Ways to find stocks to trade

Wanted to make a sweet and short post on resources I use to find stocks.  Finviz is a great resource, but scanning and scouring hundreds of charts gets tedious.  Not only that but you start wanting to see what you want to see after flipping through a few pages of not seeing much.  I realized I need to find a better way to search for stocks to not only day trade but swing trade as well.

One way is to find stocks in the news.  These are stocks that will see institutional money and new investors (whether it’s into or out of the stock is up to the charts).  Here is a great page to find just that.

https://seekingalpha.com/market-news/on-the-move

Some people pay hundreds of dollars for in play by briefing.  This is a great free alternative.  Here you can see which stocks have heavy pre-market volume as well as which stocks are gapping up and down.

Don’t want to read through all of that and get right to the list of gappers and high volume pre-market movers?  You sound like me.

https://www.barchart.com/stocks/performance/gap/gap-up

Boom.  30 min before market opens it’ll give you a list of all the gappers plus their volume. Click gap-down tab for the gappers down.  Be sure to check up on why they are gapping.  (Buy-outs won’t move much, common stock offering don’t move much either).

Those are great ways to find stocks to day trade for the day.  What about swing trades?  Well usually a few days after they gap, you’ll see either a nice breakout, pullback or breakdown pattern forming as people sell off from the gap ups or buy their shorts on gap downs.  This gives a great swing trade opportunity several days after the big gap and even if you missed it on the day trade side, they provide ample opportunities to get in on the swing trade side.

Hope this helps  some of you find some consistency in which stocks to trade.  I think searching for stocks after market open or just randomly flipping through charts is a losing way to trade.  Prepare days in advance or pre-market how you want to trade and let it come to you.

 

Cheers.

 

Moving soon – Busy!

I haven’t been updating the blog lately.  My wife and I are getting ready to move to Berlin, Germany at the beginning of September.

I have still been day trading about 3 days a week and taking less swing trades than normal.  Only because I don’t have as much time to keep an eye on them.  Unfortunately, I thought I could manage and just set stops, targets, etc. but I took 2 big losses when stocks gapped down past my stop order and I didn’t notice until I logged in a few days later to see that I am down 2R more than I should be.  Lesson learned.  Don’t get too complacent with your trading.

Right now swing trades I’m in are only SBUX from $55.50 (working out really well so far, I’m adding if it breaks below $52.99 today).

If you followed my squeeze lists a few weeks ago, you’ll see that ATHM has finally made someone call “uncle.”  I entered, stopped out, entered, stopped out multiple times.  Whoever was shorting this stock had deep pockets and was willing to just keep adding to their short position, regardless of how it traded.  I gave up.  It finally squeezed.  Ugh.  Guess whoever was holding their short position finally had enough.

Hope to get back to posting regularly after the move sometime in October.  Until then, happy trading everyone.

 

Day Trading Setups (Holy Grail?)

I am on the road to have my first profitable month day trading since I have started day trading.  I probably took about 2-3 day trades per week starting back in January or February up until April.  I was up a little, down a little, back to break even.  Since I couldn’t take more than 3 trades per week due to the PTD rule, it was a good way to ease into it.

In May I finally opened up a proper day trading account.  First month did not go so well. The mistake I made was over trading.  Having the freedom to move in and out of trades as I please was more of a bad thing than good.  So I lost about 10% of the account.  My P/L was actually not so bad, it was the fees and commissions that took my account down so much.  Some days I was in and out 15-22 trades.  I read about other guys doing shit like that and said what an idiot.  Who takes 22 trades in a day.  Yeah, well……

Second month was a little more of the same.  I was taking less trades and started seeing some profits.  So I immediately increased my risk per trade and 2 bad days in a row and I had loss all of my gains I had made.  So now I was down about 15% of the account.

Third month, July, is when I am finally seeing some consistency.  Took it slow with my risk.  Taking less trades, being patient with the setups I am familiar with and tracking tracking tracking everything.  Tracking is so very important.  People say knowing yourself as a trader is the holy grail.  Well, you can’t know yourself unless you track what you are doing and finding out what you do well.

I downloaded a trade journal that lets you track pretty much everything and it computes your win%, setups that work for you, time of day, which profit taking methods work best and so on.  So now I know from the data, what has been working and what hasn’t.  A real eye opener.

I’d like to share with you guys what has been working for me the best.

July (first profitable month) statistics:

 

Win % – 53%        Long – 30%         Short – 64%

Payoff Ratio – 1.96 (winners are almost double my losers, winning % at 50%, I’ll trade like this all day every day)

This also tells me I’m more successful taking shorts.  So I adjusted by only taking the absolute best long setups.  I don’t even look to go long unless it’s shouting at me, take the trade, take the trade!

