+$10,355.41 in 32 Minutes of Trading a Penny Stock

this morning I made $1,355 41 in 32 minutes of day trading a low priced biotech stock that had breaking news no my results are not typical but in this episode I'm going to break down for you the list of what I look for in these stocks and we're going to start with number one price let's jump onto the screen share so I can show you the chart of the stock I traded this morning all right we'll start by getting oriented here you can see this is my p&l in the top Corner that's how I finished the morning morning so I'm done trading not going to take any more trades and this is my trading layout I'll go through each of these screens in a little bit more detail but we're going to start by just looking at the price of this stock so the stock that I trade today yesterday closed at about 85 cents a share and if you look at yesterday's chart there was nothing going on I mean this thing was sideways it had no volume in fact today it has 37 million shares of volume in total yesterday it probably had less than 500,000 shares so how does a stock go from having 500,000 shares one day to 37 million the next it's breaking news which we'll talk about in a moment but the thing that's important here first of all is that this stock fit within my price range of being something that I would be interested in trading so this is the first uh data point that I look at the price of the stock and in this case when the stock first came to my attention it was at $145 slightly below my $2 minimum threshold now I say that I like to trade low price stocks but I usually don't like trading literal penny stocks I don't like trading stocks below a dollar and even stocks below $2 I find that that's not where I make the most money now I will occasionally trade them this is a rule of thumb it's not a hard set strict rule so under $2 is okay but I really prefer between 2 and 20 and in fact my metrics tell me that I make the most money on stocks between 5 and 10 that's really my sweet spot but just cuz that's my sweet spot doesn't mean I won't find some success just a little a little bit on the outskirts of that range so in any case today the price of the stock was $145 when it first hit my scanner that's the first criteria that I look for I'll show you the scanner real quick just so you get a sense of what that looks like so this morning I sat down at about 7:45 and I was ready to trade I was like all right you know game time it's sort of early in the morning and I sit down early enough because stocks usually come out with breaking news around the top and the bottom of the hour I have a window during the day when I make the most money it's between 8:00 a.m. and 10: a.m. before 8:00 a.m. I do make some money but not as much most retail Brokers like the commission free Brokers don't even allow people to start day trading before 700 a.m. so 700 a.m. anything earlier than that like not really worth it so at the earliest maybe you could show up at 6:45 if you really wanted to be like an early bird and that'd be fine you may see stocks with breaking news from earlier right at 7:00 a.m. start to get volume as retail Traders are able to start trading them so then 7:00 a.m. 7:30 a lot of Times News comes out at the top and the bottom of the hour so 7 7:30 8 839 and as the case was today at 8:30 abvc this biotech company has news that comes out and this is the headline entering a license agreement um to license rights to this other company with the indication of MDD and ADHD to this biofarma at the value valtion of $667 million so I do not spend my time studying the fundamentals of these companies but when I see a stock hitting my scanner it hit at $145 and then I see that it has news what I recognize is that the market is responding favorably to that news and that's really all that I need to know because I'm a technical Trader I'm not an investor I'm a Trader I'm looking to trade the price action so we have news we've got volatility we've got action it's time to look for a trade all right so the stock hits $145 now let's look at the Whiteboard here our next um requirement is that I'd like to see the relative volume is at least five times this is a calculation of the average volume today relative to what's normal so what is normal for this stock over the last 14 days versus what we have today and in the case of abvc we hit at a relative volume on The Daily of 172 so our actual was 172 times minimum was five times we hit 172 all right so that one is A+ that's awesome that's really really good I need number three the stock to be up a minimum of 10% already on the day we look at the stock and it was already up 70% this is the percentage change on the day right here so I I can actually pop this out to make it a little bit easier to read so uh so we'll scroll back so abvc when it first hits it's at um A45 that's the price $145 and we've got relative volume of 172 and we have 70% up already on the day so this thing was moving number three do we have news I want to see that the stock has news the answer in this case was yes number uh number four number five float float of under 20 million shares this one had a float of 2.41 million shares as you can see right here so when it first hits the scanner this was at $145 at about 831 832 you can see how quickly the stock moved up the way this scanner works is that it's searching the market in real time for stocks that are moving so this stock is squeezing up it's hitting first a147 and then as it continues moving higher it hits a scanner again and again and again and again each time the data is updating as you can see see the price is going up the volume is increasing price is going higher volume's going higher the the percentage change on the day is going higher the relative volume is increasing a little bit so now it's moving up and now right here it jacks up big time so price volume increases price goes up relative volume is now skyrocketing percentage change on the day is going up even higher and from there it just keeps going all right so this is laying kind of the groundwork for this was the right type of stock to trade for my strategy I am a day trader and I'm a momentum day trader specifically so what I'm focusing on is not trying to predict the next stock that's going to make a big move that's I found almost impossible unless you're a you know a senator