Sunday, June 11, 2017

How to Improve Your Fundamental Research Capabilities

Preface: I am not going to hold your hand and walk you through how to read a filing in this post. However, I will leave you with an actionable guideline on how to accomplish just that, some insight to how your mentality should be when you are doing this research, and the type of questions you should be asking yourself during it. Hope it helps.

Step 1: Stop pestering people "Will you teach me how to get better at research please, please???"

That really is step #1. Stop looking for a handout, you won't find one. The thing with fundamental research is this. It is LEARNED, not TAUGHT. I want to make that very clear, and you need to understand that first and foremost. By that I mean nobody is going to sit down with you and go over a step by step guide "Ok's what an S-1 is, write the definition down, and now lets go look at 3 examples of S-1s and their terms so you understand it better!" No. Not happening. That's not how you're going to learn this stuff. There's no DVD on it. There's no book about it. You teach it to yourself. And I'll explain how to do that in a few minutes, and how I personally did that. 

And also another least for me, I found that early on when I was going around asking for help, "hey what does this filing mean?" so on and so forth...I wasn't learning ANYTHING. If someone gave me the answer, I'd understand it for about an hour or two..and then it went right back out of my head again. You can't ask for these answers. You have to go get them. When you do your own digging and find your own answers, the information is MUCH more likely to stay with you in any lasting, meaningful manner. Having this information spoon fed to you is a very much band-aid, and an ineffective one at that. You''ll make little to no progress with this approach.

I want to debunk some myths about fundamental research quickly also. First off, this stuff is NOT rocket science. I often hear people saying "it's so complicated I don't even understand it or know where to begin." But I promise you, that really is not the case. You are either 1) very lazy and expecting something unrealistic in your pursuit of this knowledge or 2) you're just looking in the wrong places with the wrong approach. I'd like to give everyone the benefit of the doubt and assume the problem is #2, so that's the place I'm going to start from through the rest of this post. But you really need to tell yourself and go in with the mindset of  "This is not that complicated, and I can do this." - because its not, and you can. You just need the right approach. 

Often times if you're reading a filing of a sketchy company (our favorite kind), they're usually trying to hide stuff. So the filings will be long, with a lot of nonsense and "filler" verbal diarrhea to try and distract the reader from finding the real dirt they're looking for. That's part of the cat and mouse game. So you'll need to develop that skill of sifting through the bullshit, which just comes with time. But honestly at the end of the day, none of this is DIFFICULT, in the sense you don't need a PhD or an IQ of 190 to figure it out or get good at it. You just need to understand the game. And the fact that yes, this is indeed a game, and nothing more. If you've got a good head on your shoulders, a hunger and desire to figure it out, and a little bit of common sense, then you have all the tools you need to be a top tier researcher. The only thing standing in your way after that is time. A little bit of work, and time. 

So without further ado, how the hell do you learn this crap and become fluent in Pig Latin? Two words that are going to be your absolute best friend on this journey: Reverse. Engineering. 

That's the process of being able to make sense of these filings and situations through examining past instances of other filings and situations. A process of working backwards to reach your desired goal. Let me elaborate. 

Here's how the exercise works. If you have dabbled in this stuff in the past, then you are probably a small cap short seller, and you are familiar with all of the "usual suspects" as I like to call them. The XGTIs, ETRMs, DRYS, SSHs, CYTRs, IDXGs, there's a million of them. What I want you to do, is go through all these names past chart history, and find the huge mover days, both up and down. For example, right now I'm looking at IDXGs chart. I pull it up and I say "Hey, 12/07/16 was the start of a massive 3 day move, what the hell was going on there?" So now I want to go into the filings and news, and look at everything that was produced around that date. What filings were released? What did they say? I can now dig through the filings, knowing ok, this was the start of a massive pump, and dump. What were the signs? How could I have seen this coming through these filings and PRs? You now have everything in front of you. All the fiilings, and the resulting price action from those filings. Time to just work backwards.

That is the beauty of this process. You've already got all the answers you need! How many times do you read a PR in the morning and say "well... I have no idea what that means or how the stock is going to react to this." - probably pretty often right? Well, when you are using this reverse engineering process, you already have all the answers to those questions. We already know that starting on 12/07/16, IDXG went absolutely buck wild and ran from 2 to 20. Now all that's left to do is read all literature, filings and PRs released around that time, and figure out the "why" from there. 

And this can be done for ALL run days, not just these massive ones like the IDXG December run I'm pointing out. Lets use a different example, and go through the type of questions you should be asking yourself. 

Now I'm looking at XGTIs chart. On 07/07/16, XGTI ran a coupe bucks, and closed on its highs. So you should be thinking "Wow, this was a strong move. What was PRd that day that led this thing to run and keep all of it's gains. Why wasn't it weak like these names usually are on run days?" Stuff like that. OR....on 12/19/16 XGTI ran again in a similar manner..but this time it gave back almost all this was very weak news. What was said in that PR on that day that caused this thing to be so weak and give everything back? Compare the two, the PR from 07/07 and 12/19, what was similar about them, what was different? Why do you think one closed on highs, and the other gave nearly all gains back? Were there any other filings in play around the time of the second PR that weren't for the first? Questions like that. It will require you to do some critical thinking and analysis, but again, none of it is all that difficult, it just takes some work. Tell yourself that from the start, and it will be easier to make progress and keep motivation.

Hopefully you're catching my drift. Find the big candles, up or down, and examine them. Where did the stock open, where did it close, (assess strong/weak), and then go dig through the news, already knowing the price action outcome, and try to marry the PR to why the action took place the way it did that day. This exercise won't always lead you to SEC filings, often times it's just a PR (well technically an 8-K filing usually) but I mean you won't always end up digging through Form 4s, Ds, 13Gs,  EFFECTS, S-1s (offerings) or 10-K/Qs (quarterly annual reports) all that. So this exercise will help not only in filing reading, but in general news interpretation as well. 

