And THIS WEEK I am opening up the doors to everyone to have a front seat at two very special trainings I’m putting together:

Wednesday, May 3rd → 8pm EST

Thursday, May 4th → 11:30am EST

USE THIS ROOM LINK AT THOSE TIMES

Of course there’s no guarantee I’ll accomplish my goal, but I’m giving it everything I’ve got and will stream these trades live from my broker for you to learn.

The reason I’m calling it Small-Cap Ground Zero is because the next bull market for stocks is just getting started.

The Challenge began Friday and is off to a good start. If you’d like to learn, subscribe here.

The broker I recommend for swing trading small-cap stocks is Webull. And the reason is simple → they have the best trading hours or 4 am ET – 8 pm ET.

LEJU this morning is a good example.

I alerted it Monday with an average of $4.45.

Tuesday morning shares hit $13.69 in the premarket.

I was sleeping when I was up over 200%, but when I rolled out of bed and checked my smartphone, up over $10,000 cheddar in the small account, I hit the sell button and went back to sleep.

Small-Cap Ground Zero is off to a good start up over 25% in the first week.

In closing, as I prepared to attempt growing $50,000 into $1,000,000, I went with Webull for this CHALLENGE because it has the best hours.

If you’re excited about the small-cap bull market, that’s just getting started, it’s a good time to join Lightning Alerts.

Remember, I’m not an investment advisor, I simply teach trading through my trading and I think it’s safe to say we have trading in common, right?!

In my experience now is a phenomenal time to be looking at small-caps. And should be for years to come given the bull market is beginning.

I’m very excited about Small-Cap Ground Zero and hope you are, too.

]]> https://ragingbull.com/editorial/best-broker-for-the-small-cap-challenge/feed/ 0 108904 https://ragingbull.com/jason-bond/my-top-3-penny-stock-patterns-cheat-sheet/ https://ragingbull.com/jason-bond/my-top-3-penny-stock-patterns-cheat-sheet/#respond Mon, 20 Mar 2023 20:04:30 +0000 https://ragingbull.com/?p=107999 Stocks tend to move in 3 patterns.

The way I visualize this is in breakdowns, continuation patterns (bull flag / pennant), and breakouts.

Breakdowns and breakouts are my favorites because they present the most volatility and range in both directions.

To better understand Japanese candlestick patterns I recommend The Candlestick Course.

Fishhook (a.k.a. Breakdown) chart pattern:

The fishhook pattern emerges on a sharp downward move in the stock price through support on heavy volume and tends to be quick in duration and severe in magnitude. Excellent for swing trades.

Pennant (a.k.a. Continuation) chart pattern:

A pennant will have a period of consolidation inside the triangular flag shape on lower volume followed by a breakout, outside the triangular pattern, on higher volume. This is also excellent for swing trades.

Rocket (a.k.a. Breakout) chart pattern:  

A rocket is when the stock price moves outside a defined support and resistance level with increased volume. Enter long on a break above resistance or short on a break below support. In penny stocks, breakouts are often accompanied by dilution which for the most part, destroys the momentum. I use Dilution Tracker to gauge offering risk. Excellent for day trades.

PRO TIP: Here’s the checklist I use to find these monsters:

1. Amazing news (filter out puffery)
2. Big range (50-100% to major resistance)
3. Float (smaller = could run faster through range)
4. Short interest (higher = turbocharged breakout)
5. Dilution risk (must be medium to low)
6. Entry (am I chasing?)
7. Take the trade

Some examples of breakouts I alerted you so you can see how they progress.

1. VS opening range breakout [01:18]
2. AMAM opening range breakout [02:05]
3. LUCY opening range breakout [09:37]
4. PHVS opening range breakout [02:02]
5. CRKN opening range breakout [03:01]

Here’s a cheat sheet for the opening range breakouts.

Opening Range Breakout:

An opening range breakout in stock trading refers to a strategy where a trader seeks to profit from a stock’s price movement within the first hour of the trading day.

The opening range is defined as the high and low prices of a stock during the first hour of the trading day. The idea behind this strategy is that the opening range often establishes the direction and momentum for the rest of the day, and that a stock’s price will tend to continue to move in the direction of the breakout from the opening range.

