Keep It Stupid Simple or better known as K.I.S.S. If you have been a part of Timothy Sykes trading community then you have probably heard of many traders refer to K.I.S.S. What they are talking about is Keep It Simple Stupid but I changed that to Keep It Stupid Simple. For me I like to change it slightly so that way I am talking about how ridiculously simple the process or pattern is instead of calling myself stupid. Little word games that can make a world of difference. Maybe that’s just me but it works!
SO why is this blog post about keeping things stupid simple? Let me explain…
Now I have been trading with a live account for nearly half a year now and one thing I have heard many new traders talk about is how they feel they need to try every pattern so that way they can find what works for them. This is actually a destructive idea as they don’t even know what patterns they are focusing on. Now I am not saying I know everything because I don’t. My post here comes 100% from personal experience.
In this post I am going to provide simple solutions that have helped me zone in on some of my favorite setups.
How to Find Your Setup
As you begin your trading journey you hear about so many different setups from buying and selling within a few minutes or hours to swinging a trade for days/weeks/months/years all the way to short selling a stock (betting that the stock will go down – read this blog to get more familiar or watch THIS DVD alll about Short Selling!).
Dip n’ Rip, Morning Panic Dip Buy, Gap n’ Crap Reversal, ABCD, OT Swizzle, Earnings Winners, Contract Winners, First Red Day, First Green Day, Multiday/week/year Breakout, and many many many many more! These are just a few patterns that traders reference when they talk about their go-to strategies for trading penny stocks.
But how do these traders find out these are their favorite setups and how many strategies do they trade?
From my experience back when I paper traded thanks to the paper trading feature on StocksToTrade I learned quickly that the best way to learn my niche strategy was by listening to my teachers video lessons and picking ONE setup that sounded like it fit my schedule. I chose First Green Day OTC Closing Near Their Highs With a Catalyst and Volume for a Potential Over Night Hold. Sounds like a mouth full. What made me decide that this was the first strategy that I wanted in my arsenal? Simple.. By becoming a student of Timothy Sykes I was able to watch video lesson after video lesson that explained, IN DETAIL, this strategy and how to research for it.
As I chose my first setup to put all my energy into this allowed me to refine my process until this strategy became my bread and butter which resulted in a majority of my paper trading profits.
Choosing One Pattern at a Time
Why This is Important
By focusing on ONE strategy at a time, this allows me to research, IN DETAIL how to identify a First Green Day. That’s the first step. Identifying the beginning of your selected strategy. You want to know your strategy inside and out. See why I say Keep It Stupid Simple? Believe it or not it’s more complicated than most would think.
For my first strategy (this doesn’t have to be yours you can choose whatever first pattern you want to focus on. These are just ideas how you can learn to breakdown the structure of a strategy you want to focus on) it was key to learn what a First Green Day meant.
Was it the first candle stick that was green? The image I chose above of $IGC was a great example of First Green Day. See at the far right that GIANT green candle with MASSIVE green volume underneath? After watching many of Tim Sykes’ video lessons I learned that THAT is what I want to identify in a chart for a First Green Day. It Simply means a BIG first green candle with BIG green volume. But that’s not all…
This is just the first step towards becoming intimately familiar with your chosen strategy whatever it is that you choose.
Taking Your Knowledge Further
After I was able to identify the beginning of this pattern I chose to learn how to identify the intraday picture. How do I play this “First Green Day OTC With a Catalyst and Volume Closing Near Its Highs”? Such a mouth full but I watched SO many of Tim’s videos until I memorized that so I could identify it.
Dissecting it further I went through the categories. (Yes I know $IGC image is of a listed stock and not OTC it was the first photo I found with a massive first Green Day for the example.)
To break it down further let’s put these in a list.
- First Green Day with Volume
- OTC (Over The Counter this is not a listed stock)
- Catalyst – this could be news of some sort such as earnings, contract winner, announcements, press release, SEC Filing, etc.
- Closing Near Its Highs
Hopefully this is making sense..
List in Photos
First Green Day OTC with Volume – This is also a former runner as you can see $RBNW had a previous big first Green Day that led to a second Green Day in the middle of the photo below. Here is my blog post about how I traded $RBNW.
