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How to Find and Ride Short-Seller Momentum - YouTube
Channel: StocksToTrade
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- So while a dog might
be man's best friend
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and diamonds are a girl's best friend.
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And today we're gonna talk
about why short sellers
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are a day traders, best friends.
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(digital music)
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Hey everyone,
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Lead Trainer with stocks
and trade Tim Bohen here.
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Be sure to like, subscribe
and share these videos
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and also definitely one
of the biggest things
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I want you to do is check
out the SteadyTrade team.
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You know, it's one of the
proudest accomplishments
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of my life.
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I mean, we're consistently
mentoring and training
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consistently profitable traders.
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I think it's the best way
to really learn trading.
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Man, we're gonna talk about short sellers,
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we're gonna talk about
float rotation today,
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we're gonna talk about
key levels, whole dollar,
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half dollars, high day,
lower day, 52 week high,
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green to red, red to green.
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We're gonna talk about a bunch of patterns
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or not patterns, but terms in this video.
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And hopefully you'll learn them all.
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But the best way is with
repetition to learn anything.
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I mean, I think the best way
is just repeat this stuff,
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repeat this stuff over.
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'Cause a lot of what we're trying to do
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is pattern recognition.
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SteadyTrade team, two webinars
a day, every single day.
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I've got over 2,500 webinars,
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I'm there every day with
you going over this stuff
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check out the SteadyTrade team.
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All right, that being said
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why are short sellers a
day traders best friend?
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You know, in my opinion,
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what's great about
targeting these key levels
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that I mentioned is you
know the panic points,
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well, you might not know yet,
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but I'm gonna bring it to you.
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You know the areas that short sellers
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are most likely to panic
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and then what that creates
is panic buying, okay.
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That creates market buys.
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And if you've ever done a market buy,
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you know you get the
worst feels in the world.
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If you're trying to market
buy a stock at two bucks
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they'll fill you at 2.25
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and then the next print will be two bucks
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and you'd be like, what just happened?
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You know, I'm immediately
red on this stock
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because I used a market order,
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because they give you a crappy feels,
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it's just what brokers do.
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It's just, it is what it is
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we can't do anything about it.
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And what happens when short sellers
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see those higher daybreaks,
see those VWAP reclaims,
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see those 52 week highs,
see those red to greens,
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that's one of the biggest
levels we look for
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and they're gonna panic buy
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because they know, at
least if they're smart,
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if they're not total newbies,
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they know that they have
unlimited potential losses.
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I mean, in 2020, yesterday
we had a stock up
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three, 400% EARS, I mean
look it up for December 1st.
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I mean, dubious news,
nothing but a short squeeze.
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And the reason that stock
moved is a bad long-term chart,
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historically a terrible
company, very dubious news
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but it was a 1 million float stock
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that repeatedly broke the higher day.
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And actually, let me bring that one up.
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I've got another one to focus on today
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which was one of the best ideas we had.
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But look at EARS yesterday,
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I mean, look at every time this
stock breaks the higher day.
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So you've got the pre-market high,
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what happens when it breaks?
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It spikes, pulls back.
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But then what happens
when it breaks a high day?
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Rips, pulls back, breaks
high day, rips, pull...
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I mean, and I can just repeat all day long
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as this thing marched from
$1 to I think a high of 6.60.
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$1, just over a dollar
share to a high of 6.60
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and just rips through higher days.
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And you know that's gonna happen
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because short front load
these stocks, they can't wait.
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I joked about in one of the recent videos
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I joked about the teenage
boy on a first date,
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you know, short sellers ruin everything
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just like teenage boy on a first date.
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They can't wait, they ruin everything.
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So anyway, (chuckles) that
being said, they get into early,
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they get too excited, they get too heated
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and then they get squeezed
out over and over again.
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And if you look for these panic points
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those are your buy areas.
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Now you always have to have a stop
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and that's why we use
in the SteadyTrade team
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I talk about the three to one
risk to reward methodology.
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I've actually got a technique, where we,
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based off of the chart, we
determine our risk of reward,
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we determine our goals
as well as our stops
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'cause remember with a lot of these stocks
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you got to have that predetermined
exit on the plus side too
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'cause if you get greedy,
they often pull back hard.
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And that's why I really love
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that three to one risk reward methodology.
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So let's skip to CATB today.
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And this is a great example
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of what I call that dip and rip pattern.
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And if you've been on the channel,
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if you've been on the pre-market preps,
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you know every morning at
8:30 Eastern, I go live
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and listen, you could
go back to December 2nd,
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2020's pre-market prep
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I call this a dip and rip
all day long at 8:30am.
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After the stock had
already pulled a dollar
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off of its highs.
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How did I know that?
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How did I predict that
at 8:30am right here?
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And then the stock breaks the
high of the day at 10:00am
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and proceeds to spike a dollar a share.
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'Cause I know that when
shorts short this dubious news
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you've got a relatively low float
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I mean, this is a 17 million float
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but it's mid day right now
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I mean, I'm recording at 11:30
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and it's traded 170 million shares.
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That's 10x float rotation
halfway through the day.
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And you can do volume projections.
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You know, volume projection
is another technique we use
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in the SteadyTrade team
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where we calculate what we
expect the daily volume to be
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based on those early
candles when the news hit
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and then we can extrapolate
and do rough math,
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you know it's an estimate ultimately,
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and what we think the
likelihood of flow rotation is
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and how many times the flow will rotate.
