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Warrior Trading Blog

+$992.21 Shorting $RKDA and Trading Momo on $DXR

trading momo

What’s up everyone? All right, so finishing my third day trading here in California, up $992. Not bad at all. Today was a little bit of a rare day, because I took a short position. It’s been so long since I took a short position, I had to scroll up like 500 trades in my Excel doc to find the calculation for what happens when you buy a stock, or you short a stock, and you cover it and make a profit when it goes down.

 

It’s been so long since I even needed to use that formula, it took a while to find it. I took a short on RKDA, which was really pretty cool, because instead of giving into FOMO and chasing the stock as it was squeezing up 150%, 160, 170, 180, 200%, I waited. Calmly, patiently. Took a short a position, captured $2 per share of profit. $400 for 200 shares. Not a big winner, but just kind of a nice proof concept that I don’t have to chase these. I can wait and be patient, especially when they’re in the price range of $30-$40.

You guys will enjoy hearing me talk about that. And separately, I’m going to upload a recap of me actually trading that stock live, so you can watch that also on the YouTube channel.

Now, yesterday, being out here in California, I made a sort of an interesting discovery. We know that you can trade from anywhere in the world. You can trade from Japan. You can be like Roberto and trade from 17 cities in Europe. You can trade from Australia, South Africa, and I found out that you can even trade from a paddle boat. Don’t believe me? Check it out.

You can day trade from anywhere. Even a paddle boat.

So let’s break down the trades from today. This was a little bit of an unusual day, because it’s the first day in, I think months, that I’ve taken a short position, and I did it on RKDA, which as you can see right now is up 211% at $36. Yes, this is the same stock that I traded on Monday, buying it at $11, and making $4000 profit. It sure would be nice to have back my shares from $11, but in any case, today we are watching it because there was some news out. The news on this came out and as you can see the move started pre-market.

Here is my problem, though. I felt like by the time the bell was ringing, that it was already very extended. So you can see here, pull this back on the one minute chart, I said, “Okay guys, if its ends up breaking out of this flag pre-market, then I’m probably going to have a hard time buying it, although I might just jump in for a squeeze, but I’ll go with smaller size.”

So you can see right here, we ended up having a pre-market high of 18.81. And so I said, “I’m going to out an order at 19.”

And I had an order at $19 ready to buy 1000 shares. The bell rings, and suddenly the spread is like 18.90 by 19.50, and I was like, “Well, I wanted to get in at 19, and I don’t think I can buy it here at 19.50, so I guess, I don’t know, I feel like I can’t buy it,” and then it’s at 20, and then it’s at 21, and then it taps a high of 21.98, and I’m thinking, “Well, you know what, that’s great, good momentum, but I just didn’t get an opportunity to take a trade.”

The first one minute micro-pullback, it works, it gets bought up, but it doesn’t hold that level and it does a quick rejection. It taps a high of 22.73, and then drops back down to 19.20. So like a three point drop, and remember, you guys may remember this, back in, I think it was the end of November, I took a trade on NETE. NETE, which at that time was also in the $20 price range, and, we’ll just pull back this chart here so you guys can see … so NETE, it was here in, actually December, on the day when it squeezed up to a high of $33. Well I jumped in it with 3000 shares, and I ended up losing $12,000 because it suddenly dropped four points. Just kind of like this, dropped three points, and I was like, “I’m in too high, and I can’t keep holding it,” and I had to bail out. And that was the right move, because it ended up coming all the way back from $30 down to a low of like, $5. So it was the right move to sell it.

But RKDA here, the same kind of wimpyness, and so I just felt like even though I was feeling FOMO, and I was like, “Oh man I’m missing this opportunity,” the right thing to do is to stick to my guns and not jump in it, because this is one that I could get myself into a lot of trouble really, really, quickly on.

So, I didn’t take any trade on it to the long side here. I was just watching it. I saw it kind of pop up here to a high of 21.50, but then look, drop back down to 19.75. These are big drops. Here, back up, double topping at 22.75, at high of day, and then dropping again back down below 21. So another two point drop. Squeezing up, another three, four point drop. I mean, these are huge whips, and the spreads, as you can see, well, actually we’ve got stale order it looks like, on the level two, but the spread is 34.92 by 35.23. So 34.80 by 35.23, that’s a 40 cent spread.

These are really big spreads, which means basically as soon as you buy, you’re down 25, 30, 40 cents. That creates a lot of risk. So some of you guys, I know from the chat room I saw, you did get in at 19, you just jumped in, pulled the trigger, and rode that first wave, made a couple thousand bucks. So good job for those that got in, or bought this one minute pullback. I didn’t. I felt like it was kind of outside my go to range, and again, remember, in the last two years of trading, I’ve got $650,000 of profit. The majority of those gains are from stocks under $15. It is very rare that I make a lot of money on stocks in this price range, so I know that I don’t need to make money on these stocks in order to make great living as a trader. And messing around with them is sometimes more risk and more frustration than it’s worth.

So, I didn’t take a trade there, and we consolidate sideways for a little bit more, and here, I was sort of like, “Okay, we broke the double top of 21.73, and we popped up to a high of 23.25, but then we came all the way back down. It didn’t hold. And then it broke again, and this time it did hold, and notice how this 23.75 level, sorry 22.75, was a little bit of resistance. It finally broke and held above it. It came back down and retested it, and that’s when prior resistance becomes support. It bounced off that level, and from there I could’ve been more aggressive, but again, at this point I kept thinking about NETE, and the risk and the big spreads.

