I love penny stocks and small caps for so many reasons as a full-time retail trader. I don't wanna advocate it, or get philosophical if blue chips are better or not so let's just talk money.
The volatility you observe on small caps are many times far greater than cryptocurrency itself, and it's far less popular, so less manipulation and fewer robots - most of my strategies and indicators have clearer signals trading small caps.
We are talking about a stock that was traded at $1000 and now is at $3.6, that's what I call a good range. The actual price is nothing less than 163% of the 52 weeks lowest low, once again, that's what I call a good range.
That said, let's get at it.
This is my basic trading setup, the left part of the screen is basically my screeners, I keep track of 20 assets that I previously filter with fundamental and news research.
From those 20 filtered assets, it's where TA comes in handy. Spectrum Screener tells me without with one glance what I should look at now without wasting my time analyzing chart by chart.
Usually, I pick the 4 best assets and divide my daily trading capital among those 4 positions. The position sizing has a very specific rule, where there are weights based on a grade that I give to each and every trade based on how likely I think that it will be correct.
This asset had over $500k in traded volume that tells me I should not trade anything above $5k/daily to be able to enter and exit fast if needed. (1% of total daily volume)
Now we know how much I'm trading, I take a look at the bigger timeframe on the lowest right chart(D) - that will give me the overall idea of what is going on and what strategy I'll choose.
Once I knew it was a breakout, I picked one of my strategies that I think fitted best and I'm following it.
The way I do it is through a smaller timeframe chart, so that gives me more precision with my entry price.
The Gray Breakout lines are not aligned at the same price because the D was unprecise and I like to use price lines with high + low / 2.
I like how it gives you a better overall idea but it's not really good for final entry/exit prices, you want to use it to understand what you're dealing with and what strategy you should use - lines are great for that, also H+L/2 removes a lot of noise.
That said the rest is really self-explanatory.
ATM I'm up more than ~+4% and my stop-loss is set for a ~+1.5% profit, I do that to not transfer a winning trade in a loss.
By raising my stop-loss I get rid of amateur losses and let me eliminate unnecessary risk.
Let's say we get stopped and I'm out with +1.5% profit, there are two scenarios the asset dives down and we avoid a horrible situation or it goes back up.
In case it does go back up we already have a minefield of buy-limit orders and even a small order stop-buy order on the stop-loss level just in case we miss the bottom. In this way, we eliminate all the downside and only get in when risk is minimal once again.
Now the strategy is pretty simple and we use just a few simple yet robust features from Spectro M.
The volume analyzer, Specter Clouds, XConfirmations Reversal Warnings and the classic Spectro Oscillator itself.
How I used them is explained and compared in the chart.
You can use this similar approach for other breakouts. Also, raise your stop-loss wisely. In this topic, I'll not discuss risk management so pick your favorite protect-profit strategy.
The volatility you observe on small caps are many times far greater than cryptocurrency itself, and it's far less popular, so less manipulation and fewer robots - most of my strategies and indicators have clearer signals trading small caps.
We are talking about a stock that was traded at $1000 and now is at $3.6, that's what I call a good range. The actual price is nothing less than 163% of the 52 weeks lowest low, once again, that's what I call a good range.
That said, let's get at it.
This is my basic trading setup, the left part of the screen is basically my screeners, I keep track of 20 assets that I previously filter with fundamental and news research.
From those 20 filtered assets, it's where TA comes in handy. Spectrum Screener tells me without with one glance what I should look at now without wasting my time analyzing chart by chart.
Usually, I pick the 4 best assets and divide my daily trading capital among those 4 positions. The position sizing has a very specific rule, where there are weights based on a grade that I give to each and every trade based on how likely I think that it will be correct.
This asset had over $500k in traded volume that tells me I should not trade anything above $5k/daily to be able to enter and exit fast if needed. (1% of total daily volume)
Now we know how much I'm trading, I take a look at the bigger timeframe on the lowest right chart(D) - that will give me the overall idea of what is going on and what strategy I'll choose.
Once I knew it was a breakout, I picked one of my strategies that I think fitted best and I'm following it.
The way I do it is through a smaller timeframe chart, so that gives me more precision with my entry price.
The Gray Breakout lines are not aligned at the same price because the D was unprecise and I like to use price lines with high + low / 2.
I like how it gives you a better overall idea but it's not really good for final entry/exit prices, you want to use it to understand what you're dealing with and what strategy you should use - lines are great for that, also H+L/2 removes a lot of noise.
That said the rest is really self-explanatory.
ATM I'm up more than ~+4% and my stop-loss is set for a ~+1.5% profit, I do that to not transfer a winning trade in a loss.
By raising my stop-loss I get rid of amateur losses and let me eliminate unnecessary risk.
Let's say we get stopped and I'm out with +1.5% profit, there are two scenarios the asset dives down and we avoid a horrible situation or it goes back up.
In case it does go back up we already have a minefield of buy-limit orders and even a small order stop-buy order on the stop-loss level just in case we miss the bottom. In this way, we eliminate all the downside and only get in when risk is minimal once again.
Now the strategy is pretty simple and we use just a few simple yet robust features from Spectro M.
The volume analyzer, Specter Clouds, XConfirmations Reversal Warnings and the classic Spectro Oscillator itself.
How I used them is explained and compared in the chart.
You can use this similar approach for other breakouts. Also, raise your stop-loss wisely. In this topic, I'll not discuss risk management so pick your favorite protect-profit strategy.
