Warrior Trading Blog

Starting the month with a +300% Momentum Stock!

momentum stock

Starting the month with a +300% Momentum Stock!

All right, everyone. We’re going to do our midday market recap, go over the trades from today and today is the day where we have had to exercise some real discipline and stay focused. It’s the first day of December. It’s the very beginning of the December quarter million dollar challenge and the only goal today was to close the day green.

It wasn’t to swing for the fences. It wasn’t to try to hit a home run. It was just to try to make a little bit of money, and I’m finishing the day up $568.16, and even though it’s probably one of the smallest green days that I’ve had in a while, green is good and I’m happy with that. I really am.

This is actually the smallest green day since November 1. November 1, I made only $461, which at the time seemed like, gosh, a very slow start to the month, and of course I finished November with over $80,000. So, I’m not going to be concerned that I’m getting myself off to a slower start here.

One of the things that’s really interesting today is PXS. This stock, right now, is up 327 percent and it is still going higher, as you guys can see on this chart. High of day now is $8.68 and during the course of this midday recap, there’s a good chance it’ll hit $9.00. It’s just incredibly strong, but as you’ll see, I didn’t trade it today. I’m up $568 on DCIX, which you can see right here.

So, why did I not trade PSX, the strongest stock of the market today? Well, when it first hit our scanners, which was very early in the day, it was actually at $3.00. I saw it hitting the scanners and I immediately said, I don’t know about this one because I lost $12,000 trading it on Monday.

This is the stock that got me really good on Monday. So, it hits the scanner here at $3.00, $3.10, $3.08, $3.20. That was way back here. This was when it popped right up here to $3.24. I looked at the level two. I saw that the spread was pretty big, it was $2.75 by $3.00 or whatever, and I just thought, well, I don’t know, gosh, for me to get back into this one, it burned me once. Fool me once, shame on me. Fool me twice, it’s like come on.

You can see on Monday it squeezed up to a high of $5.25 and then it came all the way back down. Not just once, it did it twice. It squeezed here from $2.00 all the way up to $3.73, this is the one that got me, it came down, and then it went all the way to $5.00 and all the way back down. Total pop and drop. So, when I saw it hitting the scanners today, I thought, I don’t know. This thing, it was not easy on Monday and it hit our scanners at 10:05, and as of 10:05, I’d only taken one trade, which is very unusual for me. Typically, by 10:05, I will have traded three, four, five times.

So, this morning was feeling very, very slow. Nothing on the watch list was good except for DCIX, and that was only good for one trade. So I was saying, “You know what? I need to adjust my risk tolerance to external factors and the external factor today is that the market seems slow.” It’s Friday, it’s the first day of the new month and it seems slow, so I’m not sure it would be a good idea for me to jump into PXS right here at $3.08 or $3.20, so I passed on it.

You can see it squeezes up to a high of $3.65 and I thought, it’s annoying, but I was looking at the level two, and it was still a 15, 20-cent spread, $3.45 by $3.60, and I thought, this is exactly what got me on Monday. I jumped into it with a big spread and then it dropped and immediately I was deep in the red. So I said, “No. I need to wait for a good quality entry.” And it pops up here to $4.15.

That was $4.25, and it pulls back just for a moment, and this probably would have been the best entry, but this was around 11:00 a.m. and, again, I was looking at it thinking, I don’t know, because it got me so good on Monday. I think the lesson here is to try maybe to avoid having a bias on the stock because of what happened once before. I know that we often do that. We’ll put stocks on the no trade list, like DRYS, stocks that are historically choppy, we say, “No, we’re not going to touch them.”

So, this one that got me really good, it’s not uncommon for me to say, “I don’t really want to go back into it,” on the next day it’s popping up, but, obviously, in this case, I missed an opportunity because it was consolidating at $4.25 and I was looking at it and thinking, well, I don’t know, The spreads are still kind of iffy.

What happens? It goes from $4.25 up to $5.00. $5.10, drops to $4.62, and now at this point, I’m just looking at it and I’m like, if I buy it here, I’m giving in to FOMO. I’m going to be the buy that buys it at $5.00 again, and it’s going to drop back down to two bucks.

