Updated: Aug 17 2019 (News section with the most statistically profitable catalysts)

 

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I have decided to to focus my trades on a single setup. While I may break this rule on the occasion for perfect Morning Panics and Supernova Halters (which I will cover in an upcoming blog post), the Midday Perk has been my most profitable penny stock setup.

 

As much as I love trading, my equity curve has mostly ended up flat for very quick morning plays and other setups. I also overtrade too often to focus on other important life, business and career opportunities.

 

Thats not to say there ISNT an edge trading setups like: low float breakouts, higher priced earnings winners or IPOs, however I havent figured those out. I would rather focus in and go big on the 20% of my trades that provide 80% of my profits, thus trimming the fat and stop spinning my wheels. This will provide the best opportunity cost for my business and will still achieve significant alpha to meet my target income.

 

“The rules of money are very clear. Do not lose money. Never lose money. Stop putting money in things that have a chance of losing money.”

-Grant Cardone

 

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So how do you trade this ELITE setup that will turbocharge your account?

 

Its far better to be more SELECTIVE and go ALL IN, choosing ONLY the plays that have the ALL the Right Characteristics rather than playing similar setups that only have a few.

 

 

KEY CHARACTERISTICS (Mandatory)

 

OTC Stock OR Nasdaq with Blue Chip Contract (ie. Amazon) with Float under 200M. The lower the better.

 

Clear First Big Green Day

 

Multimonth B/O, with a Multiweek B/O being less ideal.

Multiday B/O on a #5 Bounce can also work ONLY IF theres GREAT NEWS.

 

High trading Volume on the day, greater or approaching greater than any day of the previous year.

 

Initial morning spike of over 20% to 30%.

This spike is followed by a pullback, usually into late morning or early afternoon (11 to 1pm) and usually 15% to 20% from its morning peak.

 

Holding VWAP or forming a higher low from the pullback in the early afternoon.

 

 

NEWS

 

Ideally there is GREAT news. However, this isnt necessary if all the other criteria are met very well AND the stock has been recently HYPED or popular due to earlier news.

 

The ideal types of news are as follows:

 

Contract: the company announces an agreement that will greatly help its product sales, preferably with a large company or government organization (Walmart, Amazon, NSA, DoDetc.)

 

Expansion: the company announces it has bought land, real estate or similar assets that will increase its business

 

Acquisition: the company announces it has acquired a smaller business that increases its value

 

There are other NEWS catalysts of course, so please use your own judgement and use these categories only as a ROUGH guide.

 

 

HOW TO TRADE

 

Now that you have have zoned in on this SUPERFIRE Midday Perk setup. How should you safely approach this play?

 

At this point its early afternoon, around 12:30pm and the stock has already spiked and pulled back.

 

STOP LOSS

Note what price level the stock has pulled-back to after its morning spike and use that as Support. For low priced plays (under $1), you may want to extend Support below that 3-5% as these are more volatile and can temporarily dip under that level. This Support level will be your stop loss level.

 

POSITION SIZE

Take the Daily Volume and multiply by 1% to find your Max Position Size. Any larger size might be tough to trade quickly.

 

If you are experienced enough (minimum 1 year of trading penny stocks) you may want to use your ENTIRE account if thats below the Max Position Size. Otherwise use the Max Position Size.

 

If youre inexperienced, ONLY use a percentage of your entire account, 20-30% if thats below the Max Position Size. Otherwise use the Max Position Size. Your main job is to PRESERVE capital while youre learning so you dont BLOW UP your account. It can occur quicker than you think, I promise! So stay safe :)

 

BUY

Use half of your determined position size for your first entry. This will be on the following higher low dip.

You want to minimize risk in the early afternoon so if it does crack your stop loss, you dont lose too much capital.

 

Now wait and watch the chart play out…

 

If it has broken your stop loss level, you should exit IMMEDIATELY. No rationalization!

If its almost at its b/o level and its looking like its going to b/o through morning highs early (before 2pm), set a buy stop limit order at the breakout level with the rest of your determined position size.

If its still holding VWAP or forming higher lows and its been about an hour from your first buy, get in with the rest of your determined position size, preferably on another higher low dip.

 

SELL

If it has broken your stop loss level, you should exit IMMEDIATELY. No rationalization!

Now wait for Volume and Price Action to come in. Usually this rally will occur in the last half hour of the trading day so be patient, but it can come earlier as well.

Your target should be around 20% from your Support level. Note that your buys have been above that level so your profit will be less than 20%.

Once this target has been met, sell HALF of your entire position here to lock in profits and move up your stop to break/even or to a higher Support level for the remaining capital.

 

Let the remaining capital RIDE. This will ensure you can profit off all the End of Day hype with small to NO risk!

If it has broken your new stop loss level, you should exit IMMEDIATELY. No rationalization!

You have multiple options now (ordered from more conservative to least):

Sell the remaining capital at 30% above the original Support level

Sell the remaining capital 5-10 minutes before market close in case there is a REALLY big spike

Hold the rest Overnight and sell IMMEDIATELY  at the Open the following morning in case of a gap up.

 

 

EXAMPLES

 

The following are a few Charts with News Headlines so you can recognize similar setups in the future. Disregard the NASDAQ plays, these are far less predictable.

Remember: History doesnt repeat itself, but it RHYMES!

 

https://imgur.com/a/TK5op8C

 

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