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Spot the Red Flags! How to Stop Trading the Worst Stocks - YouTube
Channel: StocksToTrade
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- Something I always say is
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humans can pretty much justify anything.
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You could talk yourself into buying
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the worst of the worst stock.
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Some Twitter pump, chat
room pump, newsletter pump.
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I remember getting pumps
on the fax machine.
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That's how old I am.
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Hey, you can tell by the gray beard.
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But anyway, you can talk
yourself into buying anything.
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What I want to do in this
video is talk about red flags
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and things you should look
for to not trade a stock.
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Defense wins championships,
cash is the position.
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(upbeat music)
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All right, everyone,
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be sure to like share, subscribe,
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ring that bell to be notified
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as soon as we drop a new
video and most importantly,
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check out the SteadyTrade Team.
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Hit that link below.
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Something that we go
over every single day is,
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what's a good setup? What's a bad setup?
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Where do you stop? Where
do you have a goal?
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When do you know not to trade?
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And that's what I'm going
to talk about in this video.
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So that'd being said, check
out the SteadyTrade Team below,
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but there's a lot of red
flags that we look for,
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particularly in these morning runners that
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dip and rip that you hear me talk about,
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my favorite morning set up.
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And what I'm going to
talk about today is DARE,
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oddly enough, you may
think I'm cherry picking,
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but if you're on
pre-market prep every day,
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8:30 ET on YouTube.
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If you're in the SteadyTrade Team,
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you know my extreme disdain
for this stock, okay.
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You might be laughing now I've made many,
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all my jokes are bad,
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but my jokes about DARE
are particularly bad,
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but this stock always spikes and fails.
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And there's indicators
that you can look for.
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And again,
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last night, you know,
this thing gapped up huge,
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everyone wanted to talk about it.
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I mean, I actually, in pre-market prep,
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like I headed it off with the pass.
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I'm like, I came right out and I'm like,
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we ain't talking about DARE this morning.
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Now, when I was live, gapping up huge,
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they had some FDA news last night,
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everyone was like, DARE,
DARE, DARE and I'm like,
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we ain't talking about DARE, okay?
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Because I had, nothing's guaranteed,
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I don't, you know, I
can't say with certainty,
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but with high likelihood,
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I'm like this stock is gonna gap down,
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it's going to fade and
that you want to ignore it
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and look at DARE right
now, closed red on today.
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I mean, goes from up,
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50 per, 70-80 percent in pre-market
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when everyone wants to talk about it.
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So plus 70-80 percent to red on the day,
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0.9% red, probably gaps down tomorrow.
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So that being said,
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let's talk about the things
we look for a stock to avoid,
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avoid dip and rip.
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Right off the bat, 75 million float, okay.
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It's a high float stock.
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The biggest thing that
creates a good dip and rip
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is a dubious stock, dubious news,
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but low float understand
supply and demand.
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Remember, we've got a ton of videos,
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blog posts talking about float,
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talking about float rotation,
but just really quickly,
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the idea is, the lower the
float, the lower the supply.
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Then when there's great demand,
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when they drop a press release,
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when there's an FDA announcement,
when there's a pump, okay,
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that creates a supply
and demand in balance.
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What happens when everyone
wants pens? And there's no pens.
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I mean, we're going
through that right now.
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I mean, as I'm recording,
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we're in the middle of
this supply chain issue,
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inflation exploding.
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I mean, who knows if you
check the price of pen,
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it would probably be
up like 20% this year.
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Why?
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Because everything's so hard to get.
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That's what happens with float rotation.
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Something like DARE,
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odds are it's not going
to rotate the float
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until the end of the day.
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And you can see you traded
a 100 million shares.
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So sure it did churn through the float
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but it took the entire day.
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We like to look for stocks like an ISIG,
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which was a glorious dip and
rip, 1 million float stock.
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I mean, it traded the
first candle of the day.
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It rotated the float in one candle.
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When it broke out on high volume,
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it rotated the float 4
times in one candle, okay.
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Closes the day with 70
times float rotation.
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Traded 70 million shares
with 1 million float.
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So the odds of float rotation very low
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on a high float stock,
red flag, number one.
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Other one, chart history, I mean,
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one of the reasons I
hate this stock so much,
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this thing spike,
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I don't remember this thing
spiking early in my career.
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Okay?
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Look at every one of
these spikes and fails.
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Now understand the stock
never traded at a 100 dollars.
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It's also a reverse split stock,
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that's also another red flag.
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Reverse Split Plays were
hot a couple of years ago.
