The problem I've found with this low float/ low price stocks that gap up premarket and fly at open is they generally move upwards HUGE the first 10-15 minutes and spend the rest of the day spiking mostly down and up, but mostly down. However, they are virtually impossible to short because brokerage cannot find the shares to borrow which pretty much only allows you to trade long when the majority of the time it's dropping. With futures you get both the volatility and the ability to trade both sides, and the liquidity to sell fast.
There are only a handful of patterns you need to learn to recognize. Yesterday, SOHU gapped open, gave an H1 buy signal, and an to its high of day soon after 10AM and then went into a trading range the rest of the day. MARA gapped open, pulled back and gave an H1 buy signal and ran up in a wide bull channel hitting its high of day after 1 PM before pulling back. MNOV gapped open, H1 buy in less than 15 minutes, followed by a bull flag and all bull flags are H2 buy signal. That ticker ran up nicely until almost noon, then had an orderly pullback with an H2 just shy of a 50% pullback. RIOT gapped open and pulled back, giving an H1 buy signal rallied to its high of day about an hour later, sell signal was the micro double top 5 or 10 minutes before 11 AM. SCKT gapped open and pulled back. It did give an H1 buy signal a few minutes before 10 AM that had terrible context (a lot of selling tails, unable to get back above the open, five out of the first six bars were bear bars). Best to leave alone, but even if one had taken it is was only a 23 cent per share risk for a 49 cent reward if you simply targeted the high of the day. I leave those plays for the short sellers, however. I want to see an H1 or H2 within the first 15 to 20 minutes of the open. I will also buy a breakout of a tight extended range. These breakouts sometimes do not occur until very late in the day. For gappers up I am long only so the HTB doesn't bother me at all. Also Interactive Brokers has an good borrow list generally, and if you really want to be a short seller of garbage stocks, then Centerpoint Securities is probably the best with locates. But I am long only these stocks that gap up. It is good to keep in mind that most of these tickers are garbage companies, frauds, fakes, etc. and the reason to trade them is to trade their temporary volatility only. That volatility can die at any time. For every all day runner there are probably 7-10 tickers that day that gapped open and sold down the rest of the day. I have 79 tickers on my screen as I type this. Of those, only 5 at the moment have the price action, volume and number of trades required to put them on trade watch at the open.
I can't imagine whom you are referring to. But perhaps you are mistaking the word "discipline" in this context with discernment. So simple that Brooks had to write 4 books totaling 2,112 pages to explain the simplicity? That simple? So simple that his video course exceeds 98 hours? That simple?
After we got married, I realised my wife was a total beginner cook. She would go to the bookshops and buy cookbook after cookbook but somehow the improvement was miniscule. Next she decided to go for baking classes. Her baking improved but the overall cooking didn't. After a few months of this, I took matters into my own hands. My friend owns a restaurant close by where I used to eat often as a bachelor. I went there and asked the head cook who was 60+ to come home with me and teach my wife to cook, and I would pay him for his time. So i took him home and he spent about an hour showing her what she was doing wrong. The next day I had my first decent meal in months A week later he came back, by that time her cooking had already improved tremendously..........1 hour was all it took.
A must read for traders The 80/20 Principle: The Secret to Achieving More with Less Be more effective with less effort by learning how to identify and leverage the 80/20 principle: that 80 percent of all our results in business and in life stem from a mere 20 percent of our efforts. 1949: Zipf's Principle of Least Effort One of these pioneers was the Harvard professor of philology, George K. Zipf. In 1949 Zipf discovered the "Principle of Least Effort," which was actually a rediscovery and elaboration of Pareto's principle. Zipf's principle said that resources (people, goods, time, skills, or anything else that is productive) tended to arrange themselves so as to minimize work, so that approximately 20-30 per cent of any resource accounted for 70-80 per cent of the activity related to that resource.
I probably need a bit more experience before I tread into that high volatility. Even with Al Brooks I'm still a bit wet behind the ears and getting my feet on firm ground though I have doubled my initial principal. I had thought of using the high 1's and 2's strategy, but knowing how manipulated these stocks can be I was unsure if they followed suit. Thank you for the heads up.
That paretos principle is an observable phenomenon and not anything you have any control over. Not sure how you would identify it and leverage it before you even have the data that's just impossible. And before you tell me that you utilise it by cutting out the 80% and focusing on the 20% high value data, that also won't work because it is recursive in that the original 20% becomes 100% and you are back to square one. Infinite regressive loop.
This is the 60 minute chart of AMD showing current price action. AMD may trade higher today, and I hope it does. But it is no coincidence that price has met with some profit taking at $75.80. This isn't prediction. This is probabilities. AMD had a 60% chance of trading higher this week than last week's high, and if it did break last week's high it had an 80% chance of trading to the $75.76 measured move. All based on statistics gathered through data collection and testing. That testing, of course, is based on a thorough understanding of pivot selection and a correspondingly thorough understanding price action. The pivot I selected may seem random to the untrained observer. But it is not. It is based upon a method of quantifying swing length or extent. The fact that the high of the current spike was a mere four cents higher than the measured move target indicates that I am not alone in using this method for quantifying swing extent and pivot selection. There have been almost 3 Million shares traded this morning spread over 16,000 transactions, and a few of those trades may be attributed to professionals yet to arrive at their desks taking profits with limit orders set days ago.
AMD may see the $80's $79.66 or better today if the market holds together. Additionally, if the market holds together, there is a good chance it is going to trade @par in the coming months. Given the market we have been in, if the market holds together, AMD could reach par in days. H2 long just off the lows and a baby cup with handle long and a few minutes ago a breakout to new highs long. These entries are all straight from the Brooks trading course. Nothing in life is guaranteed, and there are trading losses. But to think that price action is itself not an edge is nonsense and is an opinion borne of ignorance of price action rather than any a posteriori knowledge. edited at 11.38 AM to tighten the possible profit taking objective to $79.66