Next is identifying a catalyst. For this stock I went to OTC Markets after clicking on that SEC Filing at the bottom right of the image above. In the SEC Filing it stated something about the person who had a majority of shares, IF I remember correctly. This was a year ago so I apologize. I haven’t taken newer screen shots lately for a recent example of this pattern. Anyways, there was a gal named in this filing and I went to OTC Markets to find extra details. After that I looked the ladies name up and found that she was living in New York and into fashion or something like that. I assumed that by her living area and interests that she would try to do something to cause the stock to continue higher in order for her to make extra money. This stock also had a history of 2nd green days after a big first green day. So now I have another check marked off my list.
Next is identifying if the stock is a solid intraday pattern that shows strength into closing.
This stock had a decently strong close. This pattern can vary as in the current market hasn’t favored holding a strong First Green Day overnight as they have been failing. This is just for an example of how I began a year ago.
Anyways, in the photo I drew a circle how I bought on a dip into the close and sold into the spike the next day. This was very common when I began.
What if The Pattern Isn’t Working?
How to Track Your Strategy Stats
So I just mentioned how this pattern hasn’t been entirely ideal during the time of this writing as it’s been best to sell into the strength near the closing of the first Green Day. How do I know this? I track all my trades using TraderSync – my personal online trading journal.
How I am adjusting..
My new strategy is known as OT Swizzle which received its name from several students in Tim’s Trading Challenge.
My process of tracking – I’ll do a more in-depth video and blog on how I track the statistics of new patterns in the future this is just a basic blog post on how to begin finding niche strategies/patterns to trade – this is done on Profitly, TraderSync, and my own person Google Sheets.
By using those to track patterns and also taking screen shots I began to notice a trend and I could no longer hold these first green ays for a gap up the next day. I had two choices. Wait until the came back or adapt to a new strategy.
Adapt or Perish
A Successful Trader Adapts to Markets
I began to adapt to the changing markets. In doing so I began trading with a live account. My focus was adjusted to Morning Panic Dip Buys. This was during the CoronaVirus stock craze when stocks were easily spiking 100 – 1,000%! To begin my adaptation I studied Morning Panic Dip Buys for weeks. Hundreds and Hundreds of video lessons!
I began with the same process as above. My process started with identifying the first day of the run up.. Then how many days has the stock spiked – what price did the stock begin and after how many days was the stock price up? This could mean the stock started at $1.00 and spiked to $10.00 in 3 days. That’s a big spike with no consolidation (no resting period).
What was the catalyst that was spiking this stock? Fluffy press releases and Twitter Tweeters that were pumping the stock and hyping them by saying they were going to the moon. These stocks were mostly listed stocks that I have been studying so they have a history of offerings. This means they want their stock price as high as possible so that way these companies can sell stocks at a discounted price in order to raise money. Watch Learn to Read SEC Filings DVD to learn he details of such events.
Anyways, stocks were bound to have morning panics and after the panics they had a tendency to bounce for a single. These were happening nearly every day so I began to grow my account.
Now that the hype hasn’t been as abundant as previous months I am now adapting back to the OTC market. My new strategy is trading the OT Swizzle. Don’t worry I will make a more detailed post/video on what I mean by tracking this new strategy.
Basically I have been watching countless videos that teach this strategy thanks to Jack Kellogg, Kyle Williams, and Mathew Monaco, respectively. Below is a video of how I finally traded this pattern beautifully according to my plan.
I have spent week learning to identify this pattern based on the ideas I have listed above. First I wanted to know what days this pattern occurs. Big Green Days, ideally strong firsts and Breakouts whether they are multiday, week, year. Still collecting more data though. Also, it works best with a catalyst. $JCPNQ is the video above that I traded and I show the catalyst that moved this stock. Next I bought with a good risk/reward ratio which is also demonstrated in the video. Finally I developed a plan, let it play out, and sold safely into strength for a solid single.
Studying Patterns Becomes Easier
Learning to study patterns and identifying the patterns that work best for you comes with practice. It’s taken me a year to learn this process and hone in on specific criteria and strategies that fit my schedule and personality for my current trading account potential. The more you submerge yourself into the trading world the easier it becomes. Hopefully this little insight on how I choose a setup to focus on and how I go about studying and preparing for it helps you gain and idea of how to prepare for your beginning patterns!
Remember this is your journey and it’s a marathon and not a sprint. Take your time and study hard!