A Tale of Two Moving Targets: Key Points From My Trading Challenge Webinar
- This week’s webinar featured millionaire and Trading Challenge chat moderator Jack Schwarze. Get Jack’s take on all five top trading lessons…
- Wondering how to ‘set your sights’ on trading success? See lesson 1 (HINT: Trading is like TWO moving targets.)
- ONE all-too-common habit eats into profits. How Jack ditches it and why transparency is the way out. See lesson 4.
In 20+ Years of Trading I’ve NEVER Done This … Until Now
5 Top Penny Stock Trading Lessons
Every week I give a Trading Challenge webinar. Some webinars are Q&A and some are live-trading.
Webinars are a GREAT way to grow your knowledge account. Over time, the lessons stack up. So come along, ask questions, and work to get better at trading penny stocks under $1.
This week I surprised Jack S. (aka Jack #2) in honor of his passing $1 million in trading profits in March. It also happened to be his birthday. Here are five trading lessons from the webinar…
Lesson 1: In Trading There Are Two Moving Targets
I asked Jack why so many students — even top students — expect profiting to be linear. He said, “People change, patterns change, behaviors have to change with it. It’s never just gonna be straight up.”
Jack’s answer is a good reminder…
In trading there are two moving targets. The market’s always moving and what you’re best at is always moving. Think of it like the movie “Top Gun.” Imagine two fighter jets…
If you’re flying a fighter jet, you have your target — the bullseye. But you’re flying, too. So you’re flying your jet, and your opponent is flying their jet, and you have to anticipate where they’re going.
It doesn’t matter if you know where they’re going. You still have to fly your own jet. And I think trading is similar.
Lesson 2: Get Ready for the Next Hot Market Now
Trading isn’t a skill that once you have it, you’re set for life. You have to constantly adapt to the market. Sometimes your patterns will be there, other times they won’t.
That’s why you don’t have to bet the same dollar amount in every trade. Jack’s trading around 1/10th of the position size he was earlier this year. If you’re doing well, size up. If you’re not, size down.
Jack Kellogg went so hard for a year, he had to take two months off. In February, I couldn’t count the trades I wanted to take on my two hands. If you missed the opportunities and want them now — too bad. The market doesn’t care.
Maximize trades when the market’s hot. And when it’s slow, adapt! Study more. Use the slow times to prepare for the next hot market.
Lesson 3: These Crazy Short Squeezes Aren’t Normal
Stock offerings aren’t new. But the way stocks are holding up and squeezing after bad news is. And it’s not normal.
If a stock’s trading at $5 and the company announces it sold shares to an institutional investor for $2 per share — the stock should go down to $2.
But these days, we’re not seeing that happen. Instead of tanking on bad news, stocks are squeezing higher. Here’s Jack’s explanation:
“There are so many shorts that are piling on — they’re all on top of each other. When the stock goes down, they all have to cover and they’re fighting each other on the ask. Then you get moves like Biofrontera Inc. (NASDAQ: BFRI).”
The biggest reason I haven’t shorted in two years is that it’s an overcrowded strategy. SO many shorts bet on bad news and anticipate it — it’s already priced in.
Normally, after an offering announcement the stock goes down and stays down. But this is the market we’re in. Again, adapt.
Lesson 4: How to Avoid Overtrading
Overtrading can get you into big trouble. One student said he had the discipline to cut losses quickly, but not enough to not trade the stock again. That can lead to even bigger losses.
Sometimes I try twice on a dip buy. Fool me twice, shame on me … I don’t fall for number three. Here’s what Jack says about overtrading…
“I even have trouble with that sometimes. The easiest thing to do is to have the discipline to shut your computer down and walk away. The market’s not going anywhere. It will be there when you get back.”
I’ve made over $1 million each of the past two years. My biggest loss each year is around $6,000. I’m controlled because I don’t want to look like an idiot — it makes me more conservative.
So share all your trades on Profit.ly. I’ve cut down on losses because I’m completely transparent. Share all your trades openly. Get in with the community. You’ll start wanting to not look like an idiot when you post everything.
That accountability can help you control overtrading. Then, if you do have lots of small losses, walk away. Jack drives his car or works out.
Lesson 5: Float vs. Volume Traded & Price Action Characteristics
I don’t trust a lot of the float numbers that I see on OTC stocks.
It’s like short-selling data. Some people say, “The short interest is this…”
I’ve seen so many BS promoters say their 1- or 2-cent stock is heavily shorted. It’s a joke.
I keep low float plays in mind. But sometimes they trade much slower.
Sometimes a high float play trades like a low float play. Sometimes a stock spikes up quickly, then fails. Then it does it again.
So it’s not just about the float or the chart. It’s the price action characteristic. These stocks have price action characteristics. They move in a certain way. Start to use that knowledge for yourself.
Where to Get More Top Penny Stock Trading Lessons
Those five lessons barely scratched the surface. Here are five more lessons to look for when you watch the webinar. If you missed it live, watch the replay. If you’re not a Trading Challenge member yet, apply here.
5 More Lessons From My Challenge Webinar
Here’s what you missed and what you’ll learn when you watch the replay…
- REVEALED: How the best shorts can turn into the best long trades.
- I explain the high school drama that made Trans Global Group, Inc. (OTCPK: TGGI) a perfect #5 from my 7-step framework — and a perfect trade for me.
- Two questions Jack asks himself every day as he reviews his trades. (HINT: Jack wants other traders to have a hard time so he can find easier plays.)
- How to spot signs of topping using the SPY two-year chart. (It’s technical analysis 101. Do NOT miss this if you’re new to trading.)
- Why it’s key to study short selling, even if you never plan to short sell. (The weird combination of supply/demand and psychology that EVERY trader should know.)
The weekly Trading Challenge webinars have SO MUCH information. (There were at least 17 more important lessons not mentioned here.) But you have to show up, pay attention, and bring solid questions.
And if you’re not a student, now’s the time to take the…
Trading Challenge
Weekly webinars separate the Trading Challenge from our stand-alone products and newsletters. And it’s not just my webinars and lessons.
Every week there are two to four live webinars from mentors like Tim Lento, Mark Croock, and Matt Monaco.
Ready to take your trading to the next level? Want access to our weekly live webinars and hundreds of archived webinars?
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