First Green Day Strategy
My Tell ALL!
Today I want to update everyone on my current strategies for 2021. This will be a little inside “Tell All”! The secret sauce to my trading strategy that is currently working for me, what I am refining, and what I am tracking to give me an “edge”. I introduce to you Adapting to Different Markets: Part 1. First Green Days!
It may be to no surprise that I am a Timothy Sykes lifetime challenge student (not sure what that is then read this blog post about his vast educational resources). His educational program revolves around his 7-step framework which every trader should become familiar with if they want to survive in the day trading world and probably familiarize themselves with these books too.
Strategies for a Hot Market
Do Many People Have One?
As many of us experienced the super bubble of the Hot Market in 2020/2021 due to the pandemic lock down, most trader bought the shiny object of the next “hot” stock and rode it up as promoters lied to them saying the stock was headed “to the moon” and also “stocks never go down”.
But simply buying and holding these worthless penny stocks is NOT a good longterm investment as most of them are penny stocks for one reason or another. In order to survive a market that doesn’t “always go up” traders MUST learn to adapt, take singles NOT home runs, be patient for the right setups, not chase and cut losses quickly!
So here are a couple strategies that I have been refining and improving that way I am prepared for all hot, warm, and cold market conditions.
First Green Days
In the beginning of my journey in 2019 when stocks would move once in awhile, this strategy provided me with considerable amount of practice and confidence. It was the easiest pattern for me to begin learning. (disclaimer: trading is not easy as 90%+ of traders lose. My results are not typical and have come from years of hard work and dedication) Here is a blog post about my earlier experiences with the original First Green Day OTC pattern.
Since then I have learned to adapt. You might be asking, when did this strategy change and why? Well, it changed a couple weeks before I began trading with a live account. The stocks began panicking at the market open after a strong close the previous day. It was unfortunate to see such a pattern no longer gap up for reliable overnight profits. Instead traders began dumping their shares at the open in order to lock in considerable profits. No longer did this strategy provide a no-brainer for “easy” money.
Variations Call for Adaptations
What I look for on a 2nd Green Day
This is a stock by the OTC (over the counter) ticker symbol $GGII. You can see on the right side that the stock had a NICE First Green Day on the backside of the Supernova (7-Step Framework). Near the top you can see it closed at 49.91%. You can read my watchlist here how I was prepared for this stock to go green on the day. Every night I post my watchlist to profitly with my plan included.
Before, I only knew how to wait until the end of the day to buy into a spike for the strong close and hold overnight for a sell into a morning spike the next day. Unfortunately, that had to change. Now I have learned to adapt to several different outcomes for the next morning.
This is the 2nd day of $GGII. As you can see there is no gap up nor morning spike the next morning after the strong close. Technically you can say I am looking for a 2nd Green Day as a follow up to my First Green Day but 2nd green days come by in different ways these days. Here is an example from my watchlist:
“2nd Green Day: I want a gap up for the 2nd Green Day. either I want a dip at the open to previous close for a dip buy or I want bids stacking for a morning spike and sell into strength. if goes red to green, buy the green, risking the red. (tight risk)”
From the image above, I did not trade the next day. The stock had a quick 20%+ morning panic which was not in my plans. This is also another strategy that requires discipline to wait for my plan to play out. Not trading is also a plan. Although I love my morning panic dip buys… this has been something I had to adapt to not being aggressive on (future blog post Adapting to Different Markets: part 2 will talk about how I have adapted to that change).
The stock had gapped down so immediately I was waiting for a gradual uptrend to potentially buy the red to green move which would require me to risk the green to red. Anticipating the red to green leaves me with a bit more cushion incase the green move fails. Ideally I buy either in anticipation with a good news catalyst or enough momentum. Neither occurred in this instance so there was no trade.
Above is an example of $GVSI where the stock gapped down the next morning after a first Green Day then creeped back from red to green. Now, I did not purchase this stock but I am studying this pattern as it is one I am learning from Mariana. Her take on the red to green move varies from mine a bit. I prefer to wait until it becomes closer to the green move to buy then risk the green to red. Of course, sell into strength to lock in profits.
Every trader has their own personality so it is up to the trader to find their personality in their strategies too.
Side Note: In the advent that I hold over night and the stock gaps down on me the next morning, immediately I am placing my sell at the market open. Doesn’t matter if the stock dips and spikes to new highs. I want out.
Gap Ups/Morning Spikes
Another example in My Adapting to Different Markets Part 1. First Green Day series…
Ideally I am looking for a considerable gap up the next morning say 10%+ roughly (remember trading is not an exact science but more of an art). This either provides some opportunity to sell into the panic that usually happens at the open which everyone is preparing for or I patiently wait for the dip to the previous close (the price the stock closed at on the 1st Green Day) for a dip buy with a plan to sell into strength on a bounce.
