Looking back to my trading performance so far

Looking Back

     Overall analysis so far of my trading. In all honesty i am very disappointed in my trading with the market watch game. i am performing way under what i normally do. This may be because of the simulation i am taking risks i would never normally take. Also i made many dumb mistakes by taking a small loss instead of letting my profits run. This happened several times where if i listen to my rules i would have made a nice profit but since i ignored my rules i ended up taking unnecessary losses. However some good things have through out this trading simulation i have learned from my mistakes and learned that patients is key.

     Things i wil be doing in the future:

     I will continue using my patterns of reversal signals to find trend changes, also my pump and dump strategy of shorting cheap stocks that make huge runs off of no fundamentals. I have used these patterns multiple times and i know they work even when i do not follow them. This is why in the future i will look to become more patient to enhance my strategies and gains, i believe this to be the most important factor.

BIOC

On this trade of BIOC i broke my rules and it cost me to leaving about a 50% gain on the table. When i noticed BIOC it was soaring $1.50 to almost $5 in three days. I love these kinds of run-ups because i like shorting them. As i have said in other blogs it is important to cut losses with these stocks because of the volatility of the stocks and how easy you can get short squeezed when everyone is trying to short at the same time, but to remember to keep trying as eventually it will crack and you will catch a huge panic.

     So it appeared i was probably a day early trying to short this, and when i noticed the big crack was not happening i did the right thing and cut losses of only $.03 a share. However, the fact that the stock kept going after scared me away even though if i had gotten
back at some point the stock tanked nearly 50% now 2-3 weeks later and i could of had huge gains

Practising patients on KOP

Why i need to practise more patients.

     I believe that being patient and disciplined especially when swing trading over a couple of days, weeks, or even months is maybe the most important thing a good trader needs. When i traded KOP,  I was not patient at all and it cost me an unnecessary loss for me. I used the same pattern and strategy for this trade as i have all my others but for some reason i got undisciplined and panic sold when i really did not have to at all.

     After my loss, i checked the chart about a week later and noticed that the stock had done exactly what i expected it to do when i initially bought the stock. this was a very good lesson learned, for me t be more patient and only cut losses when a true sell signal is generated.

     As you can see here from the chart i recognized a very nice inside trading day reversal signal. Once the stock closed above the 8 exp. moving average it was a buy signal. Now at this point it was way off its highs and far removed from the 50 simple moving average. So i expected it to return to that price level. However once i bought the stock we had a small day of indecision(arrow) which caused me to believe that the move was not as strong as i thought so i took a very small loss. But as you can see right after the stock started up trending nicely to and beyond the red 50 simple moving average, which was my price target in the first place. There was absolutely no reason to take a loss on this trade in fact it would have, could have, should have been a nice $1.50 a share profit. 

ORMP

     A very similar trade to my GENE trade, ORMP had the same pattern as it shot up from 4 to 7.9 in two days on very weak news. Unfortunately, when I saw i tried to place an order but for some reason the order never went through after three tries. Since I never made the trade I will just talk about the potential play and why i was looking to short it at the time I was. When i saw the stock shoot up of very little news and the company had very poor fundamentals (negative EPS, Debt, negative margins, negative cash flow), i knew this run would not last forever. One the third day once it started gapping lower i knew that a huge red day was likely and this is when i tried to short at the open of this day. I never got executed but the stock opened 7.60-ish and immediately sold off down to the 6.40's. This would have been a perfect short, as it is similar to a pump and dump like GENE in which i was actually able to get a trade off.

     As you can this large unsustainable move that the stock made in two days, when previously the stock was doing absolutely nothing. Once the large gap down occurred it showed that there were a lot of profit takers and no more buyers showing a topping signal. After the first initial large drop the stock had a bit of a bounce as shorts sellers take profits. But this second bounce can also be shorted as i believe the stock to continue downwards all the way back $4.50.

Dip Buying After Huge Sell Off's (WBAI)

     Another trade that I made was by spotting a reversal signal in WBAI, a stock that had recently been getting sold off. This stock had some negative news about a lawsuit. This caused the stock to be sold off heavy for the next month. Although there was negative news it seemed to me that the stock was extremely low. So i patiently waited to find a bottoming point, because now it seemed the large selling volume had slowed down. Eventually I noticed a very large bullish engulfing candle that showed me that the bottom was here and the stock is now going to push forward in a strong reversal.

