Indubitably, chart patterns are the one biggest discovery in my buying and selling profession.
The truth is, it was a Supernova helped me earn my first $1 million again in 1999 and 2000.
Again then, I didn’t perceive what I used to be taking a look at, solely that I noticed large potential.
Intuitively, I purchased breakouts and rode the wave larger and better.
It wasn’t till years later I acknowledged that it was a part of my 7-Step Penny Stocking Framework.
Whereas markets have modified, the patterns stay the identical.
As a buying and selling mentor and trainer, I’ve taught 1000’s of scholars the right way to acknowledge these formations and use them to craft worthwhile buying and selling methods.
That’s why we’ll dive into my current commerce in Nano Labs Ltd. (NASDAQ: NA).
I submit each commerce I take RIGHT HERE for anybody to see.
It’s an ideal instance of how I capitalized on one of many many HUGE alternatives.
So, let’s begin with the sample after which dig into the execution.
The Sample
Most merchants are aware of standard patterns just like the ‘bull flag’ or ‘double prime.’
The one I’m most pleased with is my Supernova.
As I discussed, this sample helped me earn my first $1 million.
However what many don’t understand is that like an actual Supernova in area, it by no means actually dies, it simply modifications kinds.
That’s why I at all times search for Supernova patterns, even when I miss them.
I hold them on a watchlist as a result of they typically construct the inspiration of future trades.
However why am I speaking about Supernovas when NA wasn’t one?
As a result of the teachings I educate utilizing Supernovas may be instantly utilized to this inventory.
NA was a current IPO that began t by buying and selling a few weeks earlier than I took the commerce.
Typically, the marketplace for IPOs is scorching. Different occasions, it’s like a breezeless ocean.
Proper now, we’re in a kind of scorching cycles.
And get this…NA had the identical underwriter as HKD…you already know that inventory which ran ~20,000% from its opening IPO print!
There has additionally been a rash of IPO spikers reminiscent of MAIA Biotechnology Inc. (NASDAQ: AMEX) and Virax Biolabs Group Restricted (NASDAQ: VRAX).
Taken collectively, these puzzle items implanted the concept in my head NA may observe go well with and spike.
Now, as a result of the inventory was so new, there’s additional threat concerned. I needed to ensure it wasn’t a dud.
I adopted it after the primary spike on the twenty fifth after which bought very when it spiked once more on the twenty ninth.
You’ll discover that after an enormous spike on Friday, the inventory pulled again considerably on gentle quantity.
Given the run different shares had the previous few days, I anticipated there can be a chance to purchase shares on a pullback.
In a nutshell, I concluded that Monday needs to be bullish for the inventory, at the least off any pullbacks.
That’s what led to the dip shopping for framework.
The Execution
With this framework, I deliberate for a commerce that ought to spike off a dip.
From there, the commerce is fairly simple.
I merely search for a spike and pullback from which to enter the commerce.
As you may see, shares spiked early, pulled again, after which held simply above the open for the higher a part of an hour.
I entered the commerce figuring out that if the inventory continued to drift sideways or break down, I may simply exit the commerce.
Positive sufficient, proper after I jumped in worth jumped 10%, giving me a improbable alternative to promote into power.
There’s one thing else to remember right here.
Your complete vary for today fell inside Friday’s vary.
Shares are much less more likely to fully crumble once they sit inside one other day’s buying and selling vary.
Nevertheless, as the next day demonstrated, as soon as the inventory spiked above Friday’s excessive and made a brand new all-time excessive, that’s when sellers actually hit onerous, sending shares plummeting.
I wish to take the trades that supply constant outcomes slightly than those with huge payouts.
That’s how I’ve made my buying and selling profession with the sample that’s allowed me to maintain at it for greater than 20 years.
Closing Ideas
Each commerce wants a sample to develop a thesis.
From there, you may create the commerce setup inside that framework.
Should you attempt to create a setup with out the sample, it lowers the chances of success.
—Tim
