We took our profit yesterday afternoon on our QQQ puts. We knew this trade was going to be on a short leash as our expiration was next Friday making it very close. The Nasdaq had a big gap down in the morning with a lot of volume but failed to really roll over and eventually reversed higher. We are still slightly below water on this Small Dollar Account but are 1 trade away from getting things rolling.
We have been tied up in SCON for almost 2 months now. This was a lot longer than we originally anticipated but wanted to stay discipline and stick to our stops. Especially when you are paying ticket charges on a small dollar account it will limit how much you can maneuver around. With that being said SCON tried to break out and failed, lading to an eventual stop out.
The Nasdaq has been on a tear all year gaining 21% up until Friday afternoon. Largely lead by a select few which have gone pretty much parabolic over the last 2 months. We saw a major reversal play out on Friday as we traded up to a new high on the Nasdaq before reversing hard for the remainder of the day. This is very significant and was confirmed by the biggest volume spike in almost 2 years. This was clearly a big hedge fund or institution taking profits across the board. We call this an EXHAUSTION GAP and is something we teach in our Trading Course. Although we didn't gap to the new all time high we gapped up and ran to it early in the day before reversing. We bought puts on the QQQ which is the Nasdaq 100 ETF (most closely tracks the Nasdaq). This was as much as an instinct trade as anything. Being around the market for years lets you spot things that tend to jump out at you.
I do not think anything is wrong with these big tech companies; or are saying they will have a prolonged selloff. I just believe after having a huge run they can easily selloff in the short-term. With that being said we went to a very short term strike and bought puts which expire next Friday. These will be on a very short leash as our time frame is tight and we are trading counter trend. Will keep you posted as to when we exit and this could be the trade we need to start the growth in our Small Dollar Account Challenge......or NOT!
Purchased 3 QQQ $134.50 Puts for .32
We went long SCON yesterday right at the close of the market. This was based on our 20/50 trade setup that we teach our students in our T.O.T. Trend Trader Course.
We exited our long trade in BPMX yesterday. Our entry was at .59 after the breakout of a consolidation pattern. After hitting .76 we trailed our stop up to .64. What this did was give us an essentially risk free trade. This is a good position to be in as a trader. The momentum faded and our stop got hit at .64. This is good trading though as we are currently playing the momentum in low priced, low market cap stocks. The last thing we want is to get caught in one of these when the momentum shifts the other way.
We made .05 on 260 shares which was $13. Our ticket charges ate up all our profit keeping our account value at about $160.00. As expected ticket charges are the main issue until we get the value of the SMALL DOLLAR ACCOUNT up a little. Will keep you posted on our next move...
Our first trade in the SMALL DOLLAR ACCOUNT CHALLENGE was stopped out today. Our stop price was $1.54 and our long MRNS could just never continue momentum after we entered. Total loss was $37 bringing our account value from $200 down to $163. Ticket charges accounted for $13 of our $37 loss. Until we get this account built up ticket charges present an obstacle that will just have to be dealt with. After we double up a few times they will have a small affect as they were 6% of our account value on this trade.
At the end of the day today we put our cash back to work. We went long 260 shares of BPMX @ .59. Our initial stop loss is .49. We will keep you updated as this trade plays out.
There are 2 things I want to point out here as you get familiar with our trading style:
1- We will always obey our stop losses as discipline is the key to long term success. Having a defined risk lets you live to fight another day.
2- We will fire away as good trading opportunities setup.
Thank you for following along and it would be great if you left a comment below with your thoughts and opinions on our small dollar account challenge. Questions are always welcome also!
On Friday we made our first trade in the small dollar account challenge. We went long 105 shares of MRNS pharmaceuticals at $1.76. We are playing the momentum and breakout in this low priced stock. All trades that we take will have a defined risk and a set initial stop loss price at the time of entry. Currently we have a sell stop order at $1.54. If the trade moves in our direction we will trail the stop loss up to minimize risk and lock in profits. We will update everyone throughout this trade.
Welcome to our SMALL DOLLAR CHALLENGE. We constantly hear from people who want to start trading that they just "DON"T HAVE ENOUGH MONEY TO START". Needing a lot of money to begin trading is one of the biggest misconceptions out there. We plan to prove this! It comes down to having proper expectations and long term goals. We want to show you that patience and discipline lead to great results; and hopefully inspire you along the way. We are starting with $200.00 and will add only $150.00 a month. At first we will have to be more risky than we usually are trading; but will focus on reducing that risk as our account grows. Stay tuned for our first trade...