Time of Day Performance

  • 9:30-9:50 – 61% win
  • 9:51-10:00 – 40% win
  • 10:11 – 10:40 – 20% win
  • 10:41 – 11:14 – 50% win
  • 11:15 – 11:31 – 100% win (only 1 trade taken)

I win mostly right after the open.  I have a bias based on the daily chart or gap and take the trade.  Not only do I win the most here, but it also nets me the biggest profits.  So now I actually don’t really take trades after 10:00AM EST and only manage trades I’m in after that point.  Unless something is absolutely shouting at me to take it, I’m very hesitant to trade after this time.

Entry Setups (Don’t mind the abbreviations, I’ll explain them in a later post)

  • TBOP – 0 for 2
  • TBDP – 1 for 1
  • 1m PB – 6 for 13.  1.7 payoff ratio
  • 2m PB – 3 for 4.  1.85 payoff ratio
  • 1m 3BP – 4 for 5.  1.76 payoff ratio (my 2nd favorite trade but this setup doesn’t come along often and when it does you have to be quick quick quick)
  • 1m ORB – 3 for 4.  1.73 payoff ratio (and highest payout expectancy – my favorite trade because it makes me the most)

Profit Taking

  • Fixed Target – Set a 1.5 to 2x R target based on the setup.  ORB and 3BP do best with fixed 2R-3R target
  • Dynamic Target – 1/2 off at 1R, 1/4 off at 2R, 1/4 off trailing the swing/pivot.  Also works well on the ORB and 3BP setups but seems to work best on the pullback setups.  And actually taking off 3/4 at 1-1.5R is best.  I’ll explain why…..

Before I started tracking my trades, I had no idea what was working and what wasn’t.  I just took trades based on technical analysis books like pullbacks, breakouts, etc.  I usually used a 1 min time frame and just kept doing it and doing it and taking targets whenever I felt like it was a good time to take them.  NO.  Like a parent telling their kid.  NO!

Track your shit.  It’ll open your eyes and give you the confidence you need to let the trade work.  And of course I am still working on letting trades develop and following what the numbers tells me but it is hard, of course.  If you don’t track them, you’ll never know how to approach profit taking for a particular setup.  And I really believe each setup will yield different profit potential. You won’t know how much money you didn’t make because you aren’t tracking it.  Again, different setups yield different profit opportunities.

For example, in my experience, taking a pullback trade after the initial move has made its move or the trend has already been established usually won’t give you as much.  Get in and get out.  Everyone has spotted it already.  The big move from the open has already happened.  You’re now in it from the crumbs.  So take your 1-1.5R and move on.  You’ll probably have a higher winning percentage but smaller wins.

Taking the opening range breakout will yield you much better.  Because that is the “igniting” move of that stock.  That is the move that basically starts the trend.  So of course, you will most likely be able to get 2-3 or more R out of it.  You wouldn’t know this without tracking your trades though.  Winning percentage will be smaller, but you’ll win bigger each time.  Know this before you take the trade and set your target accordingly.  Because if you still take profit at 1R like you did the pullback trade, and it only wins 40% of the time, you’re a losing trader.  If you know this setup nets a minimum of 2R 80% of the time it moves past 1R and it wins 40% of the time, you are now profitable.  Same setup, same entry, just having the confidence and knowing when to hold on makes you a profitable trader.  

Taking a breakout or breakdown in the middle of the day is usually not as lucrative as in the beginning of the day.  I found these setups get stuffed pretty quickly as well.  So take off 3/4 of your position at 1R and see what the rest can do.  Or take off the whole thing at 1R.  It all depends on what your tracking journal is telling you.

So, don’t fall into the trap of setting an arbitrary target each time without doing your research.  I fell into the trap of just setting an arbitrary target on many of my trades and when I go back and look at them, I realized, damn these are good entries, but instead of taking off half at 1R or exiting all at 1.5R, I shot for all or nothing at 3R and came home with a full stop out.  Shit.

Yeah, taking a pullback off of an already established trend on a slow stock hoping to get 4R is not a winning proposition.  Taking a trade at the open based on a breakout on the daily chart with positive earnings report?  OK, yes 4R is realistic.  Go for it.  See what I mean?

By no means am I a super profitable, ultra successful trader just yet.  But I’m getting there.  And each month I’m improving.  So here is my suggestion.  Take a month or two and risk small size.  Risk $20 or something.  You’re going to lose money during this time, no doubt.  This is time for you to track everything.  Do not take stupid impulsive trades (that’s why I say risk $20, if you do it on sim you’ll start fucking around too much).  Take the setups you learned.  Just set an arbitrary target at 1.5R or something.  At the end of the month find out which setups win the most and least, go back to the charts and find out where the best profit targets would have been.  Maybe 1.5R is perfect for your specific setup.  Track how much you would’ve won at 2R.  Track it how much if you scaled out half at 1R, half at 3R, etc.