So, you know what, I’m just going to sit tight. I’m going to sit on my hands. This train has left the station. I’m not going to try to jump on it, and you can see, it just kept going and going. Here we go, nine bucks. I’m not going to try to chase it. I’m going to take this as a sign that momentum is back in the market and that’s great.

It’s up 350 percent right now with no news. There is no news on this. There is no catalyst today. The only catalyst is FOMO. It’s fear and greed and that’s caused the stock to squeeze up 350 percent. Now, we capitalize on this all the time. It’s not surprising to see something like this happen.

When we see stocks squeezing up, we jump on the momentum and we try to ride that momentum up to the next leg, and I’m just really happy to see a stock that has sustained this type of move. I would be very surprised if it closes at high of day, and I also wouldn’t be shocked if it was halted on a T12 circuit breaker halt pending them providing NASDAQ with the reason why their stock is up 350 percent. That has happened many times to other stocks and it could happen to a stock like this.

So, it’s certainly a risk when is stock is up 350 percent and there’s no material news to justify the move. It can get regulators asking questions and they can halt a stock until the company gives them an answer. Just as a reminder that this is a real thing, look at W-I-N-S, WINS. This stock squeezed from $22 all the way up to $225, and it was halted on June 6. It has not yet resumed trading. Jeff [Vinchet 00:07:06] say he’s holding 75 shares of WINS right now. Seventy-five shares times $225 a share … I don’t know what his average is, but that’s a little scary.

This was a crazy example, but we saw it also on DGLT. Remember DGLT? Let’s look back on this one. Let’s see, gotta scroll back a little bit. Trying to remember when this was halted. So this was halted, I think it was … This was halted on August 16 and it didn’t resume until October 6. It was halted for two months. That’s risk. Granted, we see stocks squeeze up all the time. CHFS the other day from $2.00 to $24.00, LEDS, we see these stock squeeze up and most times they don’t get halted, but we always prefer to trades stocks that have news, because if they have news then there is actually a reason why they’re moving up.

So the fact that PXS has no news is definitely going to make me more careful about buying it when it’s already up 200 percent. I’ll still jump into it when it’s in the $3.50 range, maybe the $4.00 range, but when you start getting into $5.00, $6.00, $7.00, now I feel like I’m really positioning myself with a lot more risk. Even if take 2,000 shares, that’s $16,000 in the trade. If it gets halted and then resumes 50 percent lower in three weeks or a month, I’m going to lose eight grand. So, now I’m starting to think, do I have the potential to make eight grand on this trade, with 2,000 shares, and the answer is no.

So, now the risk, in my mind, just gets higher and higher. I’m not saying that this stock won’t go to whatever, $9.00, $9.50. Who knows? Maybe it’ll go to $15.00. I have no idea, but it could also drop 50 percent. It could close at $4.00 today. It’s unknown. What we are able to do on any of these trades is manage our risk. That’s what we can control. We can’t control how high the stock’s going to go, how much it could drop, when it might get halted, but we can control how much risk we’re willing to take by getting in the trade and that’s what I’ve done today.

I just decided that this train left the station early the day. I could have jumped on it. I was just a little bit cautious and part of that is being a little gun shy because I got burned on Monday on the same stock, so it made me just a little bit more careful about getting in and then you miss the opportunity. You hesitate, the next thing you know, it’s up too much and you can’t manage the risk.

You can’t logically ration to yourself that I’m going to buy this stock when it’s up 250, 300 percent because the risk is simply too high, and as we get closer to $10.00, it’s going to be outside my price range of stocks that I like to trade. Even these types of stocks, I don’t like to trade them over 10 bucks. I really prefer not to. My wheelhouse is between $2.00 and $10.00. It’s really more like $2.00 and $8.00, $2.00 and $6.00.

Anyways, I know a lot of you guys traded this one. You weren’t gun shy on it. You saw the opportunity. You jumped in, whether it was on the first pullback here at $3.24, the second one at $4.25, or the third one here around $5.15, these were all good pullbacks based on the patterns that I teach you guys and so I’m glad to see that some of you were able to capitalize on the move.

Now, if I already had a profit cushion on the name, if I was already up $3,000 or $4,000, then that would also be a different story because the risk of getting in up here is offset by the fact that I already have a big profit cushion on the name. So, if something bad does happen, that can cushion the pain on that. And this is also interesting that this one hasn’t gotten halted today.