And at this point in the day it’s 10:15, and I was actually only up about $565 on DXR. And I had taken three trades. My first trade I made $200. My second trade I lost $60, and on my third trade, no, sorry, my first trade I made $260. My second trade I lost $60. My third trade I lost $180, and I was up only $60 on the day. My fourth trade I made $565, and I ended up, whatever, being green.

This, already I was like, “I’m not having a great day. I feel like the market’s kind of choppy. I don’t have a big cushion. I don’t really have a big cushion on the month. I’m only up like $12,000 on the month, which is great.”

I mean we’re halfway into the month, so $25,000 might be where I finish this month. That’s good, but for me it’s not great. So I just felt like on RKDA I couldn’t afford to be aggressive here. So I followed my rules and sat on the sidelines, and I just watched as this happened. Squeezing up, and then up, and up, $37! It was crazy, and FOMO is starting to kick in, and I’m feeling like I’m missing this great opportunity. Reminding myself that I have rules, and rules are in place for a reason. Then what we see is, it was halted up here, and then it dropped. And so on this drop right here, I decided to go short. And the reason I went short is because statistically when you have a stock that makes this type of move, the first time it gets halted going down it opens lower. I recorded the whole trade, and I’ll upload that live trade to YouTube later this afternoon.

So I shorted at 33.70, only 226 shares. I’m not trying to be a hero. Yes, maybe on another day I would’ve taken 2500, but today 220, 250 was my goal, I filled 226, and I was fine with that.

So short, 226 shares at 33.70, it resumes lower as expected. I cover down here for $426. Yes, with 2500 shares that would have been a $4200 winner, but I was happy with taking 250 shares. I’m happy with making $426 on it. I’m happy with being up $992 on the day. So, you know it’s a good day, and I followed my rules. Traded to the short side with small sides, which is totally acceptable. I didn’t flip directions and go long. I considered it, but that felt again, that was too risky. It did do a squeeze here, as you can see, up to 48, and now it’s fading back down.

So, it was a wild move. Unfortunately I don’t usually make a lot when that make moves in this price range. I do a lot better on stocks that go from $2 to $8, than stocks that go from $18 to $50. Just for whatever reason I’ve always done better on those lower priced stocks.

You know, today’s not a day where I’m walking away a hero with huge, huge profits, but I’m trading from California, enjoying the warm weather, it’s beautiful outside, and making almost $1000 is great. This is a terrific day. So, you know, that’ll cover my bicycle rental down at Santa Monica, and I think that’s $15, so I’ve still got 980, well, $978. So I can go get a burrito, that’s probably going to be another $15. So I’ll still have $965, or something like that.

So pretty good. I’m happy with that, and I’m just going to enjoy the afternoon be back at it first thing tomorrow morning. We’ll see RKDA does. It might be a little wild again tomorrow, but I think that I’m going to probably stear clear of that one, and just look for sympathy momentum. That’s something that we talked about in the recap, or in the live trading, the sympathy momentum.

Often times we’ll see sympathy momentums. So we’ll see, because RKDA is strong, we’ll see strength in other stocks, because of the FOMO, right. Traders have this fear of missing out on this big opportunity on RKDA, and so the next stock that starts to pop up, we jump on that. I expected that, but we didn’t see it a lot today.

OPHC popped up a little bit, but it didn’t really hold the level that well. Some traders were watching this around the same time. KZIA popped up a little bit also, but definitely didn’t hold up. There was another one on here, DXR is popping up a little bit more. XTNT popped up as well. Maybe a little sympathy momentum on these, but not that much. Not as much as I kind of would’ve thought, and I think probably the reason is because at this price range, when the MOMO stock is at the $30 price range, it doesn’t really create momentum in the $2 to $3 price range, because they’re different price stocks.

So, when you have one stock that goes from $2 to $8, any other stock in the $2 range that pop up, that’s going to get a lot of buyers, because, “Oh, this could be the next one that from two to eighth.”

I think, maybe with RKDA’s price it just didn’t happen.

In any case, even though I didn’t really capitalize on it that well, it’s a great sign for momentum in the market in general, that we saw stock today go up 200%, and open at $19 and hit a high of just under $50. That’s awesome. That’s what you love to see. If you can capitalize on it in any way, you’re doing a good job, and remember our job is to take more profit out of the market than we give back. You don’t have to be a hero. You’re not going to have the perfect entry on every single trade. You’ll probably never be the person who makes the most in one day, but if you can make some profit, and you can do it consistently, you’re doing something nine out of ten traders haven’t figured out how to do.

And if you can do it over the long haul, and achieve real financial independence, really only like 1-2% of the people in the world have financial independence. The fact that we can sit down from wherever we’re at and make this kind of money trading, is really incredible. And you know, you can do it from anywhere in the world, California, Japan, from a paddle boat, doesn’t matter. From an airplane. Anywhere.

Anyways, that’s it for me today, and again, I’ll upload that live trading recap and you guys can see that, the trades on RKDA live, this afternoon. So, that’ll be on YouTube. We’ll be back at it first thing tomorrow morning.

All right, see you guys in the morning.

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