In this post, I will go over the great OTC breakout setup on HPIL that I missed and how I would have played it. Also, I will give you some key points and lessons learned from this trade that will definitely help me going forward. I have a HPIL chart analysis picture in the end, but I suggest you open the chart yourself so you can follow me as I talk through the price action. I hope you like it and maybe it will help someone.

HPIL was a recent runner that was having sort of a cup & handle formation on the daily, so when on 06/22, it had a nice 50% morning spike, I put it on my watchlist as a potential breakout. On the daily chart, it had a clear resistance level at $0.0044 from 5/26 with decent volume, and not coincidentally, it topped at $0.0043 after its morning spike. After it set a top there, it came back to $0.0037 and started to consolidate at $0.004. My plan for it was an entry on perk off consolidation above $0.004 with the goal of it breaking HOD at $0.0043 and multi-week resistance at $0.0044. At that time, I was watching it very carefully for the move; however, I knew that I had to leave my house in less than an hour, so if it were to breakout, I would have probably not taken it, so I stopped paying much attention to it. Moreover, after that basing action, it broke to the downside and went under VWAP, so I thought the stock was done. Then by the time, it grinded back over VWAP, I wasn’t at home. When I came home near the close, I was happily surprised because I had the correct plan even though I completely missed it. 

So, if I was at home and I saw it broke under VWAP, I would have still kept it in my watchlist and casually looked at it sometimes. When I saw that it w came back above VWAP and started to base near the previous consolidation area, I would have watched it very carefully for a trigger entry. In addition, looking at the general picture, it held half of the spike that it had in the morning and held above it. I’ve recently learned that it’s a very good thing for the stock to hold its gains.

Furthermore, there are two very important rules for these kinds of plays:

1. There must be a morning trigger or end of the day (EOD) trigger

• Morning is 9:30 - 11:00 am
• EOD is after 1 pm

2. There must be some consolidation/basing action for a trigger

• It’s not a random basing; it should be a key point on the chart
• Ideally, the trigger is below the HOD
• The trigger should happen after at least 15 minutes of consolidation; the more the better

Therefore, based on this rule, I would not have entered at 11:43, where you can see it had a perk off consolidation because the trigger didn't fit the correct timeframes and it was too quick; it was 12 minutes. So, the BEST entry on HPIL was after 14:01 when it had those perks above $0.0044. I don’t know what the Level 2 was at that time, so I am not sure which minute was the actual perk, but starting from there, it started to perk above consolidation held for more than an hour. In addition, it had a news catalyst, so all the indicators were there for this perfect entry at about $0.0041. The risk here is a little tricky because looking at the chart; you may say $0.0038 is a solid risk level, but then with an entry at $0.0041 or above, the risk would be more than 7%, so, therefore, I think I would have used tighter risk at $0.0039 in this case. 

As you can see, after about 5 minutes of struggling, it finally had that nice spike and went to $0.0046 before dipping to $0.0043 and breaking more to $0.0049. So there are two ways I could have potentially played it with my entry at $0.0041.

1. The first and the most likely scenario is that I would have just sold everything at $0.0046, locking in my 10%. I don’t scale in and out of my trades right now because I simply can’t afford it; in addition, since HPIL is quite low priced, I would have already paid a decent amount in commissions to just buy and sell. In addition, my trading wasn't great lately, so most likely, I would have just locked in my gains there at that first spike as a confidence booster.
2. The second and the less likely scenario, but still possible, would be for me to hold through that dip. If you were following some of my recent breakout trades, you would know that I am able to hold through the dips because I focus on the big picture and stick to my risk unless something nasty happens. So, I would have waited for a HOD break with the idea of going further. However, as you can see on the chart, it didn’t go much higher after the rebreakout. I’ve recently come up with a new idea for OTC breakouts, and it states the following: when a stock spikes, sets a top, then drops and rebreaks that high, it should be able to spike more; otherwise, it tells you that it’s exhausted and will come back soon. Therefore, as you can see, HPIL made a NHOD and spiked just a few pints, and stuffed there. Knowing me and knowing that I didn’t have this idea back then, I would have still been holding; however, when I felt the weakness and saw the small cracks, I would have started to think about timing my sell and probably sold at $0.0048 or $0.0047 after 15:05 before that drop. 

Overall, this trade gets a grade of A+ since it fit ALL the criteria:

1. Intraday and daily breakout
2. FGD
3. Decent Volume
4. Catalyst 
5. EOD trigger

Chart Analysis:

Finally, I will say that I feel no discorgement or anger about missed HPIL. Sure, maybe I did feel something like that at the moment when I came home and saw it. However, when reflecting over everything, I understand there are going to hundreds if not thousands of these exact kinds of plays, so I don’t see any reason for being upset about missing one. I’ve learned a ton of lessons from it, and overall in the past month, I’ve really honed in on OTC breakout setups, and I’m still in the process of learning them. HUGE thanks go to Garik (GaRIk088) from Twitter, who was and still is super helpful for me. It’s because of him I started to think and view OTC breakouts from an entirely new perspective. I'm very grateful that he’s willing to take his time and help me whenever I have questions. And if you’re reading this man, shat apres axper, and keep it up, I see you are really starting to get there, wish you all the best!

This trade was a great example of pattern recognition, and I'm a true believer that it is a BIG step towards getting successful in trading. You can trade random patterns, slap little moves, and it will get to nowhere, but if you can see and recognize specific patterns, then you are golden. Don't be upset or angry about missing them because if I took every missed trade personally and cried about every one of them, I would have quit trading a long time before. Everyone misses plays, even super successful traders. The most important thing is knowledge because when you understand specific patterns and experience them enough times, the ability to execute them properly will come to you naturally.

Very proud of myself for making this progress in learning about OTC breakouts, and I will continue learning this relatively new concept for me. Looking forward to many more plays to mainly learn from and maybe capitalize on some.

Thank you everyone for reading and wish you the best of luck!

Cheers