a congressman or you have friends who are CEOs of big big companies you don't know what's what's coming we're just guessing you know you and I as retail Traders we're never going to have an edge against the people that are on Wall Street that actually you know know what's going on behind the scenes so trying to be an investor that's that's not realistic in my opinion unless you're just doing a dividend investing you're going to buy shares of Pepsi and hold it for 10 years but if you're actually going to try to pick what's going to move in the next like couple months that's very difficult so instead I focus on being a Trader my goal is to generate relatively consistent profit pretty much every single day so in order for me to do that I need to find stocks that are volatile that are moving that have some type of catalyst and today abvc as it hit the scanners clearly met that criteria so now the next question is all right where do I buy it where do I sell it h how do I capitalize on this opportunity clearly we have a stock that's volatile so I'm going to zoom in here on my 10c chart so this is a 10-second chart this is a very fast time frame and we're going to look at the price action of this stock going all the way back here um from when it first started squeezing up all right so it first pops up right here as you can see at 8:30 and this is your classic algo Spike it's a highfrequency trading algorithm that is designed to execute buy orders as soon as they see the news wire the pr hit that this stock has a news Catalyst these are algorithms that are very sophisticated they execute orders instantaneously and we're never going to be ahead of them however you know these can be kind of like a big ship going through the harbor they send out a wake so we recognize okay this stock is triggering it's firing it's moving up now the all the little fish out there you know you and me we see that there's an opportunity and so as this starts to pull back now we get more volume as more Traders recognize opportunity to get in it pulls back a little bit you get a little profit taking and you've got another wave up more Traders are coming in and notice the volume is generally increasing that's exactly what we want to see so it pulls back a little bit here and goes up to $180 $1.90 and this right here see how it hit $2 right there was $2 I'll zoom in that was $2 and then it pulls back right here and that was where I took my first trade so I bought this dip right here and in this green candle we got that first break of $2 a share that is called a micro pullback so with a micro pullback what we're looking for and I'll just draw this a little bit cleaner so the stock squeezes up in this first candle then it pulls back just for a moment it doesn't even give a proper pullback it pulls back just for a moment and then what happens the next round of buyers are already coming in so when a stock is moving quickly we get these micro pullbacks they don't even give a proper pullback because Traders are so eager to get a piece of the action now right now we're in a cycle where these penny stocks especially the biotech pharmaceutical stocks are super hot they're getting a lot of attention so it pulls back for a second and there's Traders ready to buy up that dip for the next leg higher so you could think of this as a scalp trading strategy where you're buying if we look at this right here you're buying based on a dip so there's two ways to scalp one is to buy dips so you buy this little dip right here as this dips down you buy down here with a stop really just like five or six cents below your entry so it's a very tight stop and then as soon as it pops back up you're looking for it to break through the new high of day and then right up into here you can do one of two things you could take profit and pay yourself which makes it an official scalp trade because it's very quick or you can do something a little bit more aggressive you can add to the position and that's exactly what I did I was like I'm going to add to this let's see this thing we're at the very beginning of the move this is the time to add now I don't want to add and be really aggressive when the stock you know is let's say all the way uh all the way up here that's not the time to be as aggressive the time to be aggressive is down at the beginning of the move so it's the beginning of the move right in here and I go ahead and I add we got a pop as you can see right here up to about I was about 225 it pulls back and then right in here look at how well this dip got bought up the dip got bought up and it sends it right back up to the new high up towards 240 it pulls back and happens that dip gets bought up too and this sends it up to$ 250 all the way up to $3 a share and right in that candle I'm locking up 5 six7 $8,000 I'm already up almost $10,000 on the day so if the first scalp trading strategy on this is to buy a dip the second is to take a breakout so a breakout trade is when rather than buying while it's pulling back while perhaps you're even seeing red on the tape you're waiting first to see those green orders going through the time in sales so you want to see green on the tape what is green on the tape look like I'll show you right here real quickly um so if we pull up um this stock just for example so abvc from today right now we're seeing some green on the tape right there that's green on the tape perfect time all right so that's what we want to see that when you see that and you see that when the stock is just below a breakout point so say let's just say for example let's get dialed in here so let's say right in here this would have been a dip trade if you bought right here if you bought right here that is a breakout trade because you're buying right below the high of day and looking for that squeeze through the high and naturally because you're in a little higher you've got to set I mean you don't want to set your stop way down here that's too far away so you end up setting a little bit of a tighter stop and you got to take profit fairly quickly and that's fine scalp trading is there's nothing wrong with scalp trading you just have to be quick and and I suppose most importantly if you're going to try to scalp trade these you have to be able to cut your losses very quickly because most scalp Traders have relatively small winners and so a couple of big losers