By the end of a month or two you’ll have a decent idea of winning percentage of setups and which target is most profitable.  If you have a setup that wins 30% of the time but the times it wins it goes 6R, great.  Set your target at a little less, maybe 5R and figure out if it is still a profitable setup.  If not, dump it.  You have a setup that wins 80% of the time but only nets you .8R?  Might seem good, but after commissions and fees it’s a losing setup.

Point is you’ll only know if you track it.  I never understood what successful traders meant by “you have to work hard to make it at trading,” and I think this is what they meant.  It’s not fun.  It’s like doing chores.  But I make time every week to do it.  And it has made all the difference so far.  Put in the work, track your shit, adjust your plan accordingly.

And when you start making money, send some my way.

 

 

 

 

 

 

 

Getting Paid – Trade Management

A topic I have been researching a lot lately is taking profits during a trade.  That’s right. Payin’ yoself!  We’ve all been in the situation where we are in the money nicely and price just barely misses our target only to watch in horror as it comes back to entry and even potentially stopping us out.  No, no, no, no, no.  Can’t let this bastard take all that I had.  Get fidgety and next thing you know, I click the button.  Close trade for a tiny profit or break even.  What the &*)$ the trade is now going back in the original direction.  Shit.  Don’t you hate that?  So what do you do to avoid it?

Before you continue: I would say that I am proficient enough now at choosing the right trades to get into. Usually they do move in my favor from entry at least 60% of the time.  The other 40% of the time, prices either reverse or go my way a little bit and reverse or consolidate more.  So that means I am picking the right trades to get into when I stay disciplined on my entries.  If you aren’t at this point yet, probably better you keep working on your entries and then focus on trade management when you get some trades going your way.

You’re picking the right trades and it always seems like you are watching in horror as you see profits running away from you, right before that target is hit.  You don’t want to keep taking tiny profits and but you hate seeing your profits disappear.

Well, if you were like me, every technical book out there stresses – You need to set at LEAST a 2R target and anything less is not worth taking.  Ok, true.  You should only take trades with the POTENTIAL to gain at least 2x your risk.  Don’t confuse the two.  What do I mean?  Well, you see a pullback coming, you want to short.  The previous swing low is about a 2R profit away, so it’s reasonable to take the trade.  Stop above the swing you just entered short on and we’re off.  Except price lurches down, almost getting to that 2R, reverses sharply and you’re now sitting at a break even trade.  Ugh.  I can see the pain in your eyes.

What’s the solution?  Well, I pay myself on the way.  I stalked the trade, I made the correct entry and I was right about prices continuing.  Why shouldn’t I take some home with me?  So, regardless of what technical books tell you, I’m going to let you guys on a little secret that has turned me somewhat profitable swing trading and improving my day trading.  PAY YO SELF (with certain requirements of course 🙂 )!

Let’s review conventional profit taking methods:

  1. Set it and forget it.  The target is at 3:1, it either hits stop or target.  For me, too strict, too arbitrary, and it just eats me up to see a trade miss my target by a penny and reverse for a full loss.  I used to do this.  Didn’t work.  So, no go for me.
  2. Trailing your stop above or below the previous bar.  So if you’re using 5-min bars, you just trail it down on a short above the previous bar’s high.  Except for me, price always seems to “tap” me out and then continue on down.  Then it feels like some troll is just behind a desk, stop searching.  Again, not for me, usually.
  3. EMA exit.  You put some EMA you like on the chart and ride the trade until prices touch it and you exit.  Not a bad idea, keeps your emotions out of the trade as long as you stick to your rule and usually keeps you on the right side of the trade.  But then again you can miss out on a lot of gains as you’re most likely taking profits at the end of the pullback.
  4. Pivot exits.  You entered short, price is going down and you wait for the next pullback.  Excruciating as that sounds, some patient people are able to sit through 3 pullbacks and take profit at something crazy like 8:1 towards the low of the day. You simply put your stop above the previous pivot/swing high or low and keep riding the trade up or down until it is hit.  Requires zen-like patience and balls of titanium.  Again, not for me.
  5. Into strength – a lot of those penny stock guys like to do this.  You get a nice big spike and sell some of your profits before the pullback.  Not a bad idea as usually after you get that nice surge, a pullback is underway anyway. Hmmm…

So what to do?

This is where you have to know yourself as a person to improve.  Are you fidgety and hate seeing profits wash away, like me?  You want to stay with the moves that are big but get out of the ones that are quick?  How to know when which is which?  You don’t! So, combine profit taking methods!

