There was a time early in my trading career when I bought breakouts.
Later I made a lot of money short selling penny stocks when others said it couldn’t be done.
When I came back from the dark side, my favorite pattern was the dip buy (it was SO reliable).
Especially OTCs because you could read the turn on Level 2.
I still dip buy (as you’ll see) but it’s not as easy as it used to be…
So, with a lot of the fast spikers we’re seeing right now, this is my new goal…
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Focus On Plays Making New Highs
Don’t get me wrong, there’s still money to be made with dip buys.
But if there’s one thing I’ve come to terms with in this market, it’s this:
The Supernovas are great on the way up, but UNFORGIVING on the way down.
Let’s take a look at my after-hours and premarket trades on GlucoTrack, Inc. (NASDAQ: GCTK) from Wednesday and Thursday (Sept. 23–24).
GCTK spiked after-hours on Wednesday after a positive sounding “strategic update” style press release.
Almost instantly it was one of the top trades in my new after-hours chat room.
I was busy with another trade when it first started spiking, so I only got a partial fill on this fast price action…
When it looked like it couldn’t break $4, I locked in the single (I thought I was too late).
Then it kept going to the $5s.
Still, this is a great example of a stock making new highs when I bought.
It was an easy trade that took less than 5 minutes.
And it’s a great contrast to my next trade (also on Wednesday). I cannot lie…
I Still Love To Dip Buy
When GCTK was roughly $1 per share off its highs, I thought it could bounce at VWAP (not shown on chart).
I didn’t have a set goal on this trade, but I knew it could be fast and I was ready to cut losses if it didn’t bounce.
It was a second, fast, single.
At this point I started to let my emotions get to me. It felt like I’d been late on the front side, but early on the dip buy.
So, after the gradual fade I wanted one more crack at it. It was WAY off its highs, but I thought it could still squeeze.
My goal was to make 10%–20% on the bounce. There were a lot of buyers supporting it and it was also near intraday support.
Sadly, it was a sleeper (Zzzzzzzzz). So, I got out for small gains (basically scratch).
The irony is that it did bounce about 10 minutes later. Once again I was on the right track, but I needed more patience.
When I look at the three trades above, the first thing that comes to mind is how EASY it was on the front side, when my focus was on GCTK making new highs.
But on the backside…
Dip Buys Are Tough
Dip buys are a lot more choppy right now. You have to be willing to cut losses even faster than on stocks making new highs.
And you also have to be prepared to take smaller gains because the bounces aren’t as convincing
I did try ONE more time with GCTK in premarket yesterday…
That last one put me into trading timeout.
Here’s why…
Emotional Trading Is the Enemy
My small loss was a direct result of my emotions getting the best of me.
First, I didn’t truly capitalize on GCTK on Wednesday night. Then, after I missed the solid dip buy opportunity early in premarket yesterday, I took a trade that I shouldn’t have.
There are two parts to it:
- My early success (the first after-hours trade) made me fall in love with this play
- I bungled it on the third trade and was truly late in premarket yesterday
Lessons From Solid Trading
If you look at all four trades together, it wasn’t terrible. Especially when you look at what happened when the company did an offering yesterday morning.
Here’s the entire move…
After my loss, I decided to take a step back and accept that it was weak price action and I shouldn’t have kept trading the stock.
The good news is that you can learn from my mistakes.
If you want to go deeper on setups like GCTK and build a solid trading foundation, I highly recommend you join me next Friday and Saturday (October 2nd and 3rd) for the Millionaire Formula Conference.
Yes, Tim, Show Me How To Crush The Market
It’s a free 2-day bootcamp where we’ll cover everything a beginner needs to know to get started.
At the same time, veteran traders can gain new insight into how I’m trading the markets right now.
Key Takeaway
Right now, my favorite time to trade is after-hours. Premarket is a close second.
And my favorite place to buy is on the front side, when plays are making new highs.
That doesn’t mean I’ll stop dip buying, but I WILL be extra careful.
The key lesson is that trading requires constant adjustments. You have to adapt to the market and be willing to be honest with yourself about your emotions AND the price action.
Have a great weekend and STUDY HARD!
Cheers,
Tim Sykes
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