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And so we knew this is a high volume stock
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it's a weed stock,
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I mean, loosely tied with weed,
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but we knew that pulls into the open
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and looking at this candle,
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look at that opening candle,
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big yank all the way down to a buck 75,
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I mean, which was dang
near red on the day.
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And this thing went from
1.66 to 2.40 in pre,
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and was 12 cents from
going red on the day.
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That's the bait, that's why
we love short sellers, okay,
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they take the bait,
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I mean, many of you know, you
follow me on social media,
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you know, I'm an avid
outdoorsman, big-time fisherman
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I love to fish, and that week open
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and you hear me say this
again, and again, and again
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it's just like flipping
that lure out there
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and it's just sitting there
on the top of the water
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and you know, the fish was
just like looking at it
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he tries to ignore it but he can't tape
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you twitch it a little
bit, he takes the bait
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and then you hook them, you've got them,
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and that's why they're
my best friend (laughing)
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So then now we know,
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look at this building volume,
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you get the VWAP reclaim at 9:38am
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that's your trigger that
this stock is in play.
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Okay now, you know there's a lot...
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I mean, smart short sellers.
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I mean, here's the thing.
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Every smart, short seller exited
on that VWAP reclaim, okay.
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They knew they short at the week open
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'cause of the day use news,
'cause of the bad chart
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the smart ones, the ones that
are successful at shorting
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took the loss at VWAP.
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Now, the ones I like are the dumb ones,
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the ones that are dumber
than a fish, okay (laughing)
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And those are the ones that wait,
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they're hoping they get saved,
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maybe some news comes out,
maybe an offering comes out,
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they're the ones that
panic at that high a day.
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And you can see that beautiful
2.40 break, 2.50 break
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you know, we talk about a whole dollar,
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half dollar's even better,
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and then you're risking down on VWAP.
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So let's say you buy it
at 2.50 break at 10:00am
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you're risking down at
2.24, risking 25 cents
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and the proceeded spike 75.
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Now you're not gonna sell the exact top
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you can see that top was pretty quick
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but you got your three
to one rest of reward.
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And then you get this heavy
red five minute candle
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and you take your exit, maybe
you make 50 cents a share,
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maybe you make 40 cents a share,
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which on a $1 stock, 1.66
stock to kill or move
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it's a killer trade.
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And here is the last point I will make.
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Why do I care about CATB?
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Why do I care about EARS from yesterday?
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Listen, I'm recording this
video because it was scheduled,
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it was in my task manager,
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they said, Tim, record a video
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on why short sellers are your best friend.
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It sure pops up on my calendar
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and all I got to do is,
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EARS was the number one stock yesterday
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CATB was the number one stock today.
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These are all patterns that
repeat and repeat and repeat
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and if you know what to
look for, float rotation,
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week opens, VWAP reclaims,
whole dollar half dollars
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and high daybreaks particularly
if they're 52 week highs
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those are all great signs.
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And you're just checking those boxes
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checking boxes, checking
boxes, checking boxes.
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Doesn't mean it works every time
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but I'm telling you
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these heavily shorted stocks
that break the high of the day
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three, four times a week, we
get one every, every week.
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And if you're under the PDT
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you can only trade a few times a week.
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And what difference would
it make to your account?
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If you had a couple hundred shares at CATB
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maybe a thousand shares at
CATB and you catch 40 cents.
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I mean, small account 400
bucks, that's a nice day.
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I mean, that's a nice day
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even if you don't have
a small account, right.
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You know, nobody's going to complain
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especially if you're a
part-time trader or a new trader
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with a $400 a day on a
consistently repeatable setup.
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Then what if you had a
couple thousand 5,000, 10,000
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you scale up that's what's
great about these plays.
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You look at that volume 180
million shares traded at 11:30am
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you could trade millions of shares of this
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and get in and out.
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So it's a scalable strategy too.
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So what I love about
these liquid NASDAQ's,
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I mean, I know a lot of you might be
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true penny stock traders and
you're looking at the OTCs
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and stuff like that, which
got nothing against that
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but you know, you can't
trade those with size
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because you can't get in and out.
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The great thing about a CATB,
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is you can trade millions
of shares of this thing
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when it ends up trading 200 million,
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300 million shares on the day.
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So focus on all those
levels, take your notes.
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Again, I talked fast, I
threw a lot of terminology,
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a lot of jargon at you on this video,
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re watch, itS free, its YouTube you know,
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and then also if you
really wanna get in depth
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like I said, check out
the SteadyTrade team.
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I mean, I go fast in these videos
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'cause people on YouTube have
short attention spans, okay.
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We try and keep it
right around 10 minutes,
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every webinar in the SteadyTrade team
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is 45 minutes long minimum, okay.
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45 minutes minimum.
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We treat it like a class
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you take a class, a college
class, a high school class.
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What are you gonna get
done in five or 10 minutes?
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45 minutes every day, twice a
day, you can get a lot done.
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All right everyone, have a great day.
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Look for that next hot foot rotator
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you know, hot sector,
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that dips at the open and
breaks the high of the day
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and then we won't even talk about the VWAP
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or high at daybreak pattern,
which is the same thing.
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But we'll save that for another video
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have a great day and
we'll see you next time.
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