Usually with my swing trades, I do the following:

  1. 1/2 or 3/4 size at 1R or 1.5R.  Here is where discretion is important.  Price has reached your 1R and on the intraday chart looking faaaabolous for more.  It is “spiking” on the daily. Wait.  As soon as price starts sputtering on the 5 min chart, take off half or more (you are selling into strength).  Usually you can milk out about a 1.5R doing this rather than the 1R.  If you take off 75% at 1.5R, you will have a profitable trade even if your original stop is hit with the remainder and here is the most important part for people like myself.  Or maybe price has been shitting around for 2 or 3 days right around your 1R.  Take off 3/4 or half depending on how you feel about it continuing.  No shame in taking some money at your initial risk.  The little guy in my head saying “take the fucking profit, man, take it and run!” is happy and calm.  It’s like I just gave him a fidget spinner.  No longer can I lose on this trade.  I am a winner.  I like winning.
  2. If you want to move the rest to break even, go ahead.  If not, you can’t lose money.  Or you could even take off 1/4 should it go to break even.  Never thought of that huh?  Yeah, put a stop at break even for 1/4 and the last 1/4 at your original stop.  You do it on winning trades, why not on trades going against you?  That way if it does barely stop you out at break even and start moving for you again, you can’t sit there screaming WTF@#%.  You’re still in the game!
  3. Since you just paid yourself the risk you took on for the trade, you can now be a bit more patient with the last half or 1/4.  Here is where you can switch to a different method that is used to squeeze more out of the trade. I’d say a higher EMA (20) and pivot methods are better for staying patient and riding the trade.  Trailing behind previous days is a bit spaz if you already took profits and selling into strength you probably already did when you took your first half off.  Unless you get another day or two of nice momentum movement, then trailing below the previous day is not a bad idea.
  4. Price is moving along nicely.  You are now up to like 3-4R on your second half.  Prices are pulling back to a lower EMA like the 10 (a decent place to take profit on the impulse wave which is probably beginning to pullback).  Wait, don’t cash out just yet.  Take off 1/4 of that now, let the other 1/4 ride as a set it and forget it (where you can sometimes really cash in).  Put your stop to break even and let that last 1/4 go until a target is hit that you set (52 week high, previous swing high, whatever) or your stop is hit.

Note the limit for taking profit is always at least 1R.  Do no start taking some off the table if price is just barely in your favor.  That guarantees you to be a losing trader.

So you get to combine all of the methods into one just for you.  You can be spaz and take off some quick and zen Buddha at the same time and let some ride till the end.

I’ve had so many trades this past month basically only give me step 1.  Maybe 70% of my winners.  But if I hadn’t taken off some at that point, I’d be a net losing trader right now.  Would letting those 30% that went beyond step 1 in a full size position made me more profitable?  Ehhhh, maybe, maybe not.  I should probably do the math, but haven’t. And here is the reason why:  I would’ve definitely lost my sanity and probably gone into “shit %^$# mode,” and start making undisciplined trades if I had so many losing trades or winners turn losers.  So very important.

I am now trying to implement something similar in my day trading.  Things move much quicker and it’s tough to decide which method you want to use with which trades.  I’m still ironing it out, but I think this is the closest to the “holy grail” you will get and once I can implement the trade management that suits my personality on a regular basis, I will be profitable day trading.

So try it out.  If you are still losing money, your entries aren’t good.  If your entries are good enough to go at least 1x (setting a low bar, but that’s how I like it) your risk, you can make money   Take a look at your past trades and make the assessment.  Are most trades you get into going against your sharply?  Practice entries.  Are trades you enter, doing well and then reverse?  Change your trade management.

And for me, it took probably a solid 6-7 months before I was making “good” entries, and I am still improving.  So don’t be upset if you aren’t at that point yet.  You need a setup, trigger, assessment of the trend and chart, etc. but that’s a whole different topic.  Once you master getting in, you gotta master cashing in.

Happy trading ya filthy animals.

 

 

Day Trading is Hard. My Typical Day.

For those of you that are consistently profitable day trading, please tell me your inner-most, darkest, money-making secrets.  I will reward you with….. gratitude.  Or if what you give me is gold, you get 5% of my profits. HAH!

Day trading is tough.  Shit, man.

I have been profitably swing trading now since about April.  I was once told, if you are putting in 6-8 hours a day reviewing your charts, making spreadsheets on your trades, tracking what works and what doesn’t, making sure you don’t make the same mistakes and being mindful of every thing you do, you will start to become profitable in 8-18 months.  It was about 8 months in April so that bit of advice for a successful trader gave me that extra confidence boost that “I’m almost there!”

And I’m glad I started off with swing trading.  I think most who start off and go straight to day trading either call it quits very quickly or lose their shirts and fall into that 90% fail category.  And I can see why.

Swing trading is slow.  You plan out your trades the night before, sometimes several days before.  You can work out your risk and reward.  You can find out where you want to take partial profits, move stops to break even, all while having a cup of coffee and catching up on your latest facebook feed.  So, sporadic, idiotic, spontaneous trades aren’t really an issue if you put your orders out and just let them trigger.