On most of these stocks, we’ve been seeing multiple circuit breaker halts, but on this one we’ve got no halts. So, it’s just been kind of grinding, and I think that that, in contrast to this other stock, CGG, this one squeezed up, was halted, squeezed all the way from $4.00 to $7.50 and then came back down, but in both cases it’s definitely irrational strength.

So, stocks can be irrationally strong. What you have to remember is that they can be irrationally strong longer than you can remain liquid if you’re on the short side. This type of stock is really quite difficult to short. It’s also quite difficult to find a long entry in this kind of range because when you look at this, where’s really a good pullback in this range? Went from $5.00 to nine bucks without a really obvious five-minute setup and that’s difficult, and that’s what gets traders into FOMO.

So, I encourage you guys to not feel bad if you missed this opportunity. I’m not going to beat myself up for missing the opportunity. Realistically, this morning the watch list wasn’t great. We didn’t see anything good in the first 30 minutes, and then this one popped up and started to take off, but just two, three days ago it did a really big false breakout, and it did it twice in the same day.

For me, I just love seeing momentum and I missed this one, but you know what? I’ll get on the next train that leaves the station and that’ll probably be for me on Monday. I’m not going to trade again this afternoon. I’m not going to trade past the lunch hour.

This is just a good sign of momentum for the month of December, because you know that traders, maybe even like myself, who have a little bit of FOMO, like, okay, I missed PXS on Friday, Monday, we see a stock that starts to pop up, we jump on it even faster, and then that’s how you create that next wave of momentum because it’s one stock that makes a big a move and then four or five other stocks that start to move and traders say, “I’m jumping on this because I’m not going to miss it the way I missed PXS,” and that might happen on Monday. We’ll see. We’ll just play it by ear.

In any case, I’m just happy to be closing the day green, getting myself on the leader board for the month of December, right into the green, and that’s really what I go for every month, just not to fall into the red right away, but to start the month in the green and then just keep building it up.

So, let’s see, today is, as I mentioned, the first day of the December quarter million dollar trading challenge, and traders are a little slower today to update their P&L, and it may be because some folks didn’t take trades today, so I can show you where we’re at right now, although there’s not a whole lot to show. I’m sitting up 568 bucks. Mike and Jeff haven’t updated yet. Roberto’s up 12. John, no trades. Sam hasn’t updated. [Arch 00:14:31], no trades. [Shawna 00:14:33], $465.00. Very nice. No updates from these guys. Steve down 200. Simon, Robert, Raj, no updates. Jamie, David, Nate in the green, looking good. Bernard, no trades. Lenny, John and Justin, no updates yet.

We’re kind of sitting up a thousand bucks, which is fine. We’ll wait for other people to throw their P&Ls up there and then we’ll see where we’re really sitting for the day. So, we’ll probably just come back and look at this on Monday morning and then we’ll get a better sense.

So, anyways, that’s that, and then I wanted to just give you a quick overview of my P&L here for the month of November. So, let’s see, these are my Tradervue stats, and this, by the way, is my account that I started January 1. Started January 1 with $583, so I’ll go to look at 90 days, detailed, gross profit $292,000 from a starting balance of $583. Net profit after commissions, 251, so, that’s $40,000 in commissions. Wow. That’s a lot. But a lot of it is ECN fees and a good portion of that came from trading at SureTrader during the first month and a half there.

You can see P&L, this is year to date, 69 percent is my accuracy, 770 trades sitting at 69 percent. Average winning trade 973, average loser $1,112. That’s something I’m not happy about. I’m not happy that my average loser is bigger than my average winner, and it certainly didn’t help having a $12,000 loss in the month of November. Granted, I had a $30,000 winner, which was great, but a lot of my winners will be small winners, and since 70 percent of my trades are winners, all those little wins, like 20 bucks, 60 bucks, 50 bucks, they bring down the average a lot.

