5 Rules For Trading The Hottest Trading Pattern 🔥

I know I posted this a few days ago:

PATTERN THAT'S WORKING WELL RIGHT NOW: Focus on buying any heavily shorted stocks that are breaking out near the market open, worked well with $PXMD the other day, $LIFW yesterday & now $TPST today…very simple, but very effective, giant thanks to the over-crowded short niche!

— Timothy Sykes (@timothysykes) November 9, 2023

But it’s worth repeating.

Why?

Because it’s still working…and pumping out some massive gains for traders.

What’s even more impressive…is that it’s rather simple to learn.

Now, I don’t know how long this will continue…but if you’re in search of making quick short term profits…then this is something you must try to master.

Here are my top five rules.

The Hottest Pattern Worth Trading Right Now

I’m not the world’s biggest fan of trading short squeezes.

They’re volatile, not always clean, and they sometimes make me feel uncomfortable.

However, this is where the largest opportunities lie right now.

And last I checked I don’t control the markets…so I’ve forced myself to adapt.

📈 NEW BLOG POST: https://t.co/0DvI4z6Lub

What $LIFW, $PXMD, and $NVOS have in common 🤔

"We have a new hot theme on our hands!

Yesterday cemented the theme with the third stock with the same news having a massive day.

I didn’t like it the day before because I don’t like to… pic.twitter.com/q1OyFgQJmt

— StocksToTrade (@StocksToTrade) November 9, 2023

You can find out how I’ve been trading these short squeeze plays when you visit my Profit.ly. 

Now on to my five rules for trading them.

Rule #1: Look For The Worst of The Worst Stocks

If you’re coming from the investing world this will completely surprise you.

Why?

Because some of the biggest short squeezes are occurring in the absolute worst stocks.

The reason is because we’re seeing an overabundance of short sellers pile into these stocks.

That’s right…

What was once a very easy trade…short selling crappy stocks…has gotten flipped around.

Now, the risk-reward has shifted…and it’s actually better to play the long side.

Take the ticker APLD for example…

During the day two short reports came out trashing the company.

You’d think with all the negative news it would crash, right?

It actually did the opposite.

Why?

That’s what happens when shorts are overcrowded, and shady brokers are over allocating shares to borrow.

We’re seeing squeeze after squeeze.

Even AMC…which is notorious for rug pulls, created a dip buying opportunity a few days ago.

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Rule #2: Look For Big Percent Movers + Heavy Volume

Most people when they think short squeezes…they assume it’s a stock with high short interest.

But I’ve never been able to find accurate data pertaining to it. And because of that…I don’t use it.

I think price action is KING.

Look where the volume is…and you’ll likely see what stocks shorts are being trapped in.

Because we all know…it’s not fundamentals moving these stocks.

Rule #3: Don’t Trust These Stocks

When you are trading the trashiest stocks you don’t want to keep your eyes off them.

At any point they can fall off a cliff…announce a stock offering…or get exposed.

In fact, using stops in these kinds of stocks is often a bad idea because they can swing up and down so violently.

That’s why I’m never aggressive with my entries.

And I never try to get greedy.

Eventually the shorts will be right…they might be a day, two days, or even three days early…but these stocks will crash.

Rule # 4: Don’t Dip Buy The Backside

One thing newbies do that gets them wrecked is they buy the backside of a move.

What’s that?

Source: etrade

Check out LIFW….it rallied hard for an entire day…

And the next day it gave a lot of those gains.

You don’t want to be a buyer on day two when the stock is puking.

That’s what it means to buy the backside.

It’s better to buy the dip on day one of the move…

Even better…buy as the stock is making a breakout high.

But stay away from trying to buy the dip after the stock has had a massive sell-off.

Remember, almost all these stocks will come back to their rightful place.

Rule #5: Don’t Get Overly Aggressive With These Trades

I’m trading these setups relatively small.

I also understand that my timing might not be perfect the first time. In other words, I may get into the same stock 2 or 3 times.

In order for me to do that though, I must keep my losses small. And I must position size accordingly.

These are wild stocks making wild moves.

Be smart with your position size. Even though they are making massive spikes, I’m still trying to trade them conservatively.

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