And you might over trade, but even if you do and you risk 1% of your capital, you’re really only going to lose on 5-7 trades a week if you’re really terrible.  Even when I didn’t know what I was doing, I’d have an occasional winner.  So you could kind of survive for months and months and just make a small dent in your account.  Maybe go 6-8 months losing small, losing small, before you finally start winning (like me).

 

bluemeth.jpg

Flip it over to day trading.  It’s swing trading on Walter White’s best stuff.  It’s fast.  It makes you pull your hair out.  When you’re done the morning, you’re left thinking, wow, why the fuck did I take half of those trades all while looking at that awful red P/L.  It doesn’t follow rules.  It’s swing trading’s ADHD brother who also has OCD.

Profit target, partials, stop loss and entry.  You pretty much have to calculate it all within seconds.  And sometimes you enter with a position size too small or too large, and then realize, fuck me, why is it when I enter with small size, the trades goes for me and when I enter too big, it goes against me.  That’s day trading.

I have my watchlist.  I usually go with momentum stocks I scan on finviz based on previous days top gainers/losers and I also trade stocks that gap up or down more than 3% and have pre-market volume over 20,000.  I have my strategies that I use.  But shit man, sometimes I don’t get a trigger and it’s like I’m a crackhead looking for some crack.

This is my typical morning day trading:

9:30AM – Have 2 charts on my platform up.  Both gapping down >3%.  What I look for is price to oscillate or go up slightly and go back down through the open and that’s where I enter.  Neither stock does so.  Sheeeiiiiiit.

9:47AM – Hmmm, no triggers so far.  OK, switch over to my momentum list.  Here I look for a stock that has shot up or down and is now pulling back.  I want to enter on the first pullback if I get a 3-minute consolidation or it gives me a nice reversal bar near VWAP. Hmmmm…. again, no pullbacks, these fuckers just keep hammering up or down with no rest in sight.  The rest are just shitting around like a drunk man stumbling.

10:08AM – I once read a technical analysis book that talked about triangle patterns.  *I squint at my stocks in my momentum list that haven’t really had any directional bias* That looks like a triangle!!!!!  Shit, lemme get in on that!  Enter.  5 minutes later, I’m down $100.  Why the fuck did you take that trade, dummy.

11:06AM – Alright you’re down a Benjamin.  Let’s get that back, no more dumb trades.  Oh, look at this bad boy pulling back (from my momentum list).  Oooooh, nice it’s coming down, you know what…. I’m just going to enter now and get a better price rather than wait for my actual trigger.  That way my risk is reduced and I will get more when it hits my target.

11:20AM – Da fuck dude.  You entered in on a falling stock, expecting the pullback and it just kept going down.  You idiot.  You’re down $200 now.  At least you stuck to your stop loss *pat on back*

11:35AM – *switch to 5-min charts* OK, let’s go through my ToS scanner, see what stocks are hot.  OH MAN, perfect pullback setup.  Doji on the pullback, right at around 50% retracement.  Good lord, lemme get in.  Entered.  Oh boy oh boy oh boy.  My target is only .10 away but I see so much green in my P/L.  You know what, the stock has already gone far enough, it might not even reach my target, so I should probably just take a partial profit now.  Nah, you know what, just take the whole position off.

Boom.  +$65.42.  Yeah, I’m sooooo the man.

Oh wait, I lost $100 on 2 trades and decided to take profits at $65.42 on my only winner. And look at that bitch now.  It more than doubled my target.  Shit.  I hate you stock.  Why did you stutter before my first target, fake me out, then take off after you hit it. You’re such a bitch!

BTaKGgn9c

Yessir, that is my usual day trading day.  I make money swing trading and lose it all day trading.  Actually, I’m probably profitable 2 days out of 5 day trading.  But those winnings days are still smaller than the losing days or about the same.  So the day trading is bleeding me out.

It’s only been about 2 months since I started day trading daily.  I dabbled here and there for about 2 months.  And yes, all of my poor swing trading profits get funneled into my day trading losses.  I think of it more as a business investment so that one day I can day trade for my main income and swing trade for the cherry on top.   So of course, I should give it the same 8-18 month time frame before I can be profitable.  I do track all my trades, the time I took them, why, etc.  So I am being mindful after the fact even if I did take some bullshit-spontaneous-I’ve-got-ADHD-and-can’t-just-wait trades.

Hmmmm.  Maybe I’ll start up a sweet $199 course and start a Youtube channel with me yachting in the south of France and telling you how easy and sweet life really is.  If I ever do that, please refer my customers back to this post and let them know, you will lose money, you will slam your desk (many times), shout many obscenities, hate the stock market,  complain to your wife that this shit isn’t easy and, of course, come back to do it all over again the next day.  Day after day.  For months or years.  Yay.

