08/14 – studying the market

I started my day trading career with Tim Sykes and when I wanted to learn more, I joined Investors Underground. The DVD’s that helped me the most were Tim Grittani’s Trading Tickers and Nate Michaud’s Tandem Trader.  Software that has helped me in my early years was: Trade Ideas software. Now I use FINVIZ ELITE. Click on the highlighted links for more details. For my main page, please click here: Day trading for beginners

About my blog and change of heart

Penny stocks are fun. Lets start with that. However, I find it all too difficult to find that consistency. With THAT consistency, I mean regular income (gains) and regular growth. The latter I am missing in my trading. Yes I was making USD 1,000 a week. However, this was becoming tougher and tougher. One week I was up USD 5K and the other week I could be down USD 7K. Cutting losses is harder then you think. Penny stocks need room to breath. However, give her too much room and she will run. Give her less space and you miss the points. This is very stressful and I do not like it. Also, I feel penny stock land is becoming a shit show. Too many people using this niche and the really good plays are out of my reach. Borrows, to sell short, are gone in minutes. There is no way a non hedge fund day trader is able to compete with that.

With that in mind I started to look for a different approach. Mid- and large/mega cap land. What I am looking for here is consistency, consistent pattern and bigger picture moves. Where does the stock want to go, is the main question I ask myself.

As example, AMD. AMD wants to break out SOOOOOOO bad. However, those who bought on the latest washout on July 25, 2018 (to bring in fresh blood; see FB and TWTR for similar patterns), want to take profits at highs (into the 20’s). “Investors” want to see there “Investment” higher, obviously. But I notice that mid, large and mega cap land give three shits about “investors”.

Anyway, there is a story in these chart patterns. What I am looking for is exactly that, where does this stock want to go, how does it intend to get there, and most importantly, what will she do when she gets there. Lets use the same example, AMD.

For me it was obvious that she wanted to washout (smart money taking profits, so smart money can take new positions at lower prices). Quite confirming on my thesis is the fact that AMD tested and held the 50 EMA on the daily chart. This signals a continuation of the uptrend. After this a similar move happened after the new, all time, highs were tested. AMD tested a whole number (USD 18). When this held, my guess is, big/smart money, wanted to see this go higher. Also, keeping in mind, hence yesterdays action and perfect PR timing, that a new and better product was launched. This signals for me that smart money wants this to go to new highs and then sell off when the time has come.

This falls in line with my strategy: Waiting for big money to cover/sell their positions and the sheep (majority) will follow. Short at support for the nice gains. Also in larger cap land a 80% winning strategy.

THE BIGGER PICTURE

Now that we have an idea how to approach larger caps, we need to understand what drives these companies. What I look at is the SPY/S&P 500. This is the main driver to see where the market is going. These indicators are mostly driven by macro and political factors, but also large caps like bad earnings on NFLX or the massive anticipation of the first trillion dollar publicly traded company AAPL.

You need to know the state of the market to have any idea how stocks work. Especially for a company like AAPL, FB, BABA and other large cap companies. Otherwise you are just randomly trading stocks. That makes you a gambler and you do not want to be a gambler.

CONSISTENCY AND GROWTH

Lets start with growth. What the heck is growth? A bigger account size? FUCK NO! What we should aim for is making our strategies working and see it grow with time and patience. This is new for me but I haven’t had any major losses yet. My biggest loss since I started trading larger caps is USD 500. These were bad trades due to a strong market. but where can I lose USD 500 and still be up double then that the next day? OK, penny stocks can do that for you. But chances are you will blow your account. This market is designed for retail to lose money. Penny Stocks are scams. The whole market is full off scams. Look at FB and TWTR. They washed out “weak” hands will will be back at highs in no time. This is the smart money game. Keep that in mind. Although FB could crap more IMO, depending if any scandals arise. But keep in mind that nothing happens without a reason. Just look at Tesla. If that did’t wake you up… nothing will!

THE OTHER REASON

I will be short on this, but the other reason I don’t want to trade penny stocks is that there are too many liars out there. Like Will Kareman. That scared me. I genuinely thought he was on to something, but turned out to be a fake, paper trading fool. I have my doubts on all of these penny stock furus and I advice you to do your research. Although I see the worth in these services, NONE OF THEM will teach you everything, because there is one leader in this market. And that IS the market!! You need to learn how the market works. Nobody can teach you how to react to unexpected behavior. Just know that, one day, you will see opportunity and one day you will be on top of your world!

SERVICES THAT CAN HELP YOU

Short selling is hot business. Both Tandem Trader and Trading Tickers have plenty of information on short selling.

Kindly click the following link here for Tandem Trader:

Tandem Trader DVD

Please click the link below for Tim Grittani’s Trading Tickers DVD:

Trading Tickers

I hope you enjoyed this blog entry! As always, feel free to share this post!


If you are interested in Investors Underground and would like to learn more, please click the link here: Investors Underground.

  • kindly note here that this should not be treated as advice, trade advice or any of the sort. Always trade your own plan, cut losses quickly and never follow any alerts. Always do your own research!
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