Ross Cameron - Warrior Trading - Day Trading Watch List for MONDAY
The speaker outlines a trading plan for the upcoming week, noting that the market will be closed on Thursday due to a day of mourning for Jimmy Carter. The focus is on penny stocks, which have shown significant movement recently. The speaker highlights the challenges of trading low-priced stocks, such as large sell orders and liquidity issues, and emphasizes the importance of thinking in terms of cents per share rather than total dollar amounts. The speaker also discusses the need for patience and waiting for high-quality setups, rather than overtrading low-quality ones. They mention specific stocks like NTO, SPCB, and CRNC, analyzing their potential for continuation based on recent performance and market conditions. The speaker advises focusing on stocks with catalysts and low floats for potential explosive moves. They also stress the importance of building a profit cushion early in the year to allow for more risk-taking later.
Key Points:
- Focus on penny stocks with significant movement and potential catalysts.
- Think in terms of cents per share for risk management, not total dollar amounts.
- Be patient and wait for high-quality setups to avoid overtrading.
- Look for stocks with low floats and catalysts for explosive moves.
- Build a profit cushion early in the year to allow for more risk-taking later.
Details:
1. 🗓️ Weekly Outlook & Market Closure
1.1. Market Closure Announcement
1.2. Weekly Trading Schedule
2. 📉 The Dynamics of Penny Stocks
- NTO made the biggest percentage move of the week, starting at a low price of 203 cents (or 40 cents) per share, highlighting the volatility common in penny stocks.
- Traders often take large positions with 100,000 shares, aiming for a price increase to $2 per share, illustrating a high-risk, high-reward trading strategy.
- High sell orders occur when shares reach $2, creating crowded trading conditions and illustrating the liquidity challenges in penny stocks.
- Despite the potential for profit, the high volume and large orders make trading uncomfortable for some, indicating the psychological pressures involved.
- The market saw a sympathetic momentum in penny stocks, with four stocks gaining over 100% on Friday, showing the potential for rapid gains.
- Stocks like TGL, AC, NTO, and FCU had over 200 million shares of volume, indicating heavy trading activity and the potential for quick market shifts.
- It's crucial for traders to be aware of the risks involved, such as market manipulation and lack of liquidity, which can lead to significant losses.
3. 📊 Strategy: Calculating Risk & Reward
- Traders should focus on cents per share rather than total dollars invested to simplify risk-reward calculations in stock trading.
- A recommended strategy is to maintain a consistent 2:1 profit-to-loss ratio for trades, meaning if risking $1,000, one should aim to make $2,000.
- Risk is better perceived in terms of cents per share rather than the percentage of the total position value, allowing easier management across different stock price levels.
- In practice, this means taking the same share size for stocks priced at $5 or $8 is feasible if the risk per share, such as 15 cents, remains constant, regardless of the different total capital requirements.
- An example scenario: for a $5 stock with a 15-cent risk per share, a trader can purchase 1,000 shares, risking $150 to potentially gain $300, adhering to the 2:1 ratio.
4. 🔍 Identifying Market Opportunities
- Traders should prioritize capturing significant dollar moves over percentage changes to maximize profits.
- Aiming to capture a third or a quarter of a stock's move is practical due to market dynamics like pullbacks and taking profits.
- In penny stock trading, the focus should be on large dollar moves, such as a $6 increase from $3 to $9 per share, which is more profitable than a similar percentage increase in a higher-priced stock.
- Achieving 'big green days' in trading relies more on substantial dollar gains per share rather than percentage increases.
5. ⚖️ Challenges in Trading Low-Priced Stocks
- Trading low-priced stocks demands handling large volumes to achieve significant profits, such as a 15-cent stock moving to 20 cents, which requires a substantial increase in shares traded.
- Commission costs per share impact profitability, especially when trading substantial volumes, posing a financial challenge for professional traders.
- Liquidity issues are prevalent with low-priced stocks, leading to difficulties in entering and exiting positions efficiently, which can affect trading strategies.
- Low-priced stocks tend to move more slowly, necessitating holding large positions for longer periods and increasing risk exposure for traders.