But often times, it will lead you into the filings. So my advice is this. Don't just generically start googling "how to read SEC filings" or "what is an S-1", you should be googling that stuff as it pops up in your reverse engineering, so it's relevant to the current piece of information that you're looking into at the time. So if you are in the middle of on of these, and you find a run day where ETRM dropped $3 and closed on its lows, and you see no PR that day, and the only thing you find is an S-1/A released? Then its time to google "What is an S-1", familiarize yourself, and then go digging into the ETRM S-1/A that you believe caused the huge drop that day. 

I hope this makes some sense guys. I'm not going to lie to you and say this is going to be easy, either. Because it's not. It's going to take a long time, and a hell of a lot of dedication and work. There is a reason so few people are good at it and have this knowledge. is totally do-able. Like that 6 you've been eyeing at the bar all night, 8 beers later, totally do-able. I don't want you to think "well I'm not a genius so I'll never be able to do this" because that's just not the case. It is absolutely attainable by the average investor if you have the desire to make it happen. So don't get discouraged thinking you're not smart enough. You likely are.  

Its just like reading tape. It may not all make sense early on, and may just seem downright confusing, but as you just keep at it, it slowly starts to make more sense, just trust me on that one. 

And again...remember the beauty of this process is that you already have the answers. You can already see how the stock behaved on those past run days, now all you have to do is go read back and do some investigation work as to why. The days of  "I have no idea how to interpret this news" should be over, because you've already got the price action in front of you, now it's just time to work backwards and figure this stuff out. 

This is the way I learned how to read filings and interpret news. I TRULY believe this is by FAR the BEST way to do it. If you are not doing this...well, I'm not sure what you're doing, probably nothing. Complaining and asking others for help is probably what you're doing. So I would strongly suggest you give this reverse engineering method a shot, it was an invaluable tool for me, and taught me everything I know today. 

Good luck. 

- D

Tuesday, April 25, 2017

A Scope of My Plans To Become an Elite Trader

Welcome back.  This is a long one but please read the whole thing, I want the message to be crystal clear. I have every intention of one day having my name mentioned with all the greats in this game. And this is how I'm going to do it.

This will probably be my last post for a while. I'm taking my teaching hat off, and becoming the student again. I've decided to fully commit to my trading and really try to make the jump to the "next level", and unfortunately outside of my little circle, this journey will not be a public one. Social media, distractions, PRESSURE (if you read that post), I'll have none of that. It's not that I don't want to share, or that it's too private, it's just something I want to give 110% to, and eliminate all noise. I will be shutting my room down this year as well.

I think this is some very important information I'm about to share today, none of it revolutionary, or perhaps it is, but by the end of this post, I'll have nothing left to say. It will be time to shut up, and execute.

Lets get into it.

When I started five years ago, trading was something very different to me. It was a game. I liked to gamble, and I liked the rush.  It was fun, I enjoyed the sport of it. This is why most people try to become traders and initially become enamored with it, whether they want to admit it or not. And it's that same reason most people struggle to ever break any ground. Like all true degenerate gamblers, they're inherently lazy, and infatuated with the idea of easy money. They're not interested in learning how to make it and perfecting a craft, they just want it, and they want it now. I realized that to be my issue probably two years in, by mid 2013 I knew I had a problem. I'd make money, make money, make money, try to push, lose it all. I was never satisfied. It was a perpetual cycle of hell. I knew what the problem was, and I did it anyway. It made me realize "Wow...I'm not a trader, I'm just a lowly gambler who happens to trade." And that was tough to admit, but it was true. Until you can approach this like a job, and not a game or a fast track ticket to riches, you've got zero chance. Mine as well pack it in now and save whatever money you've got left. Because you'll never make it. Pay your dues and quietly work your way up the ranks. Five years later, I'm just now starting to get a brief glimpse at that overnight success everyone is chasing.
How about that. Who knew it didn't actually happen overnight?

Moving on to the main point of this blog.

If you've seen me tweeting lately, you'll notice that my beautiful handsome face is no longer my avatar (sorry ladies), and in it's place, this sniper scope. This is actually a fairly common analogy used by traders, but I want to explain specifically why I'm using it.

So... why a sniper scope? What am I targeting? Why not a machine gun or a bazooka? Why not a bull or a bear? Why not, I don't know...a Panda? You get the point. Whats the significance? Well it's quite simple and quite complicated all at once. Lets start to peel some layers off.

The simple part - I want to wake up every morning, pull up my Twitter, and see that sniper scope. To be reminded constantly that everything I do today should be mirrored around the image and likeness of a sniper. Everything he does is extremely calculated and measured. There is no wasted energy. You'll never see a commanding officer call on a sniper and say "Here's your target - shoot him in the leg." When they are in battle, they are governed and driven by the Snipers Creed: One shot, one kill. Trying to do maximum damage with minimal moving parts. Quality over quantity, always. I think the entirety of everything I want to be as a trader directly parallels that of a military sniper. Let's go deeper.

A sniper by trade is the very definition of discipline. Did you know in most instances, their primary mission has absolutely nothing to do with even pulling a trigger? The main duty of a sniper on the battle field is that of reconnaissance, information gathering. By profession and training, they are masters of stealth & process, which makes them excellent candidates to go behind enemy lines and collect information for the cause. Most times they are simply sitting, waiting, and observing. Calculating and recording their findings to be strategically used at a later date.

So let's switch gears for a minute and talk trading now. Are you starting to see the parallels of a military sniper to that of a very successful trader? Think about all the traders you know and idolize who are making more money than you could ever imagine. Do you think they are sitting in front of their computers all day every day, rapidly pressing buttons and trading everything with a pulse? Absolutely not. For all those truly killing this game and who have found wild success, it is about quality. Not quantity. Fewer actions, bigger impact. Betting only when the odds have swung in their favor, they're playing a very different "game" than the one I described above that most traders play.

