This might sound crazy…
But if you want to make more money from trading, why not follow the money?
That said, nothing has been hotter than trading short squeeze plays…
Today, I will break down the pattern that helped me nail single-day triple-digit movers VERB on Tuesday and PALI on Wednesday…taking me to $7.5 million in career profits.
Why should you care?
Because if this continues, I expect this pattern to play out a few more times this week, leading to potentially handsome profits.
Why The Shorts Are Getting Worked
I’m not going to lie…the majority of the stocks I trade are fundamentally weak companies…some are pure trash.
But I’m not investing in these companies…I’M TRADING THEM.
And that’s where short sellers screw themselves.
They are so focused on the fundamentals that they forget they are trading.
Who cares what the fundamentals are if you are in a trade for a few seconds or minutes?
You have to be able to manage risk, right?
If you short a stock and it goes from $2 to $10, can you handle that from a risk management perspective?
Most traders can’t.
Short sellers are so narrow-minded that they forget that this game is about price action.
When The Worst of The Worst Become The Best of the Best
If you really want to thrive in this current market, you have to be open-minded.
You can’t think in terms of fundamentals…
In fact, thinking logically could be detrimental.
I know…that sounds crazy…but recognize the market we’re in.
For example, the ticker symbol VERB didn’t deserve to go up as much as it did on Tuesday…
— TradingSim (@TradingSim) September 6, 2023
Earlier in the day, the company announced a “groundbreaking TikTok integration.”
Could the news be any less significant?
But again…that’s not what matters.
What matters is if there is volume in the stock.
The stock went from $0.71 the day before to a high of $3.30, and it traded over $105 million shares.
I didn’t have the world’s greatest trade in it.
But I did recognize the volume surge in the pre-market…
And I waited for a panic dip buy near the open.
While the shorts thought the stock doesn’t deserve to be up this much…
I was thinking how can I safely get into this play while trying to manage my risk.
AHH…risk management…something the short sellers know nothing about.
The next day all eyes were on the ticker symbol PALI.
Like the stocks before it, it had pre-market news with significant volume to go with it.
The company announced: Palisade Bio Transforms GI-Focused Pipeline Through Exclusive Worldwide Licensing Agreement with Giiant Pharma, Inc. for Multiple Oral Drug Candidates Targeting Inflammatory Bowel Disease.
And the stock was off to the races.
And again, I waited for some panic selling near the open to get my entry.
The stock ultimately hit a high of $1.93 intra day…
But I’m not here trying to pick tops or bottoms.
My goal is to capture 10-15% without exposing myself to huge levels of risk.
So let’s break it down real quickly:
- Don’t worry about whether the company is “good” or not. Instead, focus on whether it has a pre-market catalyst or not.
- If it has a catalyst, watch the volume. Ideally, you want to be trading the heavier volume stocks.
- And of course, it has to be a high-percentage mover. Why? Because shorts are thinking this company doesn’t deserve to be up that much, the more they short, the greater the squeeze gets.
- Trade these stocks, don’t fall in love with them. For the most part, I’m looking at these stocks as plays. I know some of them have run significantly, but I’m not here to chase. I’m here to make a quick move and be out.
- Follow the momentum. I prefer panic dip buying, but if volumes dry up then the stock could just trade sideways to lower the rest of the day. Pick your spots, you don’t have to be in them the whole day or try to HODL.
Want to Learn More About Stocks Like PALI and VERB?
Every day, my team and I host live training sessions.
These sessions discuss what stocks are moving and how to exploit them.
It’s a chance to discover how other successful traders pursue these opportunities.
And the best part is we are bringing them to you at zero cost.