Saturday, August 13, 2016

Scalping, swinging and channel trading for beer money


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What is channel trading and what is the difference between a SWING trade and a SCALP trade?

Buy and hold is not a strategy for the OTCBB, given that people take profit and enter/exit plays at different levels it is very important to protect your portfolio and take profit.




What is Swing Trading?

https://stockwiki.org/Swing_Trading

"This technique was first described by George Douglas Tylor (George Douglas Taylor) in The Taylor Trading Technique, as a technique aimed at gaining profits from natural 3-5 day cycles of the market. Strategy "swing - trading" (born swing-trading) takes as its basis the cyclic dynamics of prices, go beyond the timeframe. In an era of global market liquidity swing trader can find excellent opportunities for transactions in different time frames - as a 5-minute charts and position trade for weeks. Swing - trading became popular in the early 1900s. It is based on the technical methodology for determining the duration of the previous market swing in relation to the overall technical structure of the market and predict the next swing. One major advantage of this trend in the trade is that the active speculator can profit no matter which direction to the market. But it is also important to know when this "right game" to see profit and look for the "true trend." Know the "right game" - is to know first buy or sell, or hold to go. Transactions are based on "objective points", which are just the high and low of the previous day. Movement between these two points determines the "true trend.""
Scalping: Small Quick Profits Can Add Up

"Scalping is a trading style specializing in taking profits on small price changes, generally soon after a trade has been entered and has become profitable. It requires a trader to have a strict exit strategy because one large loss could eliminate the many small gains that the trader has worked to obtain. Having the right tools, such as a live feed, a direct-access broker and the stamina to place many trades is required for this strategy to be successful."






What is channel trading?


Think about how things go up and down, and why:

MMs want to create volume so they can make their commission, and an important concept to keep in mind is that there is usually a lot of volume near the top of channel, and near the bottom of channel.

Once you have been trading for a while, and you have followed one ticker, you can get the sense of what I mean. This channel may take a couple months but its clear.  Its oversold, bottom feeders come in and drive it up, runs and news hits, peaks out and gets beaten back down. Rinse and repeat.






This ticker clearly is in a channel, and you can see especially with the Price by Volume indicator at left (the red and gray bars) that most of the volume is from .0021 to .0028. This is currently trading in a very nice, predictable and profitable trading channel.



What do people mean when they talk about "Beer Money" or "Lunch Money"?






This one is a classic:



This is a pretty simple concept. The above poster is attempting to persuade you to hold rather than sell, even though you are up 2-3 ticks and potentially 20-30%.

When they say "beer money" describing a trader who bought at .0005 and sold at .0007 and has the foolish notion of wanting to take profit.


In reality, how much money is "Beer Money?"  

Ok, lets do a thought experiment-


Assuming an initial buy of  $750 plus $6.95 commission $756.95 at .0005 you get 1.5 Million shares.
You then sell them all at .0007 for $1050 minus 6.95 commission, = $1043.05

You started with $756.95 and turned it into $1043.05 for a $286.10 profit. That is some serious beer money




People always complain about 1 and 2 tick flippers, when in reality  they are making $100-$300 per trade. That's some serious beer money. More like cognac money? #grind #chedsblog


Smart "Beer Money" traders never regret it, because they have protected their portfolio.


This is the same in #cryptocurrency - Good money can be made from small trades -

Here are some examples from a great crypto trader on twitter- 
https://twitter.com/PhilakoneCrypto
















PUMPER BS LINES: 


One line you often hear in #cryptocurrency that really bothers me -

"You are only down if you sell" - This is meant to trick you into holding forever while the real traders recognize legitimate chart tops and unload.





Here are some of the common lines you will hear from a pumper, or someone who is overly enthusiastic. Most of the time its pure BS and they just want you to hold your shares so they can sell higher and dump on you.  Often times when a ticker is being loaded it is very very quiet, and when it is being dumped you will hear all the pumping in the world. For example, OTC Knight on IHUB is one of the worst -





Some of the BS pumper lines I hate:

"Anything under .01 is a buy". - Okay Mr Pumper, if this is true and the ticker is currently trading at .0023, why are you not constantly slapping the ask instead of telling us how great a value it is? Its important to remember that a ticker is only worth its value in relation to its:
 POSITION IN THE CHANNEL - Top of channel it sucks, bottom of channel I love it.


"Grab cheapies before news hits" - First of all, the term "cheapies" is pretty damn annoying, but beyond that you need to remember that companies release news so that debt holders can SELL INTO RETAIL BUYING PRESSURE.

Remember, -- You are not the only one waiting for news, VFIN VNDM BMAK CFGN and all those jerks are also waiting.


"Im not selling anything under .01" - When in reality this BS pumper has several limit sell orders in and he is probably selling right now while you are slapping.

"Moves on Air" -  This is true, but usually describes a ticker with a huge gap and no liquidity. Its moving on air because there is no volume base for you to analyze and determine proper entry.


"MM's playing games" - MM's dont play games, they create volume, dump and accumulate shares. The only ones playing games are pump and dump artists.


"To the moon" - No explanation needed. because we are smart traders and take profit, and do not hold hoping we make it to the moon.

"Better buy now because you might miss the run" -  This is the worst reason in the world to buy. There is always another ticker to play, and who cares if you miss the run. OTC is hot, go find a better ticker and quietly load it.




Basher Posts:

"this is going to no bid"  - Worst offender in the world is a guy on IHUB named PSTATS. A shameless trader/basher who claims every ticker is going to .0001 and he is bidding there. The reality is each ticker trades in a channel, and while some are going to .0001/no bid, most others will test and bounce off support levels.

"this is the biggest scam on the OTC" - Dumb bashers dont realize that the biggest and worst scams on the OTC are also often the most liquid and profitable plays, but we wont tell them :)




Cheds Breakdown: 

I hope everyone enjoyed this article, the most important thing to remember is that most tickers trade in a channel and taking profit is lesson #1


Welcome to Chedsblog!   
-Helping new traders avoid my old mistakes-

OTCBB Pennystock trading article topics include:

Reading financials and filings 

Market Makers

L2 and chart analysis

Understanding the competition

Using social media to trade

Price and volume study

Bankroll management

Game theory
Sub .01 low float setups
Interviews with influence makers

    OTCBB Penny Stocks Trading Market Makers L2 Charts Technical Analysis Financials Learning Discipline Networking Planning Bankroll Management Taking Profit Paper Trading Options Nasdaq NYSE Small Cap Stock Picks Alerts Bashers Growth Pennystock Sub Penny List Stop Loss Top Hot






    Scalping, swinging and channel trading for beer money
    4/ 5
    Oleh