09/20 – TRXC – Blast from the past

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


 

A small introduction

I have been trading for a while now and I try to adapt to the circumstances that surround my niche. That means I am always looking for an edge in trading and thus, I always try to educate myself.

That being said, I was done with penny stocks. These are horrible listed companies that wreck accounts like a maniac. I had a good sauce though: I’d short parabolic moves, I’d short ramps up to certain key resistance and short stocks that crapped through support levels. I had a few nice stocks permanently on my watch list like GERN, TRXC, NIHD among others.

Then VKTX hit me quite hard. I lost a big chunk of my well earned trading income. For this reason I started looking for a different edge. My friend told me she was looking into large caps and so I reviewed them and noticed that these trades similar to small caps, but have more liquidity and follow the market. My main lookout was on stocks, as example AMD, TWTR, FB and BABA, that held key resistance or support and trade of lower highs from a double top for a short trade or higher lows and a double bottom for a long trade.

This seamed easy, but was harder then I thought. Trading large caps is different, compared to large caps. Large caps are not manipulated, which should make them more predictable. However, I did not notice this at all. These stocks just do what ever they want to do.

Kind of a no brainer. I know. But you need to understand is that playing small crap pennystocks is to understand the games of the market makers e.g. Large caps have a similar game, but is is the game of “smart money”. Smart money are the traders, hedge funds and all the other large financial institutions that know, well in advance, where the stock is going, how to get a stock to key support and how to push a stock to certain resistance areas. That is a completely different game from pump and dumps, where a garbage stock is promoted, to gain a bit of cash for those who have invested in that promotion and then they dump the hell out of a stock, which leads to a cascade of cashflow to the down side and creating bag holders.

Long story short, you need to understand what stocks want to do and understand the differences between the large cap game and small cap game. And with that in mind and my new experience from playing large caps, I have broaden my knowledge yet again and am able, more then before, to play large caps AND small caps.

Last but not least, I did learn how to manage stops now. So that was nice from all this change of heart back to what I was trading before. It is so important to manage risk! Use stops! Big boys do it too and so should you! I used to say stop losses are for pussy, but in the end it really cost me money. So just don’t. Use them stop losses.

TRXC

I always have a large watch list on hand. Large caps on watch for today where AMD, JD, IQ, TWTR, TEVA, HTHT and CPRT. I was watching TWTR for a while, after failing that USD 30.00 key resistance but did not test it any further. That did not give me any confidence, or even a chance, to trade this setup. The lower high was not looking at all as what I wanted to see and it did not look like it was going to test that USD 30.00 again. I wanted to short this, but USD 0.30 cents per share seemed a bit too much as a risk to short this setup. I wanted USD 29.88 at least to short this stock and have a stop at USD 30.00ish.

Small caps that were on my list where CRON, GERN, TRXC, SPWR and UPL. I was looking at CRON at open. Saw it hit USD 14.00 then crap and see it test again. I had my limit order ready at USD 13.88 and was waiting for this baby to hit. It never did and I lost interest. I am the type of trader that likes to short a stock at the top, for a nice and large move to the bottom. I never hold until the bottom, because I am a very systematic trader/ That means, if my target is met, I cover my short. Especially on penny stocks! CRON dumped on me, so I went over to the next ticker: TRXC.

People that have read my blog before know that I know TRXC. I have traded this baby many times before and I will trade this many times in the future. She always goes for that high and craps the next day, goes below the prior day support, bounces a little and craps some more the following days. And she did the same thing today. Prior support was at USD 6.35. I enter my short position at 6.40 – 3.30ish with a nice 6.34 average and sold into a small ramp from 6.10 to 6.12. Yes, I wish I started my position from that USD 6.80 resistance and risk from that level. Just enter that little piggy as soon as possible and just gamble a bit. I am not a gamble, but a systematic trader. That means I short stocks, based on my research. As said before, and this still stands, these garbage stocks have no real money behind them. Not like companies as Apple, Netflix and Alibaba do.

This shorting game is so easy to understand. 1). People buy the breakout (the parabolic move), Smart money / market makers will take their profits at key resistance levels. This means that these traders will sell and the stock will go down. At the end of the day, swing traders come in. The next day they will sell. You can see a stock making a small ramp upwards and then crap to support. Then people start to panic and the dumb money start to sell. Dumb money are the emotional traders that panic sell. Almost 80% of the time a stock will drag through the prior day support and trigger stop losses (which are for pussies, but also protect your capital). And tada! that’s my secret, but not so secret, sauce. I cannot make it simpler then this.

Just keep in mind that this is not a perfect system. Once in a while these little fuckers come by and squeeze your ass into oblivion. VKTX did this too me and cost me dearly. I know now that, if I wasn’t such a fucking ignorant prick, I could have protected my capital. VKTX did not whip out my account, by any means. But it would have been nice if my loss was below, well below USD 10,000. I mean, I only make USD 1,000 per week. That USD 10,000 was 10 weeks of cash that vanished into the pockets of smart money.

Thats why I try to tell people now to start small. I am too. Yeah, TRXC was a nice trade. But I did not make my normal USD 350. Not even USD 150. But I am happy with the money that I made. I only risk approximately USD 100 to make USD 150. My initial target was USD 6.00 on TRXC, with that USD 6.34 average position. But I chickened out! And that okay!

SERVICES THAT CAN HELP YOU

Trading large and mid caps is hot business. Tandem Trader offers some insight on how to trade them.

Kindly click the following link here for more info on Tandem Trader:

Tandem Trader DVD

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