Good morning, traders, this is Jake from jakethestockguy.com. Let’s get right into today’s charts. What am I looking at?
SPY, yesterday, crazy action. I’m holding onto this penny stock that was a member’s trade idea. I think I’m holding a million shares of it. It’s either a million or 10 million. ITUB was Nivette’s Leap Year call. I really liked it. I thought it was a good Leap Year, so I grabbed some. It’s funny, QDEL and Square, they were doing fine when we got into them. I bought what was in my opinion a dip. It was a good dip buy opportunity.
Then we had that really nasty pull back on SPY as you all witnessed. I really didn’t feel like averaging down, personally. I just chickened out. I was like, well, I’m pretty extended right now. In case we do have a 20% or greater correction, I’m not going to be averaging down on anything, but you just don’t know. This is part of life. This is part of trading.
I’m still in my Square calls, my QDEL, PDR, that was a Nivette calls. These three were Nivette calls in the Member’s Trading Channel that I liked. I saw these, and I said, hey, these look good. Let me take them, try them out. I really just try and take my own trades. Dan in the Penny Stock channel, he’s very active, and he’s a really good trader. He’s a friend of mine up in Oregon. He posts some really good ideas for penny stocks. He posted this one [03:15].
It’s my first time getting in the OTC penny stock world. I was like, oh, let me try. That one’s just been a pain in the butt. I just want to see it go green. I feel like I’m a bag holder. It’s shares, so technically they don’t expire like options. Maybe a year from now this will be green.
Square, these expire in April. These [03:41] expire in March. Luckily, we went out far enough in expiration so that we could handle that pull back. I can’t believe they got me like that. Like I said, know your risk.
One thing that I want to talk about this morning is going to be a little bit more about the psychology, and the rules, and the strategy of trading than what I just happen to see on the charts. That’s just half the battle. The other half of the battle is learning how to properly manage your risk. What I like to do is only put 1 to 3% my total portfolio in one trade, in any single one trade we take.
I don’t have a stop loss. I’ve experimented with this so many times. The stop loss thing doesn’t work really well. I’ve been 60% down sometimes, and then the trade will come back to break even. Then I’ll be 100, 200, 300% green and sell it. To each their own.
Everybody has to figure this out on their own. What’s their strategy? I’m going to tell you what’s really worked for me. What’s worked for me the best, and I’ve experimented. I’ve tested this thousands of times in trades. Tight stop losses, break even stop losses, no stop losses, 20% stop losses, 30% stop losses, 50% stop losses, and what works the absolute best is no stop loss and 1 to 3% of your total portfolio in any one trade. I’m not going to average down unless I have a little bit more room to add. In that case, I might, depending on the situation. Those who remember the M trade we did, I did add to that trade because there were a lot of strong convictions there. I went in really small in the beginning. I was able to add.
Anyway, that being said, don’t panic. Remember, if you panic, you’re in too big of a position. If you have a small account, you need to focus on taking trades that only cost you 1 to 3% your total portfolio. If you got into this Square or QED call, and it was 5, 8, 10, 15% your total portfolio, and you’re down 31%, trust me. You’re going to be freaking out. You’re going to feel it. If that trade doesn’t go well, and you sell for a loss, and then it comes back to be a winner, you don’t learn anything. You just keep losing money in the market until you lose everything. You didn’t learn anything, and then you quit. You never trade again. You say the stock market’s a scam because you weren’t disciplined enough. You didn’t give it 100% of your all.
Let’s see what SPY does today. I’m hopeful. Hopefully, we don’t go down anymore. You can sell any of your positions. I don’t care. Your trade, my trade, I don’t care. Just take profits, don’t panic sell. Remember, risk management is the number one rule of all trading, 1 to 3% your total portfolio in any position.
I’m not a financial advisor. This is just my opinion. This is how I’ve done it. This is how I’ve been able to stay successful. I’ve been doing this for a while now. Trust me, I’ve had a lot of ugly sad days, weeks, months, years of trading, and just never giving up, and really digging deeper and deeper, and being persistent until I finally just got to where I am today. I’m able to help other people. That’s what you’re supposed to do in life. That’s Jake’s rants for the morning.