- The speaker cites personal trading statistics to highlight a lack of proficiency in trading penny stocks, indicating the complexity and difficulty of mastering this market segment.
6. 📈 Stocks on the Continuation Watchlist
- Focus on low price stocks as they may be in demand, particularly stocks that can surge from cents to dollars quickly, allowing for significant profits. For example, a stock moving from 40 cents to $3 represents a substantial gain.
- Be cautious of penny stocks that surge and then quickly drop, as observed on Friday with several notable rejections. This volatility requires careful monitoring to avoid losses.
- Identify stocks priced above $2 that have a catalyst, as these are likely to show strong upward movements. These stocks are prioritized for better trading results due to their potential stability and growth.
- Implement a five-criteria stock selection process, ensuring stocks meet specific market conditions and catalysts to be included in the continuation scanner. This systematic approach helps in filtering out stocks with the highest potential for continuation.
7. 🔎 Evaluating Specific Stocks
7.1. NTO - Leading Stock
7.2. RVSN - Highlighted Stock
7.3. PDYN and OPTT - Market Liquidity
7.4. FFI - Liquidity
7.5. SPCB - Continuation Setup
8. 🗓️ Planning for Market Trends
8.1. Urgency in Engagement
8.2. Opportunities with Low Float Stocks
8.3. Importance of Patience
8.4. Avoiding Overtrading
8.5. Market Cycle Influences
9. 🔄 Reviewing Recent Stock Performances
- Traders are targeting stocks priced between $3 and $4 with potential to rise significantly, exemplified by recent stocks reaching $12.
- SPCB demonstrated solid performance on Friday, but it requires additional catalysts for future growth.
- WKEY, priced at $10, shows potential but needs a catalyst to drive significant upward movement.
- NTRP is identified as a low float stock, suggesting heightened volatility and trading opportunities.
- CRNC's price surged by 144% following an announcement with Nvidia, highlighting the impact of major news on stock performance.
- CRNC traded 160 million shares on its peak volume day, indicating strong market interest and potential.
- Despite a high float, CRNC's news-driven surge demonstrates how substantial catalysts can overcome typical shorting tendencies.
- CRNC's strong close suggests potential for continued upward movement, although initial day moves are generally more pronounced.
10. 💡 Insights into Trading Strategies
- Act quickly on news for initial gains, but be cautious of choppy outcomes; jumping in quickly on news can lead to initial success but may become inconsistent.
- Stocks with lower float present opportunities; however, ensure there is sufficient volume or news to sustain momentum.
- Prioritize relative volume, obvious catalysts, and market attention when making trading decisions for better outcomes.
- Specialization in a specific trading strategy can be more effective than trying to master everything; focusing on one strategy might be enough for consistent performance.
- In 2024, achieving a personal record of $2.1 million in profit with only 24 red days since 2016 highlights the importance of tracking performance and strategic decision-making.
- Strategic patience is crucial: opting for no trade days rather than red days contributed to record performance, emphasizing the value of strategic patience and restraint.
11. ⏳ Patience and Focus in Trading
11.1. Avoiding Red Days
11.2. Attention on Penny Stocks
11.3. Ideal Stock Characteristics
11.4. Challenges with Penny Stocks
11.5. Technical Challenges
12. 📈 Preparing for Upcoming Trading Sessions
- A stock experienced a significant increase from 160 to 540, particularly between 3:30 to 5:20 on Friday, without any news catalyst, indicating potential for future moves.
- A robotics company with a 5 million share float closed strong, suggesting a continuation in the upcoming session could be beneficial.
- KIT showed a 23% gain after hours, with potential to move to 880, near the 200 EMA, making it a stock to watch.
- The optimal trading period identified is from 7:00 a.m. to 10:00 a.m., where focus will be placed to maximize profits.
- The strategy for the start of the year involves building a financial cushion by securing profits early, before taking on additional risks.
- Warrior Trading is promoting a New Year's special, offering a full year of access with a 7-day money-back guarantee, fostering a community-based learning environment.
- Emphasizing risk management, traders are encouraged to practice using simulators before trading with real money.