Read this if you are a newbie like me, it will save you 2-3 months of fucking around.
After STUDYING Tim, Steve Burns, and Kunal Desai, for several months I have my trade plan.
Tim is fun and helpful but he does not discuss trade sizing or risk management very well in detail.
How I mix studying and trading:
First I use a 10 and 20 day moving average for SPX(S&P 500) on a daily chart. You can tell if the market trend is Green or Red.
Since November the market has been Green. If the market trend is Green and the day is green, I look to long a pennystock. If the market trend is RED and the day is Red, I look to short a penny stock. Otherwise I study. I do not trade everyday.
How I SCAN for stocks:
In my free Think or Swim account I use the scanner set to the following:
Stocks that Open $1 to $4
Volume 750K
+4% mid-morning +9% after hours change
Shares 53 million (adjustable to 8 tickers)
How I narrow 8 tickers down to one pick:
SHORTING a pennystock.
(Red day in red market trend)
Mid morning or end of day entry.
Risk/rew? Shares available? Flat-Sideways-Downtrend? Fading close? 3rd Green? No News? Rank?
Tick 1
Tick 2
.
.
.
Tick 8
End of day. Going LONG on a pennystock.
(Green day of a green market trend)
Risk/rew? History of Morning Spikes? Up-trending close? High tight flag? Could it breakout? Rank?
Tick 1
.
.
Tick 8
HOW I SIZE TRADES for risk management so I never loose more than $100 on a trade.
Looking for a profit of at least .12 cents on 1-2 dollar stock (1200 shares) - stop loss of .08 cents
.24 cents on 2-3 dollar stock (600 shares) - stop loss of .16 cents
.36 cents on 3-4 dollar stock (400 shares) - stop loss of .24 cents
Profit to stop-loss ratio is 1.5-to-1.
How I PAPER TRADE:
I use Interactive Brokers free account. It lets me short many stocks. The Mosaic interface is great.
Logix paper trading sucks because its glitchy.
Think or Swim paper trading sucks because you can't short anything.
Have not tried STT paper trading yet.
You should simulate trades for 2 months before you use real money. Try to start with $27K to get above PDT.
PB
I really like this post dude I'm gonna take notes on this tommorow and try learning this pattern. I really appreciate the detail it's just what I need as a newbie.
Thanks a bunch friend :)
Thank you! This is helpful, and free is always good!
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