To implement this strategy, a trader will identify the opening range and set a trade based on whether the stock price breaks above the high or below the low of the opening range. If the stock price breaks above the high of the opening range, the trader will enter a long position, while if it breaks below the low, the trader will enter a short position.

It’s important to note that while opening range breakouts can be a useful tool for traders, they are not without risks. Factors such as false breakouts and corrections back to the breakout point make explosions rare.

Ranges are easy to spot, making the range breakout strategy very popular. However, many traders lose money on this strategy, mainly because of false breakouts, corrections to the breakout point and unrealistic expectations. Strategies that are likely to provide traders with more success involve being patient and waiting for the breakout to happen and then trading the trend if it occurs, or waiting for a correction and seeing if the price resumes the breakout direction.

False Breakout:

A false breakout in stock trading refers to a situation where a stock price appears to have broken through a key level of resistance or support, but then quickly reverses and moves back within the previous trading range. This can occur when there is a lack of buying or selling pressure to sustain the price movement beyond the key level.

False breakouts can be misleading and can cause traders to enter into a position too early or in the wrong direction. For example, a trader may enter into a long position when the stock price appears to have broken above a key resistance level, only to see the price quickly fall back down and close within the previous trading range.

To avoid false breakouts, traders often look for additional confirmations, such as increased volume or a move above a moving average, before entering a position. It is also important to consider other factors such as market conditions and news events that may be affecting the stock price.

Shooting Star:

A shooting star in stock trading refers to a candlestick pattern that is formed when the price of a security increases significantly during a short period of time and then falls back to near its original level, creating a tall candle with a small upper shadow and a long lower shadow.

This pattern is often seen as a bearish reversal signal, indicating that the uptrend may be coming to an end and that the price may continue to decrease in the near future.

Base Trade:

A base trade in stock trading refers to a strategy where an investor buys a stock that has gone through a period of consolidation or correction and is showing signs of building a base or forming a new support level. The idea behind this strategy is to buy the stock at its current price, with the expectation that it will eventually break out of the base and move higher.

In order to identify a base, traders often look for patterns such as flag and pennant formations, cup and handle formations, or double and triple bottoms. Once a base has been identified, traders will typically wait for the stock to break above the top of the base and show signs of strength, such as increased volume or a move above its moving average, before entering a long position.

THRUST Analysis:

Thrust refers to the distance between the current swing high to a previous swing high (in an uptrend) or swings low (in a downtrend). Increased thrust is a sign of potential trend strength. Shortening of Thrust is a sign of potential trend weakness.

The increased thrust of T2, when compared with T1, indicates greater strength within the trend. Also compared with T3 to T2 indicating strength on the upside.

Shortening of thrust, T2 when compared with T1 indicates weakness with the trend. T3 is then much shorter than T2, indicating weakness developing with the trend. T2 is unable to project to the same distance as T1 did. Something has shifted in the balance of supply and demand. The fact that the market was unable to do so indicates either a decrease in bullish pressure and/or an increase in bearish pressure.

The uptrend is showing signs of weakening

So there you have it!  I hope you enjoyed my Cheat Sheet –  and if you want more of this kind of education, I invite you to…

Learn more about Lightning Alerts here.

… I taught why this strategy is better for trying to build a small account compared to penny stocks. 

Now let’s examine HOW it works. 

Options trading BLUEPRINT for traders with SMALL ACCOUNTS.

HOW to get 3 ways to win on every trade.

NFLX is at $348.

When a novice trader buys the $340 out-of-the-money put there’s only one way to win.

NFLX must fall below $340. 

This gives them low probability, let’s say 30%. 

That $6.10 price of the put option they bought has no true value. 

It’s only made up of time. 

Every minute NFLX is above $340, that $6.10 loses time value like a leaky bucket. 

Time value leaks on the weekends too. 

Time value always heads toward $0. 

And it does so at its fastest rate in the final 5-7 days before expiration. 

Bad for the buyer. 

Great for the seller! 

Time value of the option ‘leaks’ faster and faster as expiration approaches. 

And right into the account of the seller.

This is why I like to sell puts 1-2 weeks away from expiration. 

My order entry, as the seller, would look like this. 

And I can do this with as little as a $2,000 margin account. 