This stock had shown a decent gap up premarket. OTCs can trade premarket but not after hours but require a special broker that authorizes the premarket transactions. When I see gap ups premarket I am either looking for a continued morning spike with a stack of the bids and news catalyst (ideal for an overnight hold) but ideally for this adaptation I am watching for sell off at the open where the stock holds the previous close level indicated by the dotted yellow line in the image above. This should show bids stacking at the previous close price for a dip buy and sell into strength for a single. Cut loses quickly if fails to spike. Risk is about low of day which should be near my entry price.
My strategies revolve around risk. I care about better risk to reward than I do win rate. My goal is to try and have my entry either near or slightly above my risk so that way when the stock doesn’t go my way, I can either cut quickly for a small profit, breakeven, or tiny loss. Having small losses is most important to me as I try to focus on strategies that I trade well and the profits over come those tiny losses.
Why Tell All?
Noticing a theme? Singles add up over time especially if losses are kept small!
And as for the reason of my release of My Adapting to Different Markets series is to document the information of my progress and how I am growing as a trader. When I first began, all I could trade was the first Green Day overnight hold pattern on OTCs. Now my strategies are expanding in a repeatable fashion that I can replicate with consistency.
It is wonderful being able to document my journey and share my growth with others. This not only holds me accountable but also helps others along the way.
Last But Not Least
My Strongest Strategy for 2021 First Green Days
My bread and butter for the first Green Day that leads to those second Green Day patterns written above…
I call this beauty…. Spike, Consolidation, Spike! Simples first Green Day. You have the spike in the morning, all day consolidation, then a spike into the close.
Can you Identify the morning spike?
It’s probably exactly what you’re thinking. I consider the morning spike the uptrend until the morning high. Next I watch closely for about an hour of consolidation (this can vary depending on news, liquidity, hot sector, etc.) next I want an increase in volume (ideally) to buy into when it perks out of that consolidation that should hold around or above VWAP (volume weighted average price or the solid yellow line). Without volume there is not enough liquidity to easily enter or exit a trade and if you choose to size up, you need the buyers or sellers to take your shares to prevent extra slippage*.
*Slippage is what happens when a stock drops below your risk level. Yes, you don’t always get an exit exactly at your risk depending on the liquidity of the stock. Always plan for slippage.
You can notice the volume candles on the bottom of the chart in the morning, the lack of volume during the consolidation, and the return of some volume as the stock begins to move higher again. This has higher odds on a first and second Green Day both on the front or back side of the supernova framework from what my observations have noticed.
below is an example of a 3rd Green Day spike, consolidation, spike.
This is a 3rd Green Day on ticker symbol $APYP. Notice how it had the morning high or spike; it consolidated nicely, but oh no! This happens all too often on the 3rd Green Day; it becomes a failed spike, consolidation, spike and turns it to a spike, consolidation, fail. That is because the stock is typically over extended and it’s time for whomever to start dumping their shares so they can take their profits.
Thus the self-fulfilling 7-Step framework continues to live up to its name!
The 3rd Green Day turns into a red day with the likelihood of a morning panic the following morning. But don’t let me get ahead of myself as that will be covered in part 2 of the follow up blog post about Adapting to Different Markets.
Earlier I mentioned risk being the bottom of the consolidation. This is a Key level in the intraday chart pattern. If Key levels are broken to the downside, then odds are the stock is going to continue down. This is why it is crucial that you cut your losses quickly as you can always re-enter if the stock Proves itself to you. In the other instance where the Key level is broken to the upside, then odds are the stock is going to continue upwards.
Risk is vital to a trader.
(For indicators that may help guide the education of a trader then checkout ScriptsToTrade. They write custom work for traders that help their learning process. They have indicators that show green when the stock is up trending, white when it’s neutral, and red for the downtrend. Also they have indicators like the backside indicator that warns when a stock is about to reverse. This is great for longs who are riding a stock up then the indicator alerts a backside coming so a trader can consider taking profits or if a trader is shorting then they can gain an idea of when the stock might be ready for the down trend. Read this blog post about how they are tracking their indicators results and it’s showing 70% accuracy. Another indicator I love is the abnormal volume indicator which works well with my spike, consolidation, spike pattern as I want to buy when abnormal volume enters the chart after consolidation and the abnormal volume indicator pops up with an arrow indicating the volume is abnormal for a potential great entry! And for your time reading this post, here is my Discount Code: TESSA10)
Why I Love this Pattern
How Have I Adapted It?
I love the “simplicity” of this pattern. What do I mean by this? Well, many call this the Gun Chart/Pattern, the Lightening Bolt, OT Swizzle, The VWAP Hold High of Day Break, and many more names, but I like to keep it simple to what it is; spike, consolidation, spike.