Listen. Trading is indeed a game, and it is gambling, for sure. If you say it's not, you're lying to yourself. BUT, that doesn't mean you can't consistently win. I'll steal an idea from Tom Dante here: think about a casino - "The House". They gamble for a living. Yet they always win. Why? When you walk into a casino, they're willing to take a gamble that you'll  lose more money than you make at their tables. Sometimes they're wrong, but usually they're not. Although they're indeed gambling, it's with an EDGE, and over the long haul, as sure as death and taxes, they will always win. This is the concept I'm trying to emulate with the "sniper" mentality, of only trading the best setups. Only throw your money in the middle if there is a clear EDGE. If there's not an edge, what the hell are you doing trading it you undisciplined schmuck??? Of course you're going to lose over time! Remember why you're here - to make MONEY...not to constantly TRADE.

If you find you have an insatiable craving to just always be trading, looking for trades, over trading, chances are you're playing a child's game, not working a job. Your mindset is not correct and needs to be addressed immediately. The first step is acknowledging that.


Everything I do from here on out, I want it to be modeled after a sniper, not a mad man running in guns a blazing trying to trade everything that's moving.

I've had the pleasure of meeting and befriending Alex Temiz this year (@AT09_Trader), and this is the exact way he's begun to mold his trading style of late. LESS trades, MORE size, and QUALITY ONLY. He'll be the first one to tell you that since moving more towards this type of trading style, he's making more money than he ever did when he was very actively trading. I'm experiencing the same result since making the switch. He goes into some detail on this in a recent interview which you can find here, check it out if you haven't, some really good stuff in there.

I think it's just non-debatable that almost every trader trades too much. It's unnecessary, and it can be very easily fixed with a little discipline. Let me give you a visual example.

Here's a PnL of mine I dug up from almost exactly one year ago today. Pretty good. About +1600 in realized gains. I traded quite a bit back then, so probably all said and done after commissions and fees, that's about a net of +1200 or so. 11 names traded!! Probably 30-40 trades who the hell knows, a LOT. I looked like this for 8 hours straight. Just madness lol.

heh...NUGT was $88/share. Remember when it was $160?

OR, here's one trade from the afternoon of 4/24/17. Guess how much this one cost me? I was sitting on the Ask adding liquidity and getting rebates, so close to nothing.

11 names, 30 trades, $400 in commissions = $1200 net profit
1 name, 1 trade, $~0 in commissions =          $1200 net profit

^ is the point I'm trying to make here. Huge difference in activity, same end result.

Hopefully that adds a little color to what I'm trying to say. If you're running around doing 1000 share scalps all day, that's fine, but guess what? Scaling into one good trade of 10,000 shares is just like taking 10 scalp trades. Except you're in a QUALITY setup, and you DON'T need to be right 70-80% of the time to see some really nice profits. Scalping and piking in the long run will just have you doing a whole lot of cancelling yourself out, wearing yourself down mentally and financially through commissions, and not being very profitable. Can there be exceptions? Sure, there are exceptions to every rule. (I'm lookin at you Max! You're a beast brother, don't know how do you it lol) But as for the other 99% of you, it's not going to work out very well.

Also, it's not to say you can't make a nice living by scalping and make some decent money. You can. But I don't want to make decent money. I want to make GREAT money. And I think in order to do that, you'll need to graduate from scalping eventually - as it has it's limits.

This is the answer guys. I really firmly believe that. For many reasons. Find LESS trades, with BETTER entries and range, and hold them LONGER with more size. Not to mention with this type of trading style, you can have a LIFE, you're not chained to a screen for 10-12 hours a day. You get your good entry in the morning that you were stalking, it starts to move in your favor fairly quickly [that's how you know you got a good entry], you set some hard stops overhead at your determined risk level, and you're done. Move on to the next task, and just let that one work. You're gonna be in the trade for a day or two often times, longer if it's working and hasn't hit your target yet, so no need to sit there and stare at it all day. It lightens up the stress load and provides so much more freedom to go do other things. For someone like Alex, it allows him to help out his dad at the family business in addition to trading. For me, it's going to allow me to start investment projects outside of the market to generate a steady stream of passive income soon. You can't multi-task and do those things if you are chained to your desk and have to scalp trades all day to make money, it's just not practical in the long run.

Also, isn't that the main reason we trade anyway? Seeking financial independence and FREEDOM? How can we have the freedom to do other things if we're sitting at a desk all day every day. You're no more free there than you were at your old 9-5 desk job. I believe this type of trading allows you to both maximize your profits, and maximize your LIFE, your flexibility, wrap all that up into a ball and we'll call it maximizing your potential.

I don't know. That's how I feel about it. It's all still relatively new to me as well. Even if it meant slightly less profits than trading every day all day, I'd still probably choose this path just because of the freedoms it allows elsewhere. can actually make more this way, so why would you not strive for this as the end game?

Now, this is not a solution that can be applied everywhere to all trades, and I know not everyone can afford to trade like this yet. But you can start by practicing the root ideas intraday. And like EVERYTHING in trading, which I'm sure you've found out by now...nothing is that simple. You still have to understand share structure, situational trading (who's trapped, who's not) and be able to digest news and read SEC filings to find the very best trades to utilize this strategy effectively. And there is surely a place for scalping in trading, it's just your job to know the difference when a home run potential trade rolls around not to pike out of it. I'm not saying to stop scalping, I'm just saying do it less, and focus more on trying to catch larger moves over longer time frames. All of this is simply my opinion on the matter, and how I feel the best way to trade is.

And another thing about when you do find "the good ones"...theres another trader I talk to almost every day now who I'm not going to name, but his philosophy is simple. When he's in a trade, it's always a good one, and you are NOT pushing him out of it. Imagine a pig is consolidating under VWAP for a while. If it starts to pop and break up towards it, 99% of traders will shit their pants and cover thinking VWAP squeeze coming. While the 1% making 99% of the money are licking their chops. When proper research is done and you know you are truly dealing with a pig, they welcome higher!
I'll talk to this trader all the time and send him a message and say "Hey you short $XYZ yet?" and he'll usually say something along the lines of "yeah I started but want higher." "please higher" things of this nature. How many of you get in a short trade and wish it goes higher? Probably not too many.