And it’s a limited risk trade with a high probability of winning. 

If you are new, don’t sweat what the order entry image above means. Understand the concept for now. Order entry is easy and I’ll teach you that later. 

Bottom line. 

The buyer of the low probability out-of-the-money $340 put only has 1 way to win → NFLX falls well below $340. 

The seller has 3 ways to win: 

1. NFLX can head lower, but as long as it’s above $340, the seller wins
2. NFLX trades sideways, the seller wins 
3. And of course the seller wins if NFLX heads up

Buying that low probability out-of-the-money put is betting NFLX will go down i.e. bearish.

Which means the seller is neutral to bullish. 

Do this on recent earnings winners with strong guidance and probability increases more. 

So why on earth would anyone buy a $340 out-of-the-money put option on NFLX when MIT warns you’ll lose money?

Because most traders are not educated.

But not you, you’re still reading. 

No more option buying. 

Time to turn the tables and start taking high probability trades. 

I’ll even send you my entries and exits before I get in and out of these trades. 

No strategy is perfect. I will have losses here. But this is the best one I know.

Start your $2,000 Small Account Journey today 

… I taught why this strategy is better for trying to build a small account compared to penny stocks. 

Now let’s examine HOW it works. 

Options trading BLUEPRINT for traders with SMALL ACCOUNTS.

HOW to take high probability trades. 

It’s well documented that most small-time traders lose money.

Why?

Here’s one answer. 

My strategy? 

Take the opposite side of the low probability, out-of-the-money put options they buy. 

I encourage you to read the above headline and sub headline again. 

I repeat. 

My strategy?

Take the opposite side of the low probability, out-of-the-money put options they buy. 

And it can be done with as little as a $2,000 margin account.

Which is why I call it the $2,000 Small Account Journey. 

And the numbers don’t lie. 

The Chicago Mercantile Exchange (CME) held a 3 year study. 

An average of 77% of all options held to expiration at the CME expired worthless!

That means if you bought an option and held it to expiration, there was about 24% chance of a favorable outcome. 

So why would anyone buy a low probability out-of-the-money put? 

The simple answer, uneducated.

Not our problem! 

In fact, it’s our edge. 

First, find out where most uneducated traders are losing lots of money.

Second, take the opposite side of their trades. 

Third, rinse and repeat. 

That’s what I’m doing in the $2,000 Small Account Journey. 

High probability, limited risk trades that I cash up quick. 

And that’s how I get this edge.  

Results not typical. Nothing is guaranteed. 

I’m happy to teach you.

I’ll even send an alert to your smartphone before I enter and exit these trades.

Start your $2,000 Small Account Journey today 

WHY drinking the Kool-Aid is a problem for small account growth …

… and how my $2,000 Small Account Journey addresses it. 

As we discussed in part 2, penny stocks often go supernova.

But they are dangerous for the trader desperate to grow a small account.

Because monster breakouts lead to fear of missing out (FOMO).

Which leads to chasing.

Which leads to catching the top.

Which leads to drinking the “Kool-Aid”.

“Drinking the Kool-Aid” refers to a trader who thinks a doomed stock has high rewards.

Which leads to bag holding.

A bag holder is a trader who holds onto poorly-performing stocks, hoping they will rebound.

Remedying losses, versus focusing on realizing gains, is the root issue here.

Bag holders tend to lose money by being the last owners of a failing trade.

Now I love penny stocks. It’s one of my biggest services.

I believe they are great for the retail day and swing trader i.e. big fish in a small pond.

Trading preys on emotions and these are some of the biggest culprits. 

• Pattern day trade rule
• Fear of missing out
• Drinking the Kool-Aid

What if there was a small account strategy that:

• Mitigated the dreaded pattern day trade rule?
• Fear of missing out isn’t triggered?
• A win or loss outcome will happen in a few days to weeks i.e. cannot bag hold and therefore, no Kool-Aid

What if this strategy had limited risk, high probability trades that were cashed up quickly?

Sounds too good to be true. 

It’s not.

I’m teaching the strategy and alerting the trades before I enter and exit.

It’s called the $2,000 Small Account Journey or $2K SAJ.

No strategy is perfect. I will have losses here. But this is the best one I know.

Start your $2,000 Small Account Journey today