I look for this on the intraday time frame, multiday time frame, and even the daily time frame. Depending on the time frame and time of day we’re looking at, I like the 1 minute chart, 5 minute chart, and even the 15 minute chart to gain an idea of how it is forming.
If this stock is forming on a multiday time frame, then I am more likely to watch for a morning spike to buy into and sell into strength. See how the pattern is simple but when adding more technicalities to it, there becomes more to consider. This is a great reason why I appreciate writing these blog posts to track my progress and understanding of patterns.
Also, this pattern can provide the opportunity to scale in and out of positions ( I am not currently scaling so not much advice there but I do have an idea based on everything I watch and learn from Jack Kellogg).
Now… to get to how I have adapted it.
Back in my paper trading days, I would buy the strength into the close and hold for an overnight gap up/morning spike and make a solid 10-20% without much stress of any gap downs or panics the next morning.
That’s no longer the case.
Thanks to my Trading Journal, TraderSync, I have been able to track my perform holding this pattern overnight. I use the Elite version which gives me access to all of the statistics and provided me with an edge, hence a major reason for such adaptations. This trading journal has made it not only convenient with my schedule, but also super easy to track my strategies and how they are performing in hot, warm, and cold markets! Not to mention they have a cell phone app so I can review my data on-the-go!
These days I like to buy the stock as it is spiking out of the consolidation With abnormal volume, other times I like to buy the usual pullback after the initial spike as long as it doesn’t come all the way back down to my risk level (the bottom of the consolidation before the perk). If the initial spike kind of holds, pulls back to an ideal entry near the support, but not all the way back down, then I like to convince myself to buy that as it provides a second opportunity for traders to pile in before it takes off.
This slightly higher entry can also become the new risk level as well.
My next goal is to sell into strength (this can be where you mess around with scaling in and out but Always lock in profits along the way). My adaptation is to no longer hold over night as there’s about a 50/50 chance of a pretty decent gap down or big panic the next morning. To me, it simply isn’t worth the risk when I can lock in profits with no stress the next morning.
Trading With a Toddler
My mom says I don’t talk about this enough. As mentioned in this article by Timothy Sykes that I was quoted in, I make trading fit my life style. This means I trade around my son and his schedule, after all, if he isn’t satisfied whether it be in sleep, education, food, playtime, etc. then there will be no time for me to focus on trading. So his needs come first.
How is this possible if trading is my job? First off, I have his schedule also revolving around market hours as best as possible. We function off of Eastern Time even though we are on the west coast. So he sleeps in until 7:30am – 8:30 am PST which is about 10:30am – 11:30am EST. This way I can usually have a majority of my attention focused on the first and busiest part of the trading day.
Once he is awake it is near mid day which can have a bit of a lull especially when the market isn’t as hot. During this time we migrate to the kitchen/living area where I move my laptops to the counters. Throughout midday (eastern time) I am getting him breakfast, working on his education, perhaps I workout, we play, all while checking either my mobile charts or my laptops.
If a stock is hot, then usually I can place most of my focus on the pattern as long as he is content. When he wants something then his needs/wants come first, otherwise he is climbing up my leg. LOL. A lot of the time, he likes to watch with me and learn either the numbers, colors, the chart patterns – any way I can make it fun and educational for him too.
Near the end of the trading day which is about 11:30am – 1pm PST, I am laying my son down for his afternoon nap. This allows me to concentrate on “power hour” or the last hour of the market which provides another round of volatility.
As long as we maintain this sort of schedule then we are pretty good. Otherwise, on days that we are out running errands (first I try to schedule them after the market is closed but that isn’t always possible because of my son’s nap time), my mobile charts on my cell phone become my friend when I stop at whatever location. Also, my phone has a hot spot where I can quickly hook up my laptops if there is a good enough opportunity that I CAN’T miss. Otherwise, I like to keep an eye on the markets so I don’t lose my rhythm. After all, I need to know what’s hot and how the stocks move so I can have a better grasp on the stock’s personality when I make my watchlist.
Yes, each stock has it’s own personality!
My Strategy for Hot, Warm, and Cold Markets
All-in-all, this is how I have grown as a trader since my first days of paper trading. Make sure to scroll up and click on my records tab to check out ALL of my trades on profitly and also, read this blog post and this blog post as scammers are always thinking of ways to trick people out of their hard-earned money and I don’t want that to happen to you!
Thank you all for reading! Also, in the comments section or on Twitter let me know what strategies are working for you and how you have learned to adapt from the hotness of 2020 to the warmness of 2021. I am curious, have you kept your profits, what about locking in singles, are you cutting losses quickly to protect your account? Let me know!