These little mentality shifts when you encounter a "niche play" for you make all the difference.
Pops thru VWAP on volume where everyone is stopping out, they're adding. Thats the difference. Will you sometimes get nicked up a little bit by sticking your neck out and doing this? Sure you will. Part of generating larger profits comes with taking on bigger risk as well, but it's all relative. Not "reckless", just relative. If you see someone lose 10-20K on a trade and say "wow that guy is reckless and stupid", you may not know that he's trading with a million dollar account and risking 1-2% just like you are. Or maybe you're risking 5-10% a trade on your $5000 account, which would actually make you far more reckless than him actually! It's all relative.

 (I'm short PHMD as I'm writing this on Wednesday 4/26, its 1pm. Its consolidating under VWAP, most would freak if it popped 1.80s-.90s towards VWAP like it did at 10am, but I've got multiple short orders sitting out above VWAP to add into all the panic covers. Thats what separates the sharks from the bait. Understanding situational trading, knowing if it's truly a news scenario, or if it's just a trading vehicle scenario, when to be aggressive, and when to back away.) PHMD is up on no news today & light volume. Why on EARTH would it go higher here? Why? Does that make ANY sense to you? Of course not. It's a turd. So if it rips through VWAP, you better believe I'm adding and not panicking.

That type of mindset is where I'd like all my trading to live. How do you get that mindset? By paying your dues and watching pigs play out over, and over, and over, and over, and over again until it becomes second nature, you literally develop a sixth sense just by watching price action and digesting your surroundings of whats going on. That's the best way I can describe it. There is NO overnight or fast track success formula, no MAGIC setup, and no GURU/FURU who will get you where you need to be. Not a single one. Sustained trading success comes from within. End of story.

I'm rambling now, you get my point. Let me wrap this up.

If you approached me a year ago, or even a few months ago, none of this was my focus. I was an extremely active, intra-day scalper focused on whatever was moving, always cash every night, and always a couple hundred dollars in commissions every day. There is a better way.

I want to wake up in the morning before I start my scans, see that sniper scope on my page, and be reminded of exactly what my mission is and what I'm looking to do that day.

Remember the process of a sniper:

First, I'm looking for inefficiencies in the market & large % movers in Smallcap Land [The target/enemy] Once my target is acquired, it's time to begin reconnaissance. To go behind enemy lines [The SEC Filings] and gather information for the cause. Then, should the time come when I need to attack, I'll have my weapon tuned & ready, preparation complete, and the Snipers Creed in mind: One shot. One kill. QUALITY over QUANTITY is always the focus. No wasted energy. No in-out-in-out-in -out due to impatience or indecision.

I am here to find these above average plays, to bring SIZE to the party, and to IGNORE everything else. Not to scalp $XYZ for .15c. I don't want .15c, I want $1.50. I don't care if Stock X just ripped higher because of a buyout rumor, or Stock Y just got accused of fraudulent accounting and the bottom is falling out, or if Stock Z just popped because Adam Feuerstein tweeted out that his dog Bo thought it was a great buy and it tricked all the algos into buying it. I don't care about any of it. I'll have my scope targeting one thing and one thing only, my premeditated targets, with blinders on for everything else.

Always running to the next shiny object intra-day out of FOMO is what all undisciplined/bored/gambler traders do, and it's a losers game in the long run. If you don't believe me, try it.

This is how I'll be trading moving forward, and how I plan to reach all my goals in both trading and life. It all starts with unwavering discipline and a never-ending desire to continually become a better version of yourself every single day. And the only way to do that is if you push the money to the back of your mind, and fuel your journey on passion, not greed disguised as passion.

Reconnaissance. Accuracy. Conviction. Quality. Patience.

One shot. One kill. 

Good luck.

- D

Monday, February 20, 2017

A Collection of Everything I've Gathered On My Journey


We are all here to achieve various forms of the same common goal: financial freedom & independence.  Whether you're here for a little supplemental income in your spare time, or for enough to pay the bills and say you do something you love at the same time. Or maybe you're here to take it as far as you possibly can, and continually raise the bar towards a finish line that doesn't exist - a lifelong pursuit of greatness. At the end of the day, thats why we trade. To achieve this state of accomplishment and satisfaction, of purpose - to beat the market and feel content and complete knowing we have a skill most others do not. Where we can do something we love - with no boss, no obligations, no schedule, completely on our terms. Where there is no limit to just how high you can go. I'm describing a traders dream, but I'm also describing a very generic ideology than can be summed up in one word: Entrepreneurship

Is it the smartest idea? Probably not. 
Is it the safest idea? Definitely not.
Will you have loved ones calling you insane? Probably. 
Is it a potentially life changing idea?

Absolutely. And there's only one way to find out.

Thats why I trade. 
To find out, and to pursue that never ending finish line.

Now, thats the easy part. Dreaming about it and everything it could be. However when the rubber meets the road, that smooth pavement you had envisioned turns out to have potholes, detours, broken bridges, storms, and many other obstacles along the way.

Below are a collection of thoughts I've gathered in my past three years as a trader, which directly came from blowing out tires on those potholes, figuring out ways to get around those broken bridges, and weathering those storms.  They help me get closer to my goals on a daily basis and navigate my way through the shark-infested market waters. I hope some of them can help you as well. 





On: Why you should be sharing your charts & PnL with a trading partner or small group
This entire post.



