Chasing a stock.
We’ve all done it. And we’ve all paid the price.
If you don’t know what I’m talking about, you probably haven’t been trading very long.
In fact, you’ve probably made this very mistake, you just didn’t know it was called chasing.
Simply put, chasing a stock is paying up for a fast moving name because you can’t bear the pain of not getting in.
It’s a FOMO trade.
You’ve all seen how crazy some of these names are lately.
There’s a lot of pump and dump going on and if you’re not careful, you could find yourself on the wrong side of that scenario.
Look at Indaptus Therapeutics (INDP) yesterday.
This stock was under $7 the day before and it opened in the low teens.
But it doesn’t just chill there, even after doubling overnight, it continued to make a parabolic move hitting a high of $28.83 by mid morning.
Every time it makes another high the inexperienced/ emotional traders are “chasing” the price just to get in… for fear of missing out.
And by the end of the day?
It gave the whole move back.
Chart courtesy of thinkorsiwm
If you are a smart trader, you took profits on the way up and had a stop to lock it in.
But so many people get caught up in these moments and aren’t prepared for the inevitability of the dump.
Today I’m going to show you how we trade these pump-and-dump stocks with quick moves in and out, so we never get caught holding the bag.
AND, I hate to do it AGAIN… that’s a lie, I love it.
I’m going to show you the QQQ trade we took yesterday morning.
It’s the same damn trade we’ve hit day after day after day. No joke, I talked about it in my email yesterday and lo and behold the same trade happened that morning as well.
Take a seat and strap in, we’ve got another big trading day ahead of us. I’ll be in the room at 9:30 a.m. ET as always… so join me here.
And don’t miss out on any stocks I’m watching.
DO NOT OWN THIS STOCK
Don’t invest in worthless stocks… trade them.
And don’t chase the prices just to get in… trade around levels.
We don’t chase stocks here. If we miss a trade, so what? There’s always another trade.
And there is a way to trade these insane names without chasing them, even if you missed the initial pop.
It’s really quite simple – Just wait for new levels to form.
It’s called patience my young VWAPians.
Take a look at what we did yesterday with INDP.
The stock was at 18.83, extended from it’s previous breakout point.
The chasers were running it up in fear of missing it, but we knew better.
Over the next 60 seconds, INDP ran down 2 pts and the FOMO traders got crushed.
Why did we wait?
We don’t chase stocks.
The risk to reward wasn’t in our favor at that time, so we waited for the stock to give us a new base.
Patience is a virtue my young VWAPians.
So our patience paid off just 5 minutes later – granted that can feel like an eternity when you’re watching every tick.
On the wash out, the FOMO traders got crushed and we got our opportunity.
New levels were presented and I called this trade entry at 17.21 as the INDP broke above the body of the “FOMO candle.”
Thanks to the base, we aren’t chasing this stock anymore… We are trading it off the new levels presented to us.
And we’re making money by scaling out of the trade while it’s going up… 17.85, 18… the stock is so active it got halted to the upside while we were in it…
When it reopened, we continued to sell into the move, 19, 19.50, 20, 20.5… and at this point we raised our stops to lock in the gains.
And with the speed of this stock, we were out of the trade in no time.
Later that day there was another base formed, giving us another opportunity to trade this stock.
But I must reiterate: Trade around levels to limit your risk, Sell into the move to capture gains along the way, and Move your stop to lock it in.
You don’t know where this thing is really headed. It could go to 100… or it could go to 1.
By locking in gains along the way, you’ll never be the bag holder.
Qs SHORT ANYONE? BUELLER?
We aren’t FOMO traders. I’m not scared of missing any trades… Ever… Ever.
I Do Not Care.
If I miss something I find another trade. That’s all there is to it.
And on that note… the QQQ… AGAIN.
The Finger of God
The Qs tried to make a move up at the open and then rolled over almost immediately.
They broke through the VWAP (blue line) and then broke below the premarket low and half number at 375.50… giving us a great short trade.
Same stocks, same setups. Day after day.
Join me LIVE every day at 9:30 a.m. ET and Start Paying Attention.
Kenny “The Warlock” Glick
September 16 2021