Have a great weekend everyone.  Taking Friday off, although I do have some orders sitting out there for swings.  Taking the ol’ lady out for some din din and drinks.  And then get drunk and complain how hard it is day trading.  Don’t worry, she loves it! Cheers.

 

 

 

 

 

 

 

Loser! Yes, got plenty of those.

I have been seeing some good success with my swing trades, especially involving the high short floats.  But as with all trading methodologies and tactics, you will have losers.  The key is to cut them quick and move on.  Another component to becoming a successful trader is to take the losers, analyze and see what you can do to enhance your trades next time.   Sometimes, it’s just probabilities and there’s nothing there.  Sometimes, there’s something.

While most of the swing trades I take now have a high short float and were in established downtrends and now looking to make its first leg up or reverse, many of the trades I took were also in established uptrends.

I thought it was kind of weird….. why is a stock in a strong established uptrend have 40%+ short sellers piling into it?  It doesn’t make sense.  To me.

I did some digging.  A lot of times short float does not take into consideration what the market makers are holding.  And they could be holding a lot (long or short).  Also, these funds and institutions usually know something we don’t.  So if they are holding a large amount of shares short in a stock that has been trending up all year, they probably know something we don’t.
What I’ve also found out the hard way is that they really pile in when the stock is looking to break out.  Whether it’s longs selling their positions or shorts piling in even more, once these stocks in uptrends with high short floats look to breakout, they immediately fail.  Stubborn hedge fund manager doesn’t want to lose on his short position?  Algos that are fading new highs?  Could be both, could be something else I don’t even know about.

Take a look.

HLF failed

Got into this one a few days ago.  Triggered in a few cents up and came crashing back down real quick.

 

MDXG Failed

I got stubborn with this one.  Was triggered in last week and when it failed, I exited rather quickly.  Then I decided I’d enter should it break the slightly new high it just made.  Entered again, hung around the highs for a day or two and came crashing back down.  2 losses with this one.

 

CHGG failed

I didn’t enter this one as one of the blog readers had emailed me on it.  Same story.  Strong uptrend, makes a new high, almost immediate failure.

 

So going forward.  I will not be taking these breakout trades with high short floats if they are approaching new highs or in an established uptrend.  The ones that work best seem to have been beaten down all year in a long downtrend.  Short sellers probably got lazy thinking they’d be cashing in until the stock hit single digits.  Once a buyer started pumping money into it, they got a little scared but not too much.  Then as more volume and buying came, some hit the exit and the ones that stuck around, really got clobbered and sprinted for the exit as is the case with CAR, OMER and PLNT.

Any other nuances or behaviors you guys come across, please post them.  I would like to get as many ideas and improvements as possible.

 

Thank you Avis Car Rentals

Keep hitting base hits and eventually you’ll hit a home run.  We hear the phrase a lot in trading and in life.  For the past few months I have been grinding out small profits little by little.  Up $180, down $90.  Up $120, down $85. Sometimes down a little more than I’m up.  After commissions and all is said and done, I get about +2-5% of my account a month on swing trading.   It gets tedious at times.  It gets frustrating.  When can I make enough to buy a mansion and nice cars?  All this work and time to extract a few hundred dollars a month.  But if you think about it long term, doing this type of work day in and day out, for a few years and you have yourself a sizable return.

Well, finally, I hit a home run.  Months and months, grinding.  Scanning, analyzing, putting out orders, managing stops,  taking profits, pulling my hair out on losers.

This was a stock I had on my squeeze list.  All my criteria fit, the technical pattern was good.  All that is left is to put my order out there.

 

Car squeeze

I put my order out on Sunday night.  A stop-limit order to buy should it break the top of that range.  I was triggered in Monday morning while I was day trading.  I heard the British accent from my IB account “order filled.”  Focused on my 9:30-10 quick-as-shit moving trades, I didn’t even look over at my swing trade account.   Once I was in and out of my day trades, I took a peak over to see how my swing trades were doing.

“WHAT…. that must be an error.  Did I enter in with an extra zero? Holy shit!”

CAR had spiked up $4 in a matter of 20 minutes.  I was so ecstatic that I immediately took off 3/4 of my position.  Luckily it was near the peak of the day.  I still have 1/4 of my position on and moved my stop to break even.  My biggest trade of the year so far.

Extra motivation for me to keep doing what I’m doing and hopefully for some of you to keep at it.

What a sweet Monday.

 

 

My Squeezers Be Squeezin’

If you read my previous 2 posts on short squeezes (odds enhancer for breakout post and watchlist) and happened to enter on a few, you might be pretty happy.

Here are a few trades I am in that was on the list.

Red line was the trigger.  As I was still a bit hesitant about my own research and backtesting, I entered with smaller than usual size.  Fortunately the day after I was triggered in, we had a huge gap up and I took off 1/2 of my size.  I took another 1/4 off today as it pushes higher and will leave the last 1/4 as I trail my stop up below the previous close.  Awesome trade.