These are some of my favorite tweets from the infamous Trading Fish, @mrockrulez

  1. Chart support & resistance are the two MOST IMPORTANT chart indicators u will ever need to know. Anything else just used to impress other fish.
  2. Choosing the right stock makes trading so much easier. I never trade stocks that are red on the day unless I’m shorting (never fight trend).
  3. When trading I choose GREEN stocks that have a bullish trending chart. When the stock changes trend or turns red on the day get the eff out!
  4. It’s very hard to make $1k but much easier to make $100. So TradingFish tries to pick trades wisely to gain $100 at a time. Patience is key.
  5. TradingFish 3 Day Rule: On 3rd straight days of green, stocks tend to drop. To be safe I reduce my position in partials each day beforehand.
  6. The 3 day rule is what turned TradingFish into a GOLD fish! Study the charts of plays and you will see it. This is my million $ secret shhh.
  7. Nothing is worse than when you’re UP in a stock and let that turn into a loser. To avoid that you sell on way up in partials! Money in bank!
  8. if the trend is bullish and it dips you can buy/add to average UP. This is not fighting the trend. Trade with the overall trend.
  9. A good simple technique is buy STRONG stocks 1/2 hour b4 close then sell 1/2 hour after the open. Stick to green rule & remember 3 day rule.
  10. The Green to Red is much more reliable indicator than Red to Green. It usually tanks HARD once the stock turns red on the day. This is a MAIN signal to watch!
  11. TradingFish used Green2Red indicator when shorting. The great setups are the promos that been going up daily and is on day 3 or more!
  12. Ok the upcoming tweet is literally the million dollar question : what is the BUY SIGNAL for the 3 day rule. It is break up of trend + volume.
  13. Search for a stock breaking out of a flat or downtrend. There is often a day 0 that insiders accumulate in silence before they break it out.
  14. Volume PRECEDES chart moves. Meaning spot the increase in the volume you will spot the upcoming movement.
  15. i need to work on avoid over trading. Im hardly ever down in the morning. Then i stick around, get bored & trade during the lull & lose back
  16. When in doubt avoid. If u want to gamble go to the casino. Live to fight another day. Tomorrow is a new day.
  17. Always remember when u long trash, eventually the garbage truck will come to pick up the garbage! Don't be greedy! Lock it up along the way!
  18. if u dont have a strong feel for what a stock is doing, DONT TRADE IT! wait for next opprtnty. Breaking discipline kills most trders
  19. When not in a trade, i watch stocks that have potential to be my next trade. Often a trade i make TODAY is from YESTERDAY's observations!
  20. Half the battle is knowing which stocks to trade & which to avoid. See what u constantly lose on & eliminate. Focus on maxing your winners!
  21. Markets change constantly. need to adapt w/it. What worked last week may not work this week. Complacency is death. Need to constantly evolve
  22. When shorting, timing the peak of stupidity is where big money is made. When reality meets stupidity is when the stock tanks & you get paid!
  23. You can be green 99 days in a row, but don't let that 1 red day wipe out those 99 & the next 99 days of gains! Have a plan & be disciplined!
  24. dead money (loss of opportunity cost)is almost as bad as losing. if stuck, better to get out & trade a different BETTER stock to make $ back
  25. blowups are due to 1) ANGER so u keep adding to losers, or 2) FEAR/not knowing what to do so u keep holding. PLAN AHEAD to AVOID EMOTION





Favorite Scanning Software:      TradeIdeas Pro
Favorite News Source:              The Fly, Benzinga Pro 
Favorite Food                           Italian 
Favorite Research Tools:           BamSEC, YahooFinance, Finviz Elite
Favorite Charting Software:      DAS Pro (primary), E-Trade Pro, ThinkOrSwim
My Brokers:                              InteractiveBrokers, en route to CenterPoint Securities

*I'm not receiving compensation of any kind to mention any of these, they're just what I personally use. I'm a paying subscriber to all that require. 

Well there it is. A collection of nearly everything I know and use on a daily basis, a collection of knowledge that is helping me every single day to get closer and closer to my goals.

I think that was enough words - so I'm not going to add any more down here :) I hope it helped. 

See you out there. 

- D

Monday, January 2, 2017

My Year (or Two) in Review, Critical Lessons & 2017 Goals

2016 has come to a close. I have many thoughts about it & the events leading up to me writing this post today. I'm pretty long winded as you all know by now, and greatly appreciate all who read my ramblings, thank you! Going to keep this one as condensed as possible.

I'm calling this a Year (or Two) in Review because well, thats what it is. There were two real defining moments for me on my trading journey thus far, both of them coming in 2015, actually. I couldn't realize them to be defining moments at the time or write about them then, because this stuff doesn't make light of itself until the dust settles, but they were. We'll start in May of 2015, when I was the greatest trader of all time. Obviously.

I had been in IU since 2014, blew up a couple tiny accounts, and started to see some real success in early 2015. I wasn't using huge size, just racking up nice consistent days. But I wanted more. Like seemingly every single struggling trader I talk to these days - I was trying to hit the fast forward button. I was going to be a millionaire any day now. All you have to do is follow your rules and trading is easy! Anyyyy day now...

So I had started to make a little money, I want to say I had about 40K in total trading capital. I opened up a new 5K SureTrader account that I had dedicated to trying to "press the issue" and use some size on smallcaps. I felt I was ready to do this, obviously completely wrong, but that was just the place I was in at the time, still very naive. The very first day I opened the account was when PTBI was running, so I said "fuck it" - channeled my inner Elkwood, and used every ounce of buying power they would allow me to, and bought $29,700 worth of PTBI. It ran a buck or two that day, and I doubled my account in a matter of hours, I still have the screenshot pictured below. I was still trading on the ST Web Platform! Makes me cringe now, but I was. Look at the T&S fills lol, I wasn't even scaling yet at this point, just " entry sounds good, I'll just go all-in right now and see what happens." I did this a couple times that morning. Oh Dante.

Long story short - I figured this was "it". All I had to do was grow some balls, and size up. I was golden. Oh Dante. Dante Dante Dante. Sit down for a minute kid, let's talk.

If "golden" is another word for an idiotic, delusional greedy pig....then I was golden alright. So now overnight I've doubled the account, 5K became 10K. The very next day I went right back to the same idea, and tried the exact same thing, and PTBI sold off the entire session. I added. I added some more. Sold for a loss. Rebought. Did it again. And again. And by the end of the day, I literally gave it all back. And I don't mean just the gains from the prior day, I mean the entire account. That was the 5th and final chapter to my blown account saga.

