of future movement and they put out a press release describing their plan to dilute their shares.  You can read about the dilution here.  The shares sold for $0.13 each, the total from all SGMD shares sold this month was $5,645.14, a loss of $427.41 about 7%.  This stock just didn’t fit with my strategy; they needed to go.

On 8/29 I bought back into MU because it seemed to be continuing an upward trend which I had already profited from in the same week.  I bought 388 shares for $51.55 each, total cost $20,005.30.  I sold these the next day for $52.51 each, total sale was $20,368.61, a profit of $363.31 about 1.8%.

TSLA, one of my favorite stocks, was making an upward move right after I sold those shares of MU.  I went ahead and bought 66 shares for $301.45 each, total cost $19,900.53.  The price rose but quickly reversed, I sold before it moved me into negative territory.  Sold for $302 per share, a profit of $26.25 about 0.1%.

The last trade I am still holding but have a stop in place near $5.  GOL, a brazilian airline was making an upward move after bouncing off support.  On 8/29 I bought 911 shares for $5.48 each.  At writing I am still holding these shares, they closed at $5.52 on 8/31.  As of right now I have a small profit.

Final Notes and Thoughts

Additional income, expenses and contributions:

I recieved a dividend from LOW stock on 8/8 for $57.60.
$760 was added from side hustling during the month of August.
I made $400 in contributions from my paychecks during August.
E*Trade charged me $81.88 in interest for using my margin account.

You may be asking yourself what is technical analysis?  What on earth are you talking about?  What is “bouncing off support?”  I will explain all in an upcoming blog post so subscribe to this blog below to keep learning!  I want to first prove there are profits to be made using technical analysis, then explain it.  You will want to learn after you see me making money using these techniques.

Thanks for reading and happy trading!

The Dilution of HMNY: What You Need to Know

Dilution is a powerful weapon in the stock market and the dilution of HMNY is wreaking havoc on the share price.  Dilution is legal and you don’t always see it coming.  MoviePass parent HMNY is a prime example of what dilution can do to a company’s stock price.  The other week when HMNY dropped below $0.10 per share the data being provided was there was only 1.7 million shares available, at a price of $0.06, the market cap (or valuation) was around $100,000.  That’s it!  The price of a high end car.

Most penny stocks have valuations of more than $1 million.  The fact that only 1.7 million shares were available was what brought my attention to this stock and what made me think it was a good buy.  Since then the company has released more data including the very useful share count; remember, we thought it was 1.7 million.

On 8/15 HMNY released a report, you can read it here.  They went from 1.7 million shares outstanding to 636.9 million shares!  You can do the math but I’ll save you the time.  That’s a 37,365% increase in shares!  Let that sink in, over 37,000%!

Economics 101

I strongly believe that much of the way we look at economics is fundamentally flawed.  However, that is another discussion for another day.  The basic underlying principles of supply and demand are, from everything we can tell, accurate.  So for this post, we will assume that the laws of supply and demand as you learned them in high school are unchanged.

More buyers than sellers, in other words, more demand than supply will push the price of a good up.
More Sellers than buyers, or more supply than demand will push the price of a good lower.

Let’s consider some real world examples.  When a sports team makes the playoffs, the tickets typically sell out very quickly.  The demand for tickets many times vastly outweighs the supply.  This drives the price of the tickets up.  If you want to see the game and you didn’t get tickets from the box office before they sold out, you will have to purchase from someone else on Craigslist or StubHub and pay more than the original price.  The demand is higher than the supply so the price goes up.  This demand can cause a $300 ticket to sell for over $1,000.

When supply exceeds demand, the price will drop.  Consider a pair of designer jeans, bought new from a department store they might cost $250 or more.  At the end of the season the leftover inventory will go to discount retails like TJ Maxx, Ross or outlet stores.  The surplus supply of jeans is sold at a discount, usually under $100.  This surplus supply will drive the price down.

Supply & Demand and the Stock Market

Stocks are just like everything else that we buy and sell, the same rules of economics apply to them in real time.  More demand will drive prices up, more supply will drive prices down.  Typically, most big companies we hear about don’t buyback or sell more shares.  But this problem plagues many penny stocks.  One of the biggest reasons people don’t trust penny stocks is because the owners of the company can dilute the share holders by supplying too many shares to the market.  This will eventually drive the price down.

Companies sell shares to raise cash to make investments or cover operating expenses.  HMNY is burning cash much faster than they are bringing it in.  With the unstable business model it is unlikely they will be able to get a loan to help them stay afloat.  They have shares of their own stock and they are selling them as fast as they can.  This is how the supply went from 1.7 million to 636.9 million in just a few weeks.  HMNY sold 635.2 million shares to help cover operating expenses.

This selling “diluted” the market and made the existing shares less valuable, just like the designer jeans.  The last few weeks as tens of thousands of traders and investors rushed in to buy up what looked like discount shares, HMNY was selling them as fast as they could, which kept the price from rising and actually pushed the price lower.

The Dilution of HMNY

The management at HMNY diluted the shareholders’ current stake and made everyone’s shares worth less.  However, if they did not sell these shares they could become insolvent which would make their shares worthless, truly worthless, $0.000000.

When I decided to buy some shares it was truly a gamble.  I might lose the entire amount I invested or I might make a handsome profit.  No one knows for sure, anyone that tells you different is lying to you.  This stock is a gamble plain and simple.  With BIG risk can come BIG REWARDS!

 

Thanks for reading and happy trading!  If you have any questions please post them below.  Don’t forget to follow me on Twitter for all trades live!