TWLO Squeeze

 

Here is another I entered with smaller than usual size, but it didn’t matter, as you’ll see on the chart.

Plnt squeeze

Boom goes the dynamite.  I’m out with 3/4.  Wish I would’ve stayed in full size as it would’ve probably been the biggest winner of the year.  Just trailing my stop up behind the prior day’s close with the last 1/4 size.

 

Of course, not all are winners.  Here is one that got triggered and I am still in.  I saw heavy, heavy selling coming it once it broke out. So either long positions are taking profits as they aren’t too convinced of the breakout or some funds are adding to their short positions.  Maybe the funds know something I don’t?  Well if they’re right, I only lose 1% of my account.  The reward is absolutely worth the risk.  If it breaks that recent high one more time, I think they’ll exit as they’ve brought this stock down from breaking out 3 days in a row and more eyes are on this stock to breakout long so we should have more buyers coming in as well.  Just my thought process on keeping my conviction.

 

MDXG squeeze.png

 

Last one I had on my list that I enteredSwft squeeze.png The day it triggered, it shot up and hit my first target. I thought, wow, this is going to the moon.  So instead of sticking to my rules, I only took off 1/4 of my position (instead of half like I have planned).  I forgot to move my stop to break even and 2 days later, I saw some red in my account manager and when I took a look, my slightly profitable position was now slightly losing.  Frustrated, I just closed it out.  My fault so it was my way of punishing myself.  I would’ve been alright if I stuck around but, meh.

 

The rest on the list either didn’t trigger or I missed and wasn’t able to enter.  I don’t always put out automated orders to enter.  I like to see what it looks like when it approaches the breakout point.  I don’t want it dilly dallying up there.  If I get a nice surge up, I want in.  So depending on my feeling, I may stay out even if all the stars align.

Here is one I had my doubts on that was on my list.  Reason being there were 2 points of resistance in May and March.  So I thought, it would hit some speed bumps at those points and I would rather a clean, rapid move up without any sellers coming in.

RDUS squeeze

Damn.  I gotta stop looking at this chart.  Keep kicking myself for not entering on this.

That’s all for now.  Hope to give you guys a few more to look at and hopefully you can make up your own trade ideas and share!

Great weekend everyone.

Squeeze List for the Week

Following up with my last post, I’d like to share with you ladies the list of stocks I have on my short squeeze list this week.  They provide great swing trade ideas as well as trade ideas you might want to implement intraday.

PLEASE do your own due diligence.  The worst thing newer traders can do (I’ve been there) is blindly enter along just because it kinda looks OK.  Know why you get in, what your risk is and where you will take profit.  These are just ideas for the week.

 

RDUS squeeze.png

Looks great for a trigger this week.  All the short sellers have been happy lining their pockets since mid-February and I think the short party has come to an end.  Had a gap up and big surge up that was met with a huge “nuh uh, not today,” selling pressure.  Whether it’s algos, a hedge fund manager who hates losing or a fat finger trade, doesn’t matter.  We know the shorts piled in here and are feeling confident.  But wait, uh oh.  We had a nice pop back up and re-testing the high of that big gap up-shut down day.  Looks like a great pattern to get long, perhaps this week.  If it does, those shorts are gonna be in pain.

Next up, (gotta love that ticker symbol) THC.

THC squeeze

Again, it was a short party for the last few months.  Shorts were happy, taking profits, adding to their positions.  Then May.  Boom.  I bet a lot of shorts got caught in that gap up and “doubled down” on their positions thinking that the gap up would get closed.  They are really feeling the pain now as price is re-testing the resistance in that consolidation.  If it breaks out above that red line, I’m definitely getting in.

 

Next, kind of strange one.  Not sure what is going on here but you might want  it on the radar.  Not as clear cut as the last two but worth noting, and who knows, might even be a better candidate.

ANGI squeeze

Here we have an uptrending stocks.  Why are there so many shorts involved?  I don’t know.  Bad news?  Lawsuit?  Again, I dunno.  But with that many short sellers, it’s in a pretty decent uptrend and looking to break out this week.

 

Last up for this week is RES.

RES squeeze

Again, short sellers loved this stock since January.  Piling in, taking profits all until April when the next pull back was a bit bigger than most short sellers wanted.  Then a higher high formed and now we are in an uptrend.  57% short sellers in this!  Wowzers.  I think that big green day 4 bars from the right was the first day of a small squeeze and my thinking is that the short sellers piled in more which brought it down hard the next day. Then we had a small gap down and a doji.  Buyers came back in and short sellers were feeling the heat and another ramp up on the most recent day.  I think if it breaks that orange line, a lot of short sellers who piled in on the last false breakout will have had enough and scream “uncle!”  And I’ll be there, cranking back on the Brett Hart sharpshooter collecting my benjies.