"Grow Some Balls" Account Value recap:

May 5th, 2015: $5000.00
May 6th, 2015: $9791.60
May 7th, 2015: $387.19

Not a typo. Not missing any zeros. I just blew the entire thing up, and had no excuses for doing it. Plain and simple.

I'm not sure if I"m alone here or not, but I'll throw it out there. I had this general "danger" meter in my head when managing a position. Say a loss went from like -200 to 400-500, I'd have been very concerned. But once it got past a certain point, I just didn't care anymore. Well I don't know if "didn't care" is the right description....but a switch flipped, and I got a lot looser, and was more in denial & pray mode rather than risk management mode. Does that make sense? Like a small red number going to 400-500 bothered me a lot, but say it ballooned to -1K, then I would see -1100, -1300, -1400, and it was all the same to me at that point (in my head) - it didn't concern me as much anymore because all I was thinking about was when it was going to come back down. Thats sort of the "deer in the headlights" moment. THIS is what ruins us. This is what attributed to every single one of my blowups. This is why, until you are more disciplined, you need to set max loss numbers with your broker, where if you hit a particular unrealized loss, all positions will be automatically liquidated & account frozen for the remainder of the session - those features. That is what prevents blowups. You will always think you are stronger than you are. You will always have faith in yourself that should you get put in that sticky situation, you'll do the right thing. But chances are, you won't. Not in the beginning at least. So try taking the decision out of your hands sometimes. Use, at absolute minimum, hard stops - but the max loss at broker is also another life saving tool. And don't underestimate the amount of mental capital you're protecting as well by doing that. Consider it if you're still currently struggling and dealing with blown account syndrome. Had I had either of those things in place on my ST account that day, it would have saved me so much money. But I didn't even know those options existed until much later in my trading journey.

Turning point lesson #1 - DON'T try to hit the fast forward button because of all the big money you see floating around on Twitter. Pay your dues. You hear this stuff all the time, I know. It's cliche, I know. But it's said so often for a reason. I am begging you to pay more attention to the things I say in these blogs, and the things you constantly read over and over all over Twitter and dismiss as "yeah yeah, got it" propaganda. Pull your head out of your ass, stop thinking you're "different" or better than everyone else, and pay your dues. End of discussion. There is no fast forward button. Are you hearing me? It doesn't exist.

So that was a big moment for me. I went back to my IB account that I had worked hard to build up over the prior year, with my tail between my legs. But I was proud of myself in a sense - that I knew I shouldn't try those games with my main account, and I mitigated risk by opening the ST account, where "absolute worst case scenario" here I lose 5K (or 10K but who's counting). That was a lot better than taking one of those major account crippling losses. I would see horror stories of guys posting these huge losses and just think "wtf? how does that even happen, how stupid can you be?" I was better than that. That would never happen to me. Never.

Funny story! It happened. Lets fast forward a couple months. I had mentally recovered from the PTBI debacle and had lesson #1 well in hand, wasn't looking for a fast forward button anymore, and went right back to business as usual, trading within my means and racking up unassuming green days. June, July, August, September, all nice profitable months for me in 2015. Then came October.

One word: Oprah. Middle of October WTW gapped up 100% from 6 to 12, and everyone was laughing, jokes all around about what an easy short this would be, complete joke of a company. turned out to be a joke alright. Except the joke was on me. I was short on Day 1 with a mid 12's average, and ended up covering two days later, right near the very top (or so we thought) in the 19s, thinking "here comes 20 & all bets are off". We don't need to discuss numbers there, you can use your imagination. It wasn't pretty, but it happened. The one thing I swore never would - I took a massive account crippling loss. About a 60% haircut of my total trading capital. I was devastated.

Turning point lesson #2: The second your trade thesis is invalidated, RUN. It's fine to add to a loser in the right context, but that better have been in the cards ahead of time & part of the plan, and done in a very controlled manner. I did not do that, not even close. My plan was "Weight Watchers? Seriously? This was big in like 1999. 100% gapper? LOL. I'll just wait this out." Great plan buddy. Cliche comment #1623 of the post: If you don't have a set plan for every parabolic short play, or any play for that matter, you're done. If you've avoided trouble thus far - just wait. It's coming. You can run, but you can't hide. The market humbles all who fail to adequately prepare, and makes zero exceptions. 

Use hard stops at first as training wheels, so you get used to the feeling of being stopped out of a trade, and realizing thats okay. Because it's going to happen.

That was one of the hardest days of my life, to sit there and soak in what had just happened, and to realize I had erased over 50% of my hard work in the last year. All gone, in one brief lapse in judgement. It's that quick, and that easy. No matter how prepared you think you were for it, your ego still takes over. You literally know that you're making a mistake, and you make it anyway. And it doesn't really register in your head right away, there's sort of a denial phase first. It really registered for me the next morning when I opened my account and saw the Equity number annihilated.

I believe the quote goes "Experience is something you don't get until just after you need it." And thats unfortunate, but necessary. Don't ever think you're a failure because you did one of the dumbest things imaginable in trading. Its almost a rite of passage. It's not a setback, it's a springboard to the next stepping stone if you harness it correctly.

What seemed like the worst thing that could have ever happened, turned out to be the best thing that could have ever happened, because from November 2015 on - it's been amazing, and 2016 has been a breakout year. That loss rocked me so hard that it literally drilled a lesson into my brain, whether I liked it or not, it was in there. I was SO aware of what disaster looked like and felt like now that I had danced with it. I had my head on a swivel looking for it, permanently. Not that I was "scared", I wasn't, but you better believe I was ready for it, and had much more respect for it. Mindful of it would be a better word.

And that was huge for me. I also started a small room to try and instill these lessons in other newer traders, which I still run, and it turned into something that had way more benefit that I could have ever imagined. To constantly say my rules out loud (I livestream daily) to others. That was further solidifying everything I knew and preached, without even realizing it in the beginning. It was a way to keep me accountable day in and day out. I discuss why that's important here, and it brought me to a group of guys whom I can now call trading partners, and more importantly, friends.