 As you can see here WBAI was getting sold off from around $18 down all the way to a low of 7.50 a drop of nearly 60%. Seeing this I believed that regardless of the news a bounce was very likely. Just as stocks going up very fast almost always have some sort of pull back. In the circle it shows a very exaggerated bullish engulfing candle, as you can see after this the stock made a nice bounce. Once the stock closed above the 8 exponential moving average it is confirmed that there is a likely move to the next moving average, which was the yellow 20 simple moving average. I was buying above the 8 exponential average at around 12.60-12.9 and then was taking profits near the 20 average at 14.50 and the stock touched the average at 14.77 and then began to pull off.

Predicting Reversals in the DJI, SPY,QQQ

Why I Love Candlestick Reversal Patterns!

     Majority of my trading has been my reversal pattern strategy. I use the pattern both long and short. I also used it to predict where i felt the overall markets were headed three days before it happened. When I looked at the DJ-30 and the S and P 500 and nasdaq ETF's (SPY,QQQ), I notice with all of them they all made a very strong reversal signal to the downside on Tuesday March 3rd. All three made a bearish hurami ( an bearish inside trading day). Like with all my other trades I wait for the candlestick to close below the 8 Exponential moving average to have a confirmed reversal. Once all three did this over the next 3 days the markets made huge moves to the down side. Knowing that these reversal were about to happen I looked at other companies on these exchanges that were ready to make a downwards move as well as they would follow the markets.

DJ-30

As you can see now today on Friday March 6, the DJI sold off over 200 points. This large move to the downside was predictable as on Tuesday as you can see inside the circle the market had a bearish inside trading day in an over bought condition. When i saw this it tells me that the uptrend it is currently in may be over as the candlestick formation shows that the buying pressure has stopped. The next day it closes below the 8 exponential moving average. This confirms that the market is rolling over and about to make a pull back at least to the 50 moving average (red line).

SPY

A similar situation as the DJI is the SPY also had an inside trading on Tuesday. It also formed a doji (day of indecision)in the overbought condition on that day as well. These two signals showed that the even greater strength that the buying pressure is over . The next day when it gapped down below the 8 exponential moving average it showed great strength that not only is has the buying stopped but the bears are now in control

QQQ

This along with the other two shows the same inside trading day on Tuesday. It also followed with two more days of indecision in the overbought condition showing that the buying has stopped. This had a bit more of a delayed reaction but as you can see now it appears that it is beginning to sell off and move into a downtrend towards the 50 moving average.


     The reason why I love this pattern so much is that by knowing where the markets are going next automatically gives you an edge in trading other stocks. This is because 3 in 4 stocks follow the market so you automatically have increased your odds to 75% chance of trading a stock in the right direction just by knowing these reversals. I used this to short BECN. This stock also made a similar reversal pattern so I felt it is likely to follow the market, and that is why I went short. Also other stocks that made similar reversals that followed the market was V, MTH, MOH, and QSR. All of these were and still are good shorts as the markets progress downwards and these stocks follow them. The strongest sympathy play of the four would be V because that is Visa and Visa is literally one of the companies on the DJ-30. So if the Dow is reversing and Visa is also making a reversal signal at the same time in the same direction there is an extremely high probability that visa will also go down.

Pump and Dumps

     This strategy that I used in these trades is a bit different than the other types of stocks that I traded and explained in my other blog post. In these cases I used the very simple pump and dump strategy that is commonly used in the world of penny stocks

What is a Pump and Dump? A pump and dump is a penny stock pattern that can be used for have a successful trading strategy by shorting selling exponentially large moves over a couple of days. These extremely volatile penny stock get pumped or promoted or manipulated to soars hundreds or percents in a few days. The only this is that these stocks move on "Fluff" news and once everyone begins to realize this the stocks will crash 10-50% in a day or two. Being able to spot these pumps and short them at the right time can be very profitable for you account.