can throw off the profit loss ratio but there's a lot of different ways to trade this scalp trading is just one way I saw a number of traders who said that they got in around $2 and they said I'm going to hold this and see if it goes to 250 or three now that's certainly not a scalp trade that's when you're you're doing a bit of a a momentum Trend trade you're getting in and you're saying I'm going to hold this and mentally use a trailing stop so when I first get in at two I'm setting my stop at 190 and then when it goes up to 220 I'm setting my new stop to 199 it goes up to 230 I'm setting my stop to 2115 mental stop right it doesn't have to be a live stop order it could be a mental stop when it goes up to 280 here maybe this is where you take a little profit off the table and move the stop on the rest of it to 250 and that's fine and you might say gosh not only is it fine that looks brilliant why don't you always do that and the only reason I would say you don't always do that is because of candles like this guy right here because those can wipe out all of that profit so quickly that if you don't take profit when you have it gone they can disappear very fast so what ended up happening on this stock is we hit a high of day we had this kind of dramatic sell off it bounces all the way back up sells off again comes back up again sells off again so now excuse me now we're starting to get some a bit of choppiness and we're starting to consolidate I at that time Drew this ascending support trend line connecting the low of about that dot there that low there with something like right around here I also Drew this desending resistance line line connecting these two dots and I drew a line at the high of day and now what I noticed was the stock seemed to be holding the support level until right here when it broke it breaks that level and then it tries to get back up above it and it can't it sells off tries again and it can it sells off so it felt like this blue line was being pretty well respected tries again right here but it can't hold it and immediately rejects back below so look at these lines that I drew I drew these lines you know right here and look at how well they help me understand the price action moving forward so now I'm like uh it's a little bit too risky we're below it but right here we bust through that level and so my last trade was I let it break through this level I let it pull back and this is a micro pullback right there for an entry at about uh 26 sorry 369 and that gave us a move here up uh only to about 385 uh but nonetheless it was still a small trade a small winner we got a little bit of a pullback back down to 360 came back up one more time but it wasn't able to break over four and continue and at that point we sort of had the formation of the head on The Head and Shoulder we got back below this blue line we couldn't get back above it and that's when I kind of thought all right I think we're going to be selling off here bare flag there at the open we sell off more and that's the other arm on the head and shoulders patterned so the fact on this is the time to trade it was the front side of the move which you know really was was all in here and sometimes it could be hard to know if you know the move is over right here and so I just waited for it to prove itself and then this was where I took trades I wasn't trading it in this area here even though I could have I felt that there was too much upside resistance and so I said no I'm going to wait for this to really prove itself if it's it's strong you know it could go all the way up to five or higher however there was something that was holding this one back and that was on the daily chart so on the daily chart we had this uh magenta line as you can see here which is our 200 exponential moving average that is a very strong psychological level of resistance and that was at about 479 so given that it was below that level and I knew it would have resistance when it came up to it I I I did think that we had had Max upside potential most likely of about 479 so once we got up to about 380 390 I knew we were getting a little close to that level in terms of risk management on this trade on my first trade at the beginning of the move I took my first trade got my profit and then I started get increasing share size so if you looked at my aggressiveness it would look like this increasing and then decreasing uh like that so I was the most aggressive let's actually I was the most aggressive in this area here and then I was much more conservative on those final trades as it got higher because I didn't want to give back the profit that I had already made it's important to be able to um be on the one hand aggressive on the front side of the move but also play a little defense and make sure you don't give back back too much of your profit so this strategy right here this is the definition of momentum trading now whether or not this stock closes the day at $5 or it closes a day at $2 it doesn't really matter at the end of the day because active Traders found a window we had a window of opportunity and that was really in the first 30 minutes the first 32 minutes to be exact and that was the time to be the most aggressive and now hands are off the keyboard until either another stock has breaking news in the middle of the day or more likely tomorrow morning I come back and do the same thing again you can see the these are my metrics trading this strategy just under $12.5 million in gross profit if we look at the overview of you even just the last few weeks you can see consistently green focusing on trading at the open being aggressive and not overstaying my welcome the idea of this strategy is to get in get green and get out consistency is where it's at because for me my goal is to try to generate consistent profit as a Trader I'm not trying to swing for home runs and hit an occasional big winner I want to lock up a little bit of profit every single day and that can start with as little as $20 every day and then it goes to 30 to 40 to 50 to 100 to 200 now you're making 50,000 a year then to 400 you're making 100,000 a year and it goes up from there now if you want to learn a little bit more about trading check out this episode I recently uploaded or check out this one that YouTube thinks you guys just might love and I'll see you for the next episode right here