Just some background...

I've been in and out of the markets for about 15 years or so. I've traded FOREX (even started and moderated a FOREX forum at one point) , futures, futures options, stocks, stock options, covered calls, long options, credit and debit spreads, and even the "don't ever do this" method of selling options uncovered in the futures markets. Which by the way, is a very high win % strategy but just as high % risk and the time it can take to realize even a 2% or 3% return on account can be a month or so. I simply don't have the patience for that. Overall break even success aside from FOREX. FOREX is one of the most liquid markets to trade. Pretty much instantaneous fills on both sides of the trade. I made some money in those markets mostly with the EURUSD but when you have certain brokers that specifically run your stops on purpose to specifically take your money you start to lose faith in the so-called transparency and abandon it altogether.

I came across Tim's strategy/method this past December and was hooked. I new about penny stocks and what they were and heard the same warnings about them being junk but never really thought about 'trading' them or knew about the volatility that can be associated with them; a $1.00, $2.00, or $3.00 stock can easily move $0.50 or more in one day! That simply equals opportunity.

I gleaned most of the info from YouTube and the PennyStalking Silver info and I already knew all about technical analysis, order types, margin, etc. so I thought I was a little ahead of the game from some of the new traders that have to ask what the difference between a market and  a limit order is. I don't criticize those people at all. We all have to start somewhere. When I happen to be logged into the chat room I try to help out some of those 'noobs' when I can. Sometimes I forget to make it a private message and the chat room police remind me, several times so far, to use private messages for non ticker related subjects. I can guarantee that I'll get another citation soon.

Back to the subject at hand...

I Googled stock trading systems and quickly received (still think this is amazing) almost 16,000,000 results. That's a lot of trading systems! Some are for sale for thousands of dollars, some are totally free. A lot of these systems use custom technical indicators or common ones such as the RSI, MACD, moving averages, etc., and it a matter of if the RSI is > 50 and the MACD is doing this and the 50 EMA is less than the 67 SMA then you blah blah blah blah blah....all of them. Some of these will have several indicators on the actual chart and a few indicator windows above and below the main chart and your supposed to learn all of those psychedillic (can't spell that correctly) trading setups that for the most part...only make you look smart if someone happens to ask "what the hell is that?" on your computer. All those indicators look cool, some I've seen even have an animated flame height, but they rarely make you money. The only people that really make money off of these are the people that are selling them and not actually trading them or the person that created the system is really the only one that understands how to trade it correctly.

What turned me on about Tim's methods is not only the volatility associated with penny stocks but the absence of technical indicators he uses to trade them. Aside from support/resistance levels, a few trend lines, and round #'s that everyone in any system should use, that's it. Volume is critical and I've made a few posts about that previously and I 'see' that Tim pays attention to is also. He's been trading what he teaches for several years so he knows what to look for better than any of us so if you just started doing this, give yourself that much time to see how he sees things and get to his success level. Some pick it up faster than others, some never get it at all. Getting into the mindset of a successful trader can be a daunting task and it takes a lot of work to get to at least break even and that much more to be profitable.

Sometimes when Tim posts an alert and I'll look at the chart knowing that the entry or exit could have been a few minutes or cents previously I'll say to myself, "Why the hell is he buying here?!" Or, the trend of an overextended stock will still be up and he enters a short position and I ask myself the same question. However, this all comes back to Tim doing this for the past several years and has learned what to look for a lot better than any of us in addition to if you are wrong or your timing is off somewhat then CUT YOUR LOSSES SHORT. Look at the time of day when Tim sends out a watchlist or video review; 11:30pm, 1:03am,...etc.,. Most of us are sleeping and Tim is working. Part of being successful at this is making it part of your life or second job. It's that simple. If you want to learn someones method you must put the time in.

I've been doing a lot of studying price action and volume lately, opened up a second account with ETRADE (have account with TOS also) and learning my way around that platform. Like the ETRADE Pro level 2 quotes and possibility of more tickers to short but hate their charts. Like the TOS charts and alert capabilities but hate their Level 2 and lack of shares to borrow.  I'm still under the PDT rule and even had a few open trades this week but I've been watching the live price action more than I have been trading....studying.

Soooooo....looking at last week's alerts for CELH that was on probably nobody's radar aside from Tim's which comes from hours upon hours of data mining and patience for things to fall into place I'm going to 'attempt' to get inside the mindset of a trader. I might be totally off base here but it's the same as learning to ride without training wheels.

The far left of the chart is the open on Wednesday 4/29. I cut the time axis off on the bottom by mistake. This is price action from Wednesday 4/29 when the alerts came out. Tim has said it on more than one occasion, his alerts are to learn from not trade from. Sometimes you can get in a few cents away from the alert time/price either way but that's up to the individual trader. I mostly refer to the chart when one of his alerts come out to 'see' what he is doing and only look for possible re-entries in the same direction per the given strength of the trend. OK, Tim's found CELH sometime before 4/29 (or maybe even the same day)  and waits for the news to make it's way into the chart to find a long entry. On 4/29 at 1:49 (red vertical line) is when the alert comes out and the price, which it usually does, has already moved several cents away from his entry. I have seen some people in the chat room ask why the alerts are sent a few minutes after the fact and I would simply answer them as...You try and monitor a chart, put several thousand dollars (or more) into a trade, enter the trade and watch it for a minute or two if you have to exit quick, then type an alert and send it...Try to do that withing a few seconds and you'll stop asking why. I'm betting it's not too easy. Back to the chart...

The first alert at 1:49 (Buy @ 2.32) comes out. Again, trying to get into Tim's brain here....Why did he enter here?  Take a look at the volume spike at #1. This is the largest volume spike of the day (I've mentioned volume spikes -slam bars- previously in the blog and probable trend changes when they occur) after the news release (I think) so this might have been the ingredient to click the mouse. The bounce was an almost round number off of 2.05 so that never hurts as another 'reason' to enter either. Price ticks up to 2.80 and knocks on that door twice. Look at #2 in the volume graph. Another high red slam bar followed by more selling without much buying volume. At point #3 another high volume spike and then the alert at 3:25 comes out to sell some (not all) of the initial position. I am thinking that Tm might have exited the entire position if 2.50 would have been broken to the downside or would have at least been ready to if there was no bounce from 2.50 which did happen but not in a real high volume way. Towards the end of the close of the day, price firms up and the 3:49 alert (chart text says 2:49-incorrect) and he adds to his position size like we have seen many times before - strength into the close per good earnings/news to look for a spike after hours or open on next day.

 

The Thursday open is weak, selling at the open (#4) and the alert comes out (first blue arrow) to exit some hares. Some thin buying shows up but price fails to break the morning high (Run Luke, Run!) and the remaining shares are sold (9:07) alert.

I'm not sure how close this analysis is to how or what Tim was actually thinking per the chart but I think it's just as important to learn how someone thinks per a potential trade. Even if it's a different ticker that is not even on the watchlist the pattern or logic should still be similar to what is being taught.

It doesn't matter if the trade was a win, loss, or wash. What matters is trying to see what a successful trader might be thinking or how they are thinking. And, it doesn't happen overnight.

 

There is no need to rush learning how to trade. If you force trades or think you have to make a trade just because you have an account open you're throwing your money away. The markets aren't going anywhere. Take the time to learn.

Thanks for adding a spell checker to the blog postings because I really didn't study hard enough in kolludge!!!

Cheers...off to look for blue crab and redfish on the flats.