I would probably never have been motivated to do any of this had I not been slapped silly by reality and had my flaws as a trader thrown right in my face. Adversity and hardship are the precursors to all significant growth. You have to find the positives in every negative situation that gets thrown at you in this game. It will be discouraging beyond belief sometimes, but you need to spin everything as positively as possible and learn from it, let it make you better, not bitter. If it doesn't kill you, it only makes you stronger.

So that was the roller coaster ride of events to date in my young trading career that culminated in 2015. Conventional? Not quite. But I wouldn't change a thing. (What is conventional anyway?) I could talk about some of the wins too, but I think the losses offer a lot more value. And I'm sure there are many more stops to come on the roller coaster, thats in our job description as risk takers on the NASDAQ playground.

2016 Recap

Admittedly, I had not grown as much as I would have liked, and by grown, I'm simply referring to my position sizes. Most were between 1-4K, occasionally getting into the 5-10K size range in the latter half of the year, and that was about it. I can count on two hands the amount of trades I was over 10K shares, and on one hand the times it was over 20K shares. I'd like to get to the point where I can really hammer the big ones, and I think you need a certain amount of mental capital to do that, which I hope to find by accomplishing my 2017 goals listed below.

Mentally & consistency wise, I think I grew a ton. I got to a point where I feel balanced, and fully expect to be green every day, not in a cocky way, just a confident one, and when I was red, it didn't bother me because it was almost always planned. Planned in the sense the red days were very controlled, and just resulted from ideas that didn't work out, stops were in place & adhered to, I didn't continue to aggressively trade on those days trying to turn them green like I would have in the past, etc. Lull & boredom trading have become very rare, I still do it once in a while, but much less often. I've become an avid reader to pass the time in those situations, which has a double benefit. Not only am I not trading crap, I'm learning a lot about life and how to improve myself outside of trading, which inadvertently helps improve your trading, you just don't realize it. In 2015 before I opened my room, I'd go to the gym during the lull to avoid it. 2016 was books. 2017-20XX will also be books. Lot of good tweaks this year.

I had an overall win rate for the year of 76.9%, so green just about every 3 out of 4 sessions give or take. Very pleased with it.

Goals for 2017 

I guess the two main things are sizing up more, getting to that "next level", and becoming more research oriented. The two kind of go hand in hand to me, by becoming more research oriented & advanced there, you develop a stronger edge, which in turn gives you stronger conviction on the trade, which allows you to more comfortably size into the position. I'm a pretty calm person by nature already (was a little too calm on WTW D-Day lol), so I think this will be a somewhat smooth transition, whenever it does happen. Looking forward to it.

"Know what you are trading." If you don't know what you're trading, what are you even doing? Might as well put a blindfold on and go to church more if you don't fully understand the circumstances around what you're trading, and WHY it's moving. Everyone is focused on the fact "It's moving, it's moving! Nice!" But nobody seems to look into "WHY" further than the headline of a PR. 2017 for me is dedicated to taking the "Why" to a whole new level and understanding it inside and out.

So those are my two main goals. I've started a bit by laying out some early suspects here - and I'd like to take that level of research and improve it tenfold, really digging into the dirt on these smallcaps and truly trading with a significant edge.

We shall see! I'm very excited to see what 2017 has in store. I'll probably be tweeting a little less, not altogether, but just about the pigs - broadcasting your research to the world is not always the best course of action, in an effort to keep the masses away from crowding the best ideas. But I'll still be prevalent on the blog too. I'm running out of psychological stuff to throw at you in these posts before it will just be redundant, so maybe I'll get back to some Daily Trade Recap blogs like the old days, who knows!

Short & Honest Assessment of Progress To Date:

2014 Theme: Whoops
2015 Theme: Try Not to Die You Idiot
2016 Theme: Consistency & Process
2017 Theme: Growth

Hope you enjoyed the read, and wishing everyone a happy, healthy, and profitable New Year!

- D

Monday, December 26, 2016

A List of Top-Grade Pigs I’m Interested in for 2017

It's almost the end of 2016, and very much a "breakout" year for me. The second you stop looking for the fast track to success, put your nose to the grindstone and just unselfishly WORK toward your goals with pure intentions, things just start to happen. Good things. That was a lesson I very much felt this year, and one I'll always carry with me in everything I do, not just trading. That concept is difficult to grasp at first - "How do I approach my goals unselfishly and in the right manner?" - so I highly recommend you read the book Flow by Mihaly Csikszentmihalyi - he goes into great detail on how to achieve that state of mind. It's applicable to many areas of life, but especially applicable to the mindset we need to have as traders. This book has helped me very much.

I've began to develop a list of pigs who interest me in the coming months of 2017. These are names I believe are largely complete junk, and companies who have every intention of soon manipulating the unsuspecting public by trying to convince us otherwise - through a series of bullshit PRs, Reverse Stock Splits, Dilution, Toxic Financing deals, and who knows what else. But they're names to remember, and expect fireworks and great short opportunities from a lot of them in the coming year.

Always do your own research, that's the only way to learn. These are just some highlights.

SNMX - Oh boy. $14M offering disclosed last week on December 22nd, plus an additional 294K shares. With none other than your good friends at Lincoln Park Capital. Name ring a bell? If not, it should. They’re the firm behind the 100M shelf on good ole Anavex Life Sciences (AVXL), doing big things over there.... Lincoln Park has also recently been involved with a supporting cast of pigs like MVIS, TRXC (currently), NEPH, GALE, PARN to name a few, check out those charts, beauties. Expect similar stellar performance from SNMX whenever they choose to run it. LPC is just waiting to unload on the public now that they have skin in the game.

ETRM - this beautiful little piggy will be re-entering our lives soon on Dec 28th with a 70:1 reverse split, bringing the float down to about 1.6M - perfect humping range. Chatrooms & pumpers alike should have their way with this for a short while, then it’s time to dilute, dilute, dilute, and when they’re done diluting - just for good measure - they’ll dilute some more. Excited to watch this one. Think GBSN/RGSE here - thats the type of price action you’re probably about to see. 