I’m 56% down on this trade, the PBR, but I’m not selling. I’m not panicking either because this is options. You don’t know how it’s going to end until it’s over, until you get really close to the expiration date. This could go down more. This could come back to break even. This could go on to be 1000% winner. You don’t know. What I’m doing is I’m watching the charts. This is the other part of the battle. I’m being patient. I’m being disciplined. I’m not panicking.
Let’s go to the PBR trade, for instance. I have multiples on this [08:39]. I have 10 April 12 calls. Let’s go to PBR. I’m going to teach you something right here. This is going to be worth an entire year’s membership in this one little class. What I’m going to do is this [09:04] is the ten-minute time frame on the five-day. This [09:07] is more of an intraday day trading chart. Look, that PBR call is April 19th 12 calls.
Let me go out to the year-to-date. I’ll show you why I took this trade. We’re pretty low here [09:35] on the RSI on the daily time frame. Let’s see what weekly looks like. Weekly is cool and everything too. I don’t really mess with weekly. For now, I like dailies. Look how well it works. Stochastic was off the 20. If you went out two months, one month, look at that run. You’re rich. You guys are rich.
This $1,000 probably became 50 to $100,000 on this one run. You never hold it this entire run. You probably sold right here [10:37] because the RSI on the daily was high. The stochastic was high. You wouldn’t have been able to know that. You could have sold half and then let the other half run. You couldn’t have known that this [10:53] would have followed suit. You would have just been watching your charts and said, okay, we’re pretty maxed out here [11:00] and here [11:01] on the daily from this entry, from here [11:04] to here [11:05]. Time to get out. Plus, you’re coming into all of this [11:07] overhead historic resistance. Then it just kept going up bulldozer style.
What you could have done is sold half, let the other half run till closer to expiration date. I’m down 56%. I’m holding two. I’m holding a shorter term expiration and a longer term expiration. The longer dated expiration, the Aprils will be fine. The February 26s, those probably are gone. On the daily time frame, what I’m looking at is for this [11:42] to go back to the top of the range. It was here [11:47], all the way up here [11:52]. That was a good move from here [11:54] to here [11:55]. What I’m hoping for is a move from about here [12:00], right here [12:02], which represents here [12:04] when we got in.
Maybe we can fill this gap fill window at around ten, and that will be good profits. That will be at least 100% return, I would imagine, especially with trading options and the leverage. If I were to panic sell that 56% loss, and then I check back; I come back here [12:35] to look at PBR on the daily time frame, year-to-date daily. PBR is up here [12:40] at 12 or 11. I’m going to be so angry. I’m going to feel like an idiot. Why did I sell for a loss?
You’ll never be able to do this. You’ll never be able to day trade and be a full-time day trader if you can’t get the discipline and the rules down and master your emotions. Losses are going to come. That’s inevitable. You’re going to have more wins than losses if you stick to your formula, your trading strategy, your rules, and your risk management. You never want your whole portfolio to be invested at one time either.
Let’s say you have a $10,000 account. You only want $6,000 invested at any one time. That prevents you from any correction or crash. The party could end. Imagine you’re 100% invested in your portfolio and calls. That’s never a good thing.
That’s all I got for today. I’m looking at ETSY as a day trade. I like the 230 calls, break of this resistance. It’s already doing it. I like [14:23] for a day trade. Nice, the yes is moving. Let’s keep an eye on the five-minute time frame. I’ll be watching it on the ten-minute. It’s a little less noise. I want to see something here [14:54] too really quick, yeah, same thing. I’m looking for a little bit of a dip to this trend line. On ZS, I like the 220 strike price. Hopefully, we get a pull back at the market open in ten minutes. ZS, ETSY, and then GRPN, these are my top three focus list for day trades. Nobody expects this one [15:32], but I like it. Hopefully, we can get a good entry on one of these. I’ll be rotating between these three.
That’s all I’ve got for today. Good luck. Let’s have a great day in the markets. You know the drill. This is Jake the Stock Guy signing out. God bless and see you on the charts.
