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.

Over-the-counter (OTC) stocks are stocks that are not listed on a formal exchange, such as the New York Stock Exchange (NYSE) or NASDAQ. Instead, they are traded through a network of individuals and firms that work together to buy and sell the stocks. OTC stocks are often small, relatively unknown companies, and they may be more risky to invest in than stocks that are listed on a formal exchange. However, they can also offer investors the potential for higher returns.

Advantages of OTC Stock Trading

One of the main advantages of OTC stock trading is that it provides investors with the opportunity to invest in a wider range of companies. Because OTC stocks are not subject to the same listing requirements as stocks that are traded on formal exchanges, smaller, less well-known companies may be able to have their stocks traded on an OTC exchange. This can provide investors with the chance to invest in companies that may not meet the requirements for a formal listing, and can potentially offer higher returns.

Another advantage of OTC stock trading is that it can provide greater liquidity for certain stocks. Because OTC stocks are traded through a network of individuals and firms, rather than on a centralized exchange, they may be easier to buy and sell, especially for stocks that do not have a lot of trading volume on formal exchanges. This can make it more convenient for investors to buy and sell OTC stocks, and can also help to ensure that they are able to obtain fair prices for the stocks they trade.

Pink Sheets and OTCBB

Pink sheets are listings for OTC stocks that are not listed on a major U.S. stock exchange. Most pink sheet stocks are considered penny stocks, which trade for less than $5 per share and are considered highly speculative. Companies may choose to sell their shares through the OTC network to avoid the costs and regulatory requirements for listing on a large exchange.

The OTC Bulletin Board (OTCBB) is an electronic system that displays OTC securities with real-time quotes and volume information. Shares listed on the OTCBB are required to file financial statements with the Securities and Exchange Commission (SEC) and carry an “OB” suffix. The OTCBB is operated by NASDAQ and is divided into the OTCQX and OTCQB platforms.

Disadvantages of OTC Stock Trading

However, OTC stock trading also has some disadvantages. One of the main drawbacks is that OTC stocks are not subject to the same regulatory oversight as stocks that are traded on formal exchanges. This means that there may be less information available about the companies and their financial health, and investors may have a harder time evaluating the risks and potential returns of OTC stocks. Additionally, because OTC stocks are not traded on a centralized exchange, they may be more susceptible to price manipulation and other forms of fraud. This can make it difficult for investors to accurately assess the value of an OTC stock and can increase the overall risks of investing in these stocks.

Pink sheet stocks are considered especially risky, as they are often penny stocks that trade infrequently and may be difficult to accurately price. Additionally, some pink sheet stocks have been found to be fraudulent shell companies or companies on the verge of insolvency. Investors in OTC stocks should carefully research the companies and their financial health before making any investment decisions.

Conclusion

In general, OTC stock trading can be a good option for investors who are willing to take on higher levels of risk in order to potentially earn higher returns. However, it is important for investors to carefully research the companies and their financial health before making any investment decisions, and to consult with a financial advisor or other investment professional if they have any doubts or concerns. Investing in a diversified portfolio that includes a mix of different types of stocks, including both OTC and formal exchange-listed stocks, could be one way to limit the risk of trading OTC stocks.

Educate Yourself

The first step in participating in the financial markets is to educate yourself about how the markets work and the different investment options available to you. This can include stocks, bonds, mutual funds, exchange-traded funds (ETFs), and more. It’s important to understand the risks and potential rewards of each type of investment before you decide where to put your money.

It’s not possible to say which type of investment is the best, as the best option will vary depending on your individual financial goals and risk tolerance. For some people, stocks may be the best option, while for others, safer investments like bonds may be a better fit. It’s important to do your own research and consult with a financial advisor before making any investment decisions.

There are many resources available to help you educate yourself about the financial markets and different investment options. Here are a few ideas:

• Read books or articles about investing. There are many good books out there that can provide a broad overview of the financial markets and different types of investments.
• Take a course or attend a workshop. RagingBull offers some complementary courses. Check out Ben Sturgill’s course on what to expect as a new trader in our member dashboard. Don’t have an account? Sign up for $0 here.
• Talk to a financial advisor. A financial advisor can provide personalized advice and guidance based on your individual financial situation and goals.
• Do your own research. Use online resources, such as the websites of regulatory organizations like the Securities and Exchange Commission (SEC), to learn more about the financial markets and different investment options.

Overall, the key is to educate yourself as much as possible so that you can make informed decisions about your money.

Find a Good Instructor

It can be helpful to have a good instructor when you’re taking a course or attending a workshop on investing. A good instructor can provide valuable insights and help you understand complex concepts in a way that is easy to understand. In addition, a good instructor can answer your questions and provide guidance on how to apply what you’ve learned in the real world.

That being said, it’s also important to remember that everyone has their own learning style and what works for one person may not work for another. So while it can be helpful to find a good instructor, ultimately the most important thing is that you find a learning approach that works for you. So, it is up to you to decide whether it is important to find a good instructor for your course.

It’s generally agreed that the best instructors are those who have a combination of practical experience and teaching skills. Practical experience can provide instructors with real-world examples and insights that can make the material more relevant and interesting for students. At the same time, knowing how to teach effectively is also important. This can include being able to clearly communicate complex concepts, engaging students in the material, and providing personalized feedback and support.

Ultimately, the best instructors are those who are able to effectively combine their practical experience with their teaching skills to provide a high-quality learning experience for their students.

That is a part of what makes Jason Bond a great instructor. He is a former schoolteacher with a master’s degree in education, and has years of real world experience trading stocks. Check out Jason’s course on small account strategies in our member dashboard. Don’t have an account? Sign up for $0 here.

That being said, it’s also important to remember that everyone has their own learning style and what works for one person may not work for another. So while it can be helpful to find a good instructor, ultimately the most important thing is that you find a learning approach that works for you.Our goal here is to help you find the tools and information that you need to grow as a trader.