OPXA - Hovering around magic NASDAQ compliance numbers. Only drug candidate failed to meet primary & secondary endpoints. Literally their only one. Not their lead candidate, their only candidate. 40% reduction in workforce recently for cost cutting, but only 20 employees to begin with, so 8 got the axe. The remaining 12 employees are now seemingly working on, well…nothing. Ah thats not true, they’re working on a way to keep the charade up as long as possible and squeeze as much out of this dying pig as they can to walk away with a collateral damage paycheck.  Also shockingly enough, the acquisition firm they had been in contact with, Ares, has declined to acquire the worldwide rights for said drug that does not work. Tcelna is heading to the glue factory. Pipeline empty. Now what? I think you can figure out the story from here. 

SSH - They’re gonna have some fun with this one in 2017. Poor shareholders. Was a valiant effort a couple weeks back to try and get this piggie over 1 and into compliance, they made it to… $ .96 prints I think I saw. I’m a big comedy fan. Would love to fly out to Minnesota for “The Special Meeting” happening on in a couple weeks on January 9th to discuss this piggies woes, should be pure comedy. 

Here’s a snapshot of the meeting plan:

I just imagine an entire room full of Sunshine Heart shareholders who look like this mulling over what they want to vote for:

“Hmm….I don’t know. Julian, Ricky, Mr. Lahey, whaddaya think?” 

They use the word "amend" 3 times in the first 13 words of Proposal 3, that sounds like a good choice to me, no?

Godspeed shareholders. Godspeed. 

HTBX - Main drug candidate is a cancer vaccine in pII, very, very unlikely trial success. Nice 3m or so offering sitting out there. To be issued when? “From time to time” Nice. Warrants exercisable at 1.00 - licking chops anytime they run this trash again like the end of November nonsense. Company also authorized to offer up to another 25M in stock anytime they see fit, which amounts to about 100% dilution from here, should they so please. Cool. I'm rooting for ya HTBX, I really am. Fuck Cancer. But theres a 99.9% chance you don’t exist in a few years, and you take some brave bagholders down with you on the way out.

*Side note: Very important side note. People get real touchy feely when you badmouth a "good" company, as in a company working to save lives, cure cancer, etc - you know what I mean. But here's what they don't get. I don't care what the company does - that run HTBX had at the end of November? Thats pure manipulation and bullshit, where they're duping investors and roping in new unsuspecting victims for their own benefit. Thats the part of these companies we mock. Nothing to do with what they actually do, and everything to do with HOW they behave - with entirely selfish & deceptive monetary agendas. Nobody is wishing they don't cure cancer. That would be amazing if they did. We're simply mocking the way they conduct their business that directly manipulates shareholders. SRPT was another prime example. Great company trying to do great things, but HORRIBLY deceptive management. Just look at that stock chart. Case and point. Same concept if you follow @BagHolderQuotes on Twitter - don't get bent out of shape. He's not laughing at people losing money - theres nothing funny about that, and it happens to all of us as traders and investors sometimes. He's laughing at the things people say about the stocks, which is truly funny sometimes. I'd like to assume everyone is investing responsibly and nobody is losing their house over a bad investment. I know it happens, but thats not our problem, either. If you're an irresponsible idiot with your money, you deserve no sympathy. Alright - moving on.*

TRXC - Just last week they signed a $25M offering agreement with Lincoln Park Capital as well, LPC is staying busy! Please, please, pretty please with sugar on top - run this heaping pile of trash again.  Give me $2 and I’d be thrilled. Float is kind of big at 90M now so don’t have very high hopes here for anything substantial, but any pop on this name is surely a gift. On watch now that LPC is back in the game - expect them to create some waves to push this higher before they start selling to recoup their initial investment and then some. 

AMRS - just received delisting notice Dec 19th, probably nothing happening here for a while. They just received a 3.9M loan & issued notes for it, but that money looks to be going to pay off some liabilities already in place re: a Factory. So they’ll need more. Very low on cash, keeping an eye on them to hook up with someone shady for a toxic financing deal, R/S candidate in the future, but, need to see them link up with their local Josh Sason first before we see too much pumping here. Clock is ticking but they’re safe till June 19th, for now.   

RXII - this one is ugly, and has been humped, dumped, re-humped, re-dumped, and now almost entirely left for dead. This one may not be able to be saved for a 3rd round. On back burner. They’ve duped investors multiple times already. However….if there’s one thing I’ve learned, it’s to NEVER underestimate human stupidity - idiots bought once, then they bought again, so whats to say they won’t a third time? Hold out hope we get the trifecta of humpage here. Not holding my breath, but a guy can dream. 

XGTI & IDXG are self explanatory shit shows, and have been delved into in great detail courtesy of your Twitter research rockstars, you know who you are. It’s printed in boldfaced lettering on every SEC filing these guys put out as to just what kind of true garbage they really are. 

REXX - There are some really bad debt ridden Energy names like our most recent flying bankrupt turd SGY, but this one is the pig of all pigs in that sector. What a disgusting balance sheet. They are out of 5550 compliance like most of the names on this list, but so kindly let us know two weeks ago “It’s cool, guys. We’re going to r/s soon and dilute the shit out of you all, don’t you worry you little baggie masochists, we’re going to give you your fix of pain!” No date set yet, but they’ve got until June 12th to figure it out. Oh yeah, and they have literally almost no money. So expect the process to be aggressive once they are ready to go: R/s, dilute, dilute, dilute coming to a theatre near you in early 2017, stay tuned.  

MNGA - #AnotherOne. Not an energy name, but for plan here, see: REXX. They’ve got until June 12th to get the r/s, pump and dilution party started. 

CTIC - They’re currently out of 5550 compliance, and will soon be fixing that with a nice Happy New Year 10:1 reverse split January 1st, and effective on January 3rd which will have them trading around $4/share. This company doesn’t appear to be desperate for cash nor do I see any sharks circling or financing deals around, so not quite as excited about this one. We’ll see. 

CYTR - good. lord. I’m just gonna leave this here.