Ross Cameron - Warrior Trading - We had 4 Penny Stocks up OVER 100%
The speaker reflects on the challenges of trading at the start of the year, particularly with lighter volume due to holidays. They emphasize the importance of adapting to market conditions, noting that the current focus on penny stocks is not their strength. Despite this, they managed to achieve small gains by setting realistic expectations and focusing on base hits rather than home runs. The speaker highlights the importance of understanding market dynamics, such as the impact of fees and commissions on trading lower-priced stocks. They also discuss the benefits of using a broker that allows direct routing of orders for faster execution. The speaker concludes by stressing the importance of managing risk, being content with small gains, and preparing for more regular trading conditions in the coming weeks.
Key Points:
- Adapt to market conditions; focus on base hits when conditions aren't ideal.
- Understand the impact of fees and commissions on trading strategies.
- Use brokers that allow direct routing for faster execution.
- Set realistic expectations based on market dynamics.
- Manage risk and be content with small gains.
Details:
1. 📅 Navigating New Year Trading Challenges
- Starting the New Year on a Thursday and Friday presents unique challenges for traders, as it disrupts the continuity of a full trading week.
- Traders often prefer commencing the year at the beginning of a week, which allows for better planning and strategy execution over a full five days.
- Locking in a green trading day early in the year can be beneficial for maintaining positive momentum and setting a strong tone for the rest of the year.
- To overcome these challenges, traders can focus on setting clear goals and strategies for the first trading days, ensuring they are prepared for the shortened week.
- Utilizing historical data and trends from previous years can help traders anticipate market behavior when the year starts mid-week.
2. 🚀 Breakout Success: Achieving Daily Goals
- The lighter trading volume over the last weeks, due to many people taking extended breaks, can affect market activity, presenting both challenges and opportunities.
- Despite choppy market conditions, identifying stocks with breaking news can lead to significant financial gains, highlighting the importance of staying informed and agile.
- For example, a strategic stock pick based on breaking news led to a 100% increase, achieving daily financial goals solely from that opportunity, demonstrating the power of timely and informed investment decisions.
3. 🔍 Market Analysis: Strategy and Adjustments
- Achieved three times the daily goal on one stock, but overall balance was affected by earlier trades, indicating the need for better balance management.
- Ended the previous day with $122,000 in earnings, showcasing a high level of trading success.
- Current market focus is on penny stocks, with multiple stocks experiencing over 100% gains. However, these do not align with the trader's usual strategy, highlighting the need for strategy adaptation.
- Opted for smaller gains ('base hits') rather than large wins due to current market volatility, reflecting a strategic shift to mitigate risk.
- Completed the day with several small successful trades, concluding with a modest net gain, demonstrating the effectiveness of the adjusted strategy.
4. ⚖️ Decision Making: Trading Execution
4.1. Trading Execution Preferences and Strategies
4.2. Promotional Offers on Trading Memberships
5. 🧐 Penny Stocks and Trading Approaches
- The speaker begins trading penny stocks at 7 a.m. Eastern Standard Time, focusing on the challenges and strategies involved.
- Penny stocks are low-priced and often difficult to trade effectively, requiring strategic approaches to capture profits.
- An example includes trading SPCB with a breakout strategy, entering at $9.60 and aiming for a high day break, resulting in a move to $10.40, yielding $0.80 per share.
- Another example is NIT, trading from a breakout at $1.80 to $2.00, then from $2.00 to $2.30, demonstrating small profit margins typical in penny stocks.
- Capturing the entire price move in penny stocks is challenging, often resulting in partial gains, such as $0.10 out of a $0.20 move.
- The cost of trading with brokers who charge per share can be high, impacting profitability, especially with small margins.
- Using brokers that allow order routing selection is beneficial for faster execution but comes at a higher cost.
- Commission-free brokers may delay execution by routing orders through institutional traders, affecting the speed of trades.
6. 💡 Broker Choices and Trade Efficiency
- Traders should focus on stocks with a potential gain of 30-50 cents per share to justify the costs associated with routing fees and commissions.
- A trade involving 20,000 shares resulted in a 2-cent per share profit, but fees and commissions accounted for 25% of the total profit, highlighting the need to consider transaction costs in trade evaluations.
- Stocks with minimal potential gains (e.g., 5-10 cents per share) may not be worthwhile due to disproportionate fees and commissions.
- Significant percentage gains (e.g., 400%) may not always translate to profitable trades if the absolute price movement is small (e.g., 30 cents move from 60 to 90 cents).
- Low-priced stocks trading in a small range may not offer sufficient opportunity to cover transaction costs.
7. 🔄 Market Conditions: Evaluating Strategies
- Traders often receive lists of active stocks, but these may not always align with personal trading strengths. Forcing trades on unfamiliar stocks can statistically lead to poor results. Focusing on familiar stocks requires awareness that they may not always be the top market movers.
- Example: SPCB was highlighted as a stock with significant movement and profitability, illustrating the importance of identifying key market movers.
- Market focus on a single stock can lead to concentrated trading activity, enhancing follow-through and action. This concentration can be beneficial for traders who are well-versed in those stocks.
- Traders must evaluate whether to be aggressive or conservative based on market conditions. A strategic approach involves assessing the volatility and liquidity of the market to decide on the level of aggressiveness in trading.
8. 🚦 Morning Recap: Trade Execution and Reflection
- Set expectations lower from the beginning due to market conditions and chose smaller trade sizes.
- No trade setups were identified until 8 a.m. when news about CRNC collaborating with Nvidia emerged.
- Despite CRNC having a higher float, traded it due to the positive news and historical performance of similar stocks.
- Entered CRNC at around $9.60, added positions at $10, and captured profits up to a high of $11.20.
- Executed trades with relatively small sizes; largest position was 4,000 shares at $10/share for a $40,000 position.
- Took trades on SPCB, which had a significant move the previous day; largest position was 6,000 shares, resulting in a $60,000 position.
- Concluded the day with a total profit of $4,800, demonstrating effective trade execution with smaller account size and leveraging.
- In theory, a $10,000 account with six times leverage could have achieved a 48% gain with the same trades.