So, anyways, that’s where we’re sitting year to date, and just for the month of November, give you a guys a look here into where I finished. Gross here, 87,000, 71 percent accuracy, and you can see this is the problem with the P&L ratio. It’s that couple big losses really, really hurt my averages. This is something that is definitely disappointing for me and, like I said earlier today, I want all of you guys to look at your metrics and ask yourself, “Okay, what did I do right in November and what could I do better?” For me, in November, my accuracy was pretty good, 71 percent is not bad.  It’s really not bad at all. It’s great. However, my profit/loss ratio was not good, and so, in my opinion here, what I need to do for the month of December is focus on having tighter stops.

Yep, so there’s the rollover on PXS, and this is interesting because it just dropped from $8.97 to $7.16 with no halt, so that’s a fairly big drop. It’s now up only 273 percent. Still up a lot, but, yeah, that was a little bit of a rollover there, down almost two points. Obviously, that would be a situation where if you were holding this at $8.87, you bought it for the break of $9.00, all of a sudden you’re losing $2.00 per share.

You could be getting absolutely smoked. Look, we’re at $6.70 on the bid. This is a really quite sharp drop. That’s risk, and so, for me, I have to be able to know that every time I’m getting into a trade, I have a good entry because if I have really good, solid entries, then I don’t have to worry about this happening.

Personally, when I look at this, there would have been no entry on this stock up in this range. There’s no setup here. Not at all, not even close. There’s a setup down here and there’s one down here and maybe right in here, but not up here. This is way too much.

What I’m finding interesting is that there’s no halt on this and we don’t know the rhyme or reason with the circuit breaker halts at this point because it’s almost like the rules were turned off for this stock today. No idea why. We’ve been seeing five-minute halts, 10-minute halts, and then this stock, no halts at all. So, it is a mystery, but in any case, going back to my trades here.

My goal for the month of December is, in terms of monetary goal, I’d like to be able to make $20,000. That would certainly be nice, and I really want to focus more than anything on having tighter stops. That’s what I need to focus on because I can’t allow myself to have my average losers be bigger than my average winners. I mean, really, I want my average winners to be bigger, like two to one. I’d rather be 1,400 average winner and 700 average loser.

I think if we go back to the month of May, 5/1 to 5/31, I think this month, I had a pretty good profit/loss ratio. Nope, it wasn’t that month. Oh, wait, wait, wait, wait, wait. 5/30/2017. Yeah, that was not bad. This was my month of rehab. I was in rehab this month, and my average winner was 500 bucks and my average loser was only 197.

That’s a great profit/loss ratio. My accuracy, 68 percent. I’m very consistent at 68 percent, but this is the thing that’s the variable for me. This is what can really change radically month to month, and I need to get this a little bit more under control.

So, for me, that means in the month of December, I’m going to be focused on making sure I have a good entry, not chasing stocks, because when I chase them, I get myself into trouble. So, instead waiting for the right pullback, waiting for the good setup and keeping probably max loss of around 20 to 30 cents.

Now, I’ll show you guys the profit trifecta that we talk about in the classes. This shows you the three components of profitable trade. It’s your percentage of success, your accuracy, your profit/loss ratio, and your consistency. Those are the three components. So, consistency, how many weeks of profitable trading do you have? Accuracy, which is just simply your accuracy, and profit/loss ratio.

So, for me right now, my accuracy is like 70 percent, which is great. My profit/loss ratio is less than one to one, and of course because I lost money on Monday, my consistency is going to be zero here because I only have one week now. I have zero weeks of consistent profit since I’m red this week, but that’s because of one big loss.

So, this is really the area where I need to focus and I want you guys to do that for yourself. Create the game plan. What are you going to do for the month of December so you have a better month than you had in November? Even if you had a great month in November, we want to be better, all right?

So, anyways, I just wanted to go over a couple of those things here as we wrap up the week. It’s been a little bit of a tricky week, but I feel good that I was able to regain control Tuesday, Wednesday, Thursday, and here on Friday. So, I’ve got four green days under my belt. Today is the fourth consecutive green day and it’s just getting things off to the right start.

All right, so, anyways, that’s it for me, and I will see you all first thing Monday morning. I hope you guys have a great weekend. Get some rest. Study up if you want to because Monday morning’s going to be here quick and I’m thinking we’re going to see some pretty good opportunities next week. Okay, so, I will see you all first thing on Monday morning. Bye everyone.

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