10/5 – Missing out on the big move CRON

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. Click on the highlighted links for more details. For my main page, please click here: Day trading for beginners


 

Todays Watchlist was: CRON – TRXC – ARWR – MDXG – DNR

Introduction

What up you guys! Let me tell you I am totally focusing on small caps / penny stocks again. That seems to be my niche. Although large and mid caps have loads of potential too, you also need to realize that they have their down side too. For example, AMD moves fast! You cannot set your limit order and get filled in the moment. Large and mid cap stocks should follow the market, but smart money play mad games. Although I have a firm understanding of that game, after reviewing the tickers, I notice that the probability of a successful trade was way lower then with penny stocks. And last, but certainly not least, I found it harder to find new / additional large / mid cap stocks to trade.

So, I am back at what I was doing and fingers crossed that I do not make the same mistakes I did before. Currently I am on a 60% win ratio and my gains, on average, average roughly above my losses. Mind you me, I lost big on VKTX and the large / mid cap promised land did not fulfill its promise.

TRADE A PLAN

I always have three basic ideas in my head. 1. with a probability of 20%, short into a parabolic move. 2. with a probability of 50%, Short into a push / ramp  and 2. with a probability of 80%, short into break of (key) support.

When looking at a chart, the first thing I do is to “chart out” or line out, where the key support and resistance levels are. This is important, because I can easily see where the main points for a breakout or a break down might be. To get back at shorting into anything, this way I know where the resistance might be.

Keep in mind that I know already, from my own research, which setup has the most probability to fail. I have added them in the above section.

Also, I prefer trading stocks I have traded before. This is because tickers have a certain flavor or accent. I was looking at a few tickers, before I entered my position on CRON. DNR had heavy support and resistance with a very tight spread (as example, DNR had 500K sitting at one point this morning), where CRON had a tiny bid (Biggest was at USD 10.00 and was only 50K max on the bids).

CRON was a nice, no stress, trade. Right out of the gate, CRON washed out some helpless stop losses and found some footing at 10.10, then ramped up a bit (easily classed as a weak open) and washed out any buyers who tried to hold USD 10.00. I entered my short after 10.40 failed and added my stop there too (I am not an idiot anymore).

She was just above yesterdays high during power hour so that seemed like a good place to start with a small size. Added some size after VWAP broke at USD 10.15 and covered into the wash from USD 10.00 to USD 9.90. Obviously I left a lot of money on the table. But this was my plan and I stuck to it. I might have easily lost my money too. But there was this 25K bid at USD 10.03 that gave me confidence that CRON will fail this USD 10.00 key support. Also USD 10.20 was heavy and after that 10.00 to 10.15 was heavy too. But ultimately she failed and I made my money.

DNR – MDXG – TRXC (MISSING OUT ON PLAYS)

Because I had some issues with my broker I missed out on the above tickers. I could have easily doubled my money on any of these tickers. I hate it when my software screws me. But one phone call later, everything was fixed. But yeah, I’m a bit butt hurt that I missed out on DNR. My plam was to short into that USD 6.45 crapper and cover into a USD 6.30ish wash but my broker decided it was time for a well deserved weekend.

MDXG and TRXC had similar patterns. TRXC failed key support too (pretty much the same pattern / setup as CRON!). My original plan was to short into or risk off USD 6.00 or short into key support at USD 5.75.

MDXG is a total shit company not deserving the listing she has. I can easily follow the same pattern rules on this ticker as I did on CRON and would have done on DNR and TRXC.

SWING TRADING

I am also still looking for swing trade opportunities. But I am very critical on what I would swing. I review these using a check list with a wide variety on point I review. The most important thing I look at is chart pattern. Am I familiar with this pattern? Is it up trending or down trending? Are there gaps? Do any of the spikes / gap ups hold? Where will she break out or break down?

The second most important part of this review are the points on risk. This is where I look at filings. the price action (reasons I avoided PYX was because of a 50 cent spread!), see if there are any equity, solvency (how do its assets compare to its liabilities?) and cash risks. The final points that I look at is the average company analysis by research companies and the overall state of the market.

With this I start making a plan for the swing trade. Almost 99% of stocks I review do not make it further then the check list stage.

FUNDAMENTAL ANALYSIS

I also want to quickly tell you how I look at fundamental analysis. As I am an accountant, I can understand financials like the back of my hand. I know what to look for and what to look out for.

The main thing that is important in any accounts is its cash position. This can be found on the cash flow statement. There, you can review where cash is generated (operational or via financing – inter company loans – or toxic offerings). What is also important here is to look at re-payment of any debt / liabilities and if outstanding receivables are received.

Then I look at the balance sheet. Does the cash in hand increase each quarter, do the asset cover the long and short term liabilities and I look if the equity is positive. Negative is a an immediate avoid. I prefer positive retained earnings, but that rarely happens.

I rarely look at the profit and loss statements. They do not offer me any idea on how the company preforms. Yes, this should be where we should be able to determine if a company is preforming well. But, in general, I get caught by toxic offerings. This means that it is more important to review if a company will offer new shares and dilute its shares then if a company has any good or bad results. You should be able to tell from the balance sheet anyway!

This is generally what I look for when swinging stocks. Keep in mind that trading stocks always involves a high degree of risk. If you do want to trade any high risk and toxic companies, please use small size. This will save you a lot of money!

SERVICES THAT CAN HELP YOU

For 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

Also, if you are interested in short selling, you should check out Trading Tickers, which contains two important strategies 1). shorting parabolic moves and 2). buying breakouts.

You can find it by clicking the following link:

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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