In one day, the stock TOP catapulted from $6.25 to an astronomical $260.
An unexpected windfall for some but a disaster if you shorted.
After all, the stock can sharply sell-off and create a series of stop-loss orders to go off.
The longs get taken out…more shorts pile in…as more shorts get sucked in, the stock reverses and trades higher.
This is one-way longs and shorts can lose trading the same symbol.
That’s why I usually don’t bother trading these unless I get the ideal setup.
Like the one, I had in AITX the other day.
A trade that delivered double-digit returns in less than 24 hours…and one of the main setups I would be trading right now if my goal was to build a small account.
Here’s what you need to know about it…
Table of Contents
Why I Love Trading OTC Stocks
Companies like Charles Schwab, Morgan Stanley, and Goldman Sachs hire armies of analysts to cover stocks like Apple, The Home Depot, and Visa.
You see, when it comes to the top 100 companies in the market, it’s hard to be surprised because these stocks have so much Wall Street coverage.
It makes no sense for me to trade these stocks without an edge.
You see, these firms rarely, if ever, look at penny stocks.
Because most penny stocks are crappy companies.
A lot of them are pumps and dumps.
But that’s why I love trading them.
Penny stock promoters are not nearly as sophisticated as a Goldman Sachs banker, and the people who trade penny stocks are not nearly as skilled or knowledgeable as the smart money on Wall Street.
I believe that if you study long enough that you can find a pattern in trading penny stocks.
Like the one, I’m going to show you right now in AITX
Can You Spot The Setup In AITX?
On June 5th, AITX’s subsidiary, Robotic Assistance Devices, announced it was preparing RADDOG 2LE’s Launch as its introduction on Fox Entertainment’s “Stars on Mars” June 5th, 8 PM ET episode.
Why I found this compelling:
- RAD’s RADDOG 2LE would be featured that evening on national television, FOX’s “Stars on Mars” reality show.
- RAD’s RADDOG 2LE will be formally introduced on June 6th, with a demonstration.
I’m not going to lie, had I read the press release, I would have bought the stock immediately.
Because the company just announced two hypey events in the upcoming future.
In my mind, anyone seeing the news will likely want in.
Especially given how hypey AI stocks are right now.
I saw it as a one-two combo.
In my opinion, this gives me a cushion of sorts. The company is positioning both these events as positive, and that’s likely how traders will perceive them too. This tells me there’s likely to be less selling pressure in the near term.
The morning runup was an awesome one…and it sucks I missed it. But I did see the stock trending higher near the close so I decided to buy some shares ahead of these two catalysts.
And that’s what I did…
Getting in at $0.119
The next day the company released this press release:
AITX’s Subsidiary, Robotic Assistance Devices, Unleashes RADDOG™ 2LE, the Robotic Dog for Law Enforcement Applications
While it wasn’t a monster catalyst, it spiked the stock enough for me to get out, taking profits at $0.0135…good for a move of 13.5%.
Clearly, this company is trying to pump its stock.
On Wednesday, it issued another press release, this one:
AITX’s Subsidiary, Robotic Assistance Devices, Receives Multiple ROSA Orders from EPIC Security Works
For me to trade this again, I’ll need to see more compelling press releases and interest in the form of volume. I want to see trading volume significantly above its average.
Sometimes companies will tell us beforehand that they will be pumping their stock. I love these setups because they give you a cushion and favorable risk vs. reward.
Remember, these are quick trades for me. I don’t look at these companies as investments.
And while I love this setup…
In fact, tomorrow, I’ll likely be placing a trade utilizing it.