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They probably will come back,
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but know that right now
in the post 2020 world,
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the reverse split stuff is just,
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there's just haven't been plays there.
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So a stock with a history
of reverse splits,
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always a red flag.
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Look at all of these
timeframes, the tenure,
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the five-year, the one year.
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Look at this one year,
spike fails, spike fails,
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spike fails, spike fails.
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Every time the stock spikes,
it closes on the low of the day
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and gaps down the leg next day.
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Chart history tells you that, okay.
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So those are some of
the biggest red flags.
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Then zoom in and look at
the intraday action, okay.
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So remember this darker
gray area is after hours,
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this lighter gray area is pre-market,
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look at this collapse at 7:00 AM.
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That breakdown is what
we do not want to see
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on the intra day for a dip and rip.
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What we want to see is that
holding near the highs.
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When this thing collapses at 7:00 AM,
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look at those huge red candles.
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I mean, that's your death knell.
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And also from a technical perspective,
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it breaks last night support.
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So last night support after
it came out of the halt
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for news pending, you know,
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it based at 275 all through after hours.
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When it breaks on that level, you know,
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now everyone that bought
after the T1 halt,
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the news pending halt, they're all red.
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So you've got a stock with
a history of bag holders,
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that just created another
load of bag holders.
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Now, if DARE was hugging around three,
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maybe hugging around the highs,
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maybe I would've had a different opinion.
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But when I went live
at 8:00 AM or 8:30 AM,
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it's sitting here at the low of the day,
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looks like it's going to
fill the gap to the downside,
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but still, still and this is
what I want to save you from.
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People still were like,
what's the buy signal on DARE?
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And I'm like, there's
no buy signal on DARE,
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this thing is dead as can be
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based on lack of float rotation,
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based on bag holders on the yearly,
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based on bag holders on the intraday,
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based on this thing, couldn't
even get back to VWAP
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and pre-market, and ultimately
you have a stock within,
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in a very dubious sector, okay.
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They make these ridiculous
female health products.
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I mean, again, not a hot sector.
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So there's all these
red flags that tell you
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this stock should be in ignore.
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Now, hopefully you watch this video
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and you're like, I get it,
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you know, the volume is not there.
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The floats out there, the
chart history's not there.
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The news is dubious, bag
holders on all time frames,
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but hopefully you made it to
this point and these are all,
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you know, turning on light bulbs for you.
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So the next time you see a
stock that looks like DARE
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which will probably be DARE,
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who knows you might be watching this video
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6 months from now and it
would probably gap up again,
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fade and close red on the day
and gap down the next day.
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So if I can keep you out of
DARE in the coming years,
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that might make this
entire video worth it.
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But these signs,
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these signals replicate for
crappy non-ideal trades.
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That especially if you're under
the PDT, you should avoid,
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especially if you're
new, you should avoid.
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Watch the past videos, I
talk about float rotation,
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I talk about dip and rip,
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talk about all of these good setups,
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but if you're not
checking all those boxes,
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avoid, avoid, avoid, save your day trades.
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And listen, if you
trade a stock like this,
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you're probably going to take a loss.
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Maybe you keep your loss
small, which is a good thing,
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that's what you should do,
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but it's still a loss is a
loss that takes away your,
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not only your trading capital,
but your emotional capital.
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I mean, listen, I said it this morning,
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I'm like, this was my quote,
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I said, if DARE is the best
stock I got, the best idea,
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I will not trade today, will not,
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because odds are, I'm gonna
lose, I'm gonna get frustrated,
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And I'm going to be like, seriously,
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DARE of all of the
stocks, no float rotation,
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crappy chart on multiple
timeframes, not a hot sector,
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and this is the stock you
chose to take a loser on.
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So it drains your mental capital as well.
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You get frustrated, you revenge trade,
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you make more mistakes.
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You know, I think in,
momentum works both ways.
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That's one of the reasons I
preach taking small gains,
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you know, focusing on green trades,
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no matter how small momentum builds.
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Now that sword can cut both ways.
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Keep making bad mistakes,
you get frustrated,
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you get too aggressive, you revenge trade
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and you magnify your mistakes.
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So don't discount the value of
staying out of crappy setups
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from an emotional and mental standpoint.
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All right, everyone, check
out the SteadyTrade Team,
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ISPC, another low float,
hanging around gapping up.
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So anyway, it's a wild times, man.
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Check out the SteadyTrade Team, subscribe,
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share with your friends and
we'll see on the next video.
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