Hope this provides some of you guys with some trade ideas for the coming week – either swing or intraday.

It will be interesting to see how these stocks work out.  It is a newer tactic I have started implementing with good success so I hope to see it continue.

Happy Sunday fun day.  I just love running these screeners hungover.

 

 

 

Odds Enhancer for Breakout Trades

One of my favorite swing trades is the traditional breakout or breakdown trade on the daily chart.  My favorite breakout pattern is probably the cup and handle.  The name of the formation is not important.  What is important is that price reached an area of resistance 2 previous times (when going long) and is now approaching the resistance area for the 3rd time.  Also important is that the previous swing low was higher that swing low before that. Some get fancy and call it other names, ascending triangle, head and shoulders.  Whatever it is you want to call it, the important thing is that if price doesn’t break the third time, there are some big players that don’t want it going up.

Not the most picture perfect example but you can see resistance back in March was then sort of retested in early May then a sharp move up again in later May.  When it comes roaring up like that, I’ll take my chances that it’ll breakout on a strong stock like this.

MU June Swing

So that is just some background on regular vanilla breakout trades that I like to take.  Nothing more, nothing less than what I just typed out.  Don’t need to get cute with super precise entries on an intraday chart or have any super complicated money management other than the 3×3 method I covered in an earlier post.

ALRIGHT BRO, so what is the odds enhancer?  Get to the good shit.  I don’t care about the plain jane stuff.  Gimme the grail!

Well the past few weeks I have been trying to up my game, add some new weapons if you will.  Of course in the past I’ve read several times about short squeezes.  Never took an interest in them as I usually associated them with penny stocks or day trading stocks that have big gaps up where short sellers panic after a sharp rise and prices just go to the moon.  I accidentally came across some articles on short squeezes for swing trading and did some research.

After absorbing what I had read and putting together a tactic and paper trading it a few times, I had a very high success rate (for at least the entry).  I won’t go into money management because I am still working on that.  Just using the 3×3 method for now and seems to be working.  I went live with it this week and so far I have 2 winners (paper trades I was 3 for 4).

So how do you do it.  Spill the beans.  Take me to paradise.  You just wasted 5 minutes of my time writing all that nonsense above.  Alright, alright.

Head on over to Finviz.  On the screener, we want to search for stocks susceptible to short squeezes.  What this means is that we want stocks priced over $10, avg volume > 750k and here’s the important titty-bits.  You want to search for “short float” over 15%. This is the percentage of total shares being shorted.  The higher, the better.  Also “short ratio” you want 5 or more.  This is the total number of days short sellers have to cover their positions.  It is relative to the average daily shares traded and short positions.

Here is one I’m in now.  Notice the red box.  This stock is being shorted out the ass, almost 26% of shares outstanding are shorts.  I don’t know why, I don’t care.  But it’s in an uptrend and about to break out of the resistance I drew in with an orange line.  I placed an order to buy should this stock break out and it did.  And they usually will, if you picked the right spot where short sellers are getting their stops hit.  That is up to you to determine where it may be.

 

 

PLNT Squeeze

That’s it for the screener.  What’s the trigger?

So what we want is an entry at a point where short sellers are thinking “oh shit.”  And a traditional breakout point (long) is the perfect place where a lot of stop orders will be hit and other short sellers will be feeling the burn.  You do not want to use this tactic with stocks that are down trending strongly or in a wild range.

Here is another one I’m in now.  I never know if there will be strong follow through or not but the odds are definitely on my side.

Twlo squeeze.png

Just look at that.  Half of all the shares outstanding are being shorted!  That is pretty crazy if you think about it.  And it has been showing an uptrend as of late (although weak).  There is also a nice breakout formation where I placed the orange line.  I was entered into this trade on Friday.  Hoping to see some continuation on Monday and the more this goes up, the more those short sellers are going to panic and get out of this and that means more $$ in my pocket.

Here is one I paper traded.  Wow.  Just look at this squeeze.  I believe the short float at the time was over 50% as well.  The short sellers are still trying to get out of this and panic has set in.  Who knows how much higher it will go.

Omer squeeze

As for now the way I will approach these going forward is to scan for new potential short squeezes every Sunday.  Put out my orders a cent or so above the breakout point and let them do their magic.  Unfortunately, although you may get a candidate or two per week, they don’t always trigger.  So you might go a week or longer without any trades.  It’s a great odds enhancer and a great way to boost your win rate if you can stay patient and take only these types of trades.

I’m also researching how these might be good day trading candidates as well.  Imagine getting into a trade like OMER with a tight stop using day trading size and just trailing the stop up above the previous day’s low.  My goodness that’s a monster trade where if you can nail one a year, it’ll more than make up for all the small losses.

Will update on the results and how these are going.  Happy trading.  Ya filthy animals.