One of the Pumps in question is the stock GENE. This stock made an exponential run up from $1.50 to $11 in a week! This large run up was not from good fundamental news, but it was a pure pump from a penny stock promoter called Ironside. Ironside for the last week had been sending out mailers to thousands of people and manipulating the price of the stock. The best thing to do with these pumps is to wait for the top because even if you think a move from $1.50 to $5 is a lot and i must come back down, in a couple of days it got short squeezed and ran to $11. To avoid running into a problem like this look for topping signals such as, fading volume, dojis, and the stock going red on the day. These three things usually mean top. But not all the time so it is important to look for these signs and if things don't go your way right away keep taking small losses until the big collapse happens. Trust me if you time it right and you just kept getting in when topping signals occurred and got out when it fail, eventually it will top out, it WILL ALWAYS TOP OUT EVENTUALLY. When this happens i promise you will make back all your losses and then some as these things easily tank 30% in a few days. GENE for example once i finally got the move made me a 33% profit in one day . As i noticed a long legged doji at the top with faded volume I slightly jumped the gun and did not wait for it to go red on the day as I held over night anticipating a gap down morning panic. This did not occur as the stock got one last squeeze in and I tried to follow my rules by covering losses quickly and look for better re-entry. My position was delayed 15 minutes which caused me to get out for a $1.50 a share loss. This unfortunate situation obviously really hurt my account but I remain focused on trying to re short it as I did twice. First I made $.50 a share and than i made about $2.50 a share in one day. These large gains made me back all the money I had initially lost. Perhaps i would have made more but I was a bit shell shock from the first loss so I took a position smaller than I should have as I was very certain of the collapse.

     This is what happens to this pattern a month after its run it goes all the way back down to where it started. This shows my point as two keep shorting and cutting losses because eventual the large collapses happens and you will make a huge profit. It is important to cut losses however because here it looked like it was topping at $4 but then it ran all the way to $12.50.

Reversal Signals

Technical Analysis

HIVE- I chose to take a position in this stock for a few reasons. By using my knowledge of technical analysis and identifying reversal signals i was able to identify an opportunity in the market. This reversal pattern is something that i have been using at very high probability.

HIVE was a great play because of the price since it was only a $4 stock. When i looked at this chart i noticed several things that meant probable reversal. Firstly, the stock had been getting sold off for a few weeks and months. However when i looked at the chart i noticed a very exaggerated bullish engulfing candle and also it form a hammer candlestick that day, while in the oversold condition. All of these things show great signs of reversing. I also noticed it closed above the 8 exponential moving average. This is a very important part of the strategy as it gives bullish confirmation as i would never enter the trade without this confirmation signal. Once i established a high percentage buy signal i decided to take the trade at $4.09. The goal was to trade the stock all the way up the 50 moving average. When i took this trade i was completely correct with my analysis of the stock. However i miss clicked the button in the game which caused me to take a microscopic of only 1000 shares when i wanted 10000. This mistake caused me to get out with a very small profit even though the stock acted perfectly in going straight to the 50 simple moving average.

     This chart shows the exact trade. As you can see from the chart at the bottom the stochastics show that the stock is in the oversold condition and the green candlestick inside the circle shows a very nice large bullish engulfing candle, but it is also a hammer candlestick. These show an immediate reversal as the stock closed above the blue 8 exponential moving average. As you can see right after this the stock made a 5 day green move to the red 50 simple moving average and the stock has since bounced of the 50 and is still up trending. This move may look small but its is a highly predictable 10% move that is still going higher. A few of these a week at 10% could be very profitable in the long run.



SFM- This trade used the same principles as the one used above. Except this time I looked for a bearish reversal in an overbought condition. In this case SFM is a much more expensive stock than HIVE as its is around $37. However the same reversals signals still apply to any priced stock whether it is a $4 stock or a $30 or a $300 stock the strategy still works in the same manner.

I took this trade as I noticed the stock was uptrending in an overbought condition with a doji candlestick at the top. On top of this the next day gapped down and closed red on the day. This signal shows that the buying pressure has stop and we are reversing into much more selling pressure. Same as the other stock I waited for a close below the 8 exponential moving average now instead of above it because we are looking to short this time. Once a confirmed sell signal took place I took a short position at $37. 33 again expecting the stock to now move lower towards the 50 simple moving average. I eventually closed the position at $35.75 ish before it got to the moving average because it had such a huge morning panic i thought it was worth covering into all the selling and taking nearly $2 a share.

     Here in this chart it shows trade and the downtrend that the stock is now in from this reversal. The "t" looking candlestick in the circle is a doji. This doji shows indecision in the overbought condition. So when the stock gaps down it shows that the bears are in control. Once the stock closes below the blue 8 exponential moving average it is a confirmed reversal. Technically it is ideal to wait for the stock to touch the red 50 simple moving average as it appears that the stock is still headed in that direction. However I wanted to free up some capital for another trade and taking almost $2 a share in the morning panic was a safe way to lock in profits.