Hey there, I hope you had a wonderful past week. This week has been an absolute blast, to say the least. Another week in the books! Welcome to the new Website, it's not perfect, but practice makes progress. If you don't know who I am, please make sure to click on the About tab. Feel free to ask any questions you have. Today, I am going to reveal the game plan with Trading with my very first Monetary account. Along with going over the recent Sector plays in relation to the Coronavirus.
This past week I opened my first Brokerage account. I will be trading with TD Ameritrade, using the Thinkorswim Swim platform. I always get asked, "why did I wait this long?” Understand that I did intend to open a live account numerous times in the past. Those expectations were unfulfilled. Again go and read the blog post. 80 Weeks of growing my knowledge about and all it took me was 10 minutes to open a brokerage account and call myself a Trader. Once more there is no other business in the entire world that offers instant gratification. There is a reason that 90% of individuals don’t find a state of consistency within the Market. To answer the question, it’s my fault. I did not have great money management in place. I was expecting to open a live account with at least $4000 in order to start Trading. Instead, I am starting at $800, the goal is simple. Survival. Currently, I have a full-time job, which pays bi-weekly. I am trading time for Money. Three concepts of money. Get it, Keep it, and Multiply it. Do I want to be working a full-time job? Hell no! I am focused on the bigger picture, focus on the process, and the outcome will come naturally. Every two weeks, I will be putting 75% of my check into my Brokerage account. Just because I add money to my account, does NOT mean I have earned the right to take a larger position size. I must earn that right. Risk management is vital to a small account like mine. In my opinion, one of the most overlooked components in Trading is Position Sizing. Once more what works for me, may not work for you. It’s my Trading Process! As of right now, I have $800 in my account. In my opinion, I need more capital in order to trade in alignment with my Risk Management rules. I will be dabbling with small lots when I see an opportunity that has high odds of reward. As I have revealed in many past blog posts, my personality leans towards the Short side. Of course, those trades, which I traded were in a Live simulator. In reality, I would have to find the borrows and have the proper brokerage to get the fills. With a small account like mine, being a long-biased trader is ideal. Shorting is going to be out of the question until I get over the Margin requirements of $2,500. Until then, I must focus on high odds Long set-ups that suit me as a Trader. I can’t emphasize it enough that Risk Management is paramount. I don’t care how well your Trading System is, without proper Risk Management rules in place, you can find yourself in a hole. Alright, let’s dive right in. Video Recaps will be attached like always below. Currently, I am working on categorizing the videos, in the Video Archives, so stay tuned for that!
The Coronavirus has been spreading rapidly, much faster than the dealy SARS. I am not here to talk about the virus itself, but I am here to talk about the HYPE that surrounds the Coronavirus. Every few years there is a Hot Sector, that ignites the Market. Great examples include the Dot.com Bubble, 2008 Financial Crisis, Ebola Outbreak, Shipping, Bitcoin, Gun violence (Police Equipment ), and the most recent the Cannabis Sector. Stocks like $TLRY was the head of the snake as it ran from the low of $20 to the high of nearly $300 in a matter of weeks. This lead too numerous sympathy runners, such as $IGC, $NBEV,$MARA,$CVSI,$CGC,$CRON and many more. I would highly encourage you to take a look at each of those Tickers long term chart. Each of them has gone Supernova in the past. So what? The main point that I am trying to make, is that you never want to underestimate a stock. Especially during a Sector run. Stocks, that are running as a result of some hype, will act abnormally, it will hang around much longer. Take a look at $IGC below.
$IGC was a classic example of a Supernova during the Cannabis sector run. This was a massive short squeeze. Yes, they do come back down eventually, but never say they can’t go higher. It can do whatever the hell it wants!
Coronavirus Sector Plays $NNVC,$APT,$CODX,$VIR,$INO,$NVAX,$CBLI,$LLIT,$BIMI,$VXRT,$DTSS,$AHPI
Below are some rules that I have instilled in my Trading Process about hot sector mania. What works for me, may not work for you!
Price Action is King- Understand that prices move before Fundamentals. The only thing that matters, in the end, is price action. Most of these Tickers on the list have crappy fundamentals. Most of them will not exist in the long term future but play the hype. What led these stocks to their massive gains, was not because of their fundamentals. Price action is what I focus on. The only core fundamentals I care about are Share Structure and Return on Equity That is a topic for another day.
Never go against the Crowd / Play the hype, but never believe in the hype-take advantage of the informational inefficiency- It pays to go against the Crowd. The first green day has the highest odds for Longs. Be wary of shorting the first Green day, as the odds are going to be stacked up against you. Going long is much easier than going short for numerous reasons. Just understand that, and you don’t want to be stick on the wrong side of the trade.
Never say that this stock can’t go higher- Shorting wise, this was a big one. Don't focus on trying to catch the exact top. There is going to be plenty of room towards the downside when the trend changes. Just be patient and wait for the sideways price action. Never think that a stock can't go higher, just because it’s already up a ton. Do you remember $BPTH?
NO FOMO- Again don’t let Fear Of Missing Out take the trade. With these names, there was numerous opportunity, both on the long and short sides.
I will post the Charts below along with some Video Recaps from this past week. I will be posting the Weekly Video Recap on Monday, so stay tuned for that!
Disclaimer: This blog has a term of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.