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How to Grow a Small Account Day Trading? Penny Stocks NOT the only way for Beginner Traders! - YouTube
Channel: Humbled Trader
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Contrary to what all the marketing tell you,
Trading penny stocks is NOT the only way to
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build your small account.
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How iâve personally done it years ago, is
byâŠ.
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So most new traders, myself included when
I first started trading, lean towards trading
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small cap penny stocks under the impression
that, hey since theyâre cheap, I can buy
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more shares with my small account and make
that lamborghini money quick!
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While drinking at the beach or sitting on
the toilet.
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Well, five years later, I'm not at the beach
or sitting on the toilet.
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But i do own a lambo, hat!
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So I got to the point where I can afford a
lambo, hat, by yes trading small cap penny
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stocks, but also, trading momentum on large
cap and mid cap stocks.
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I incorporated trading these two kind of stocks
into my trading playbook, so I can adapt to
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various market conditions.
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Because letâs just face it, there isnât
going to be hot penny stock breakouts every
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single week for you to build your small account.
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And if i force those trades in slower marketsâŠ
well iâd lose all the profits from before.
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So in this video Iâll go be comparing trading
penny stocks versus large cap stocks, the
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best set ups in both market caps for people
with small accounts to take advantage of,
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and the specific market cycles and the months
of the year that favor those set ups.
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So if you have a small account, but are struggling
to find penny stock setups when the market
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is slow, and you end up forcing your trades
and lose all the profit from the hotter months,
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this video is going to help you out!
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And all its costing you, is this $5000 DVD.
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Just kidding, it's just costing you a simple
tap on the like button.
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I truly appreciate it.
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So let me address the two biggest misconceptions
regarding trading large cap stocks right now.
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First, trading large caps is like competeing
with ivy league graduates, while trading penny
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stocks youâre just competing with the dumb
money.
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And that's partially true statement.
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But what most gurus are not telling you is
that, when youâre just starting to learn
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to trade, and following their alerts and newsletters,
you are their dumb money.
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So they are selling you the idea that hey
its âeasierâ to trade and make bank in
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penny stocks
so you should come and join thousands of their
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alert followers, which, according to this
amazing trader psychology book âTrade the
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Traderâ by Quint Tatro, those tens and thousands
of followers trading small cap stocks, is
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the dumb money.
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And regarding trading large cap stocks, yes
itâs mostly smart money and big money in
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comparison to the small caps.
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But when institutions, aka the big money,
start pouring their funds in and out of a
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stock, they leave tons of money trails, and
itâs not difficult for us retail traders
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to follow the money and the buying or selling
volume.
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Weâll talk about these large cap set ups
for small accounts in a little bit.
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Now the second misconception regarding mid
caps and large cap stocks is that they are
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expensive for small accounts under $5000.
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But thats not true at all.
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$PCG was a stock in play last week.
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They have a market cap of 3Billion so its
a mid cap stock.
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But it was trading around $6, just like our
small cap stock XNET.
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And mid cap large cap stocks generally give
us a lot of range, especially when they have
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catalysts such as earnings and deals.
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So letâs take a closer look here.
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So $XNET is a small cap blockchain penny stock
that was very hot in the past week.
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You can see it spiked from $3 to $4.8 at the
close on Friday.
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And opened at $6 on Monday Oct 28.
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So letâs say with a small account you only
want to put $3000 exposure into this trade.
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And you pick up 500 shares of XNET at the
$6 breakout, and you sell into the pop at
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$6.30.
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So thats a 30 cents a share, which is $150
gain.
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For a small account under $5000 thats a very
solid profit.
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But what a lot of newer traders with a small
account cannot handle, is the volatility of
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these penny stocks.
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When a penny stock price fluctuates from $5.75
to $6 in 3 minutes, then squeeze to $6.80âs
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in 5 seconds.
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Then drops back down to 5.80 in 2 minutes,
its hard not to get emotional watching this
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price action when you have your hard earned
money on the line.
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Whereas if we take a look at Pinterest stock
on Friday Nov 1.
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The stock gapped down overnight due to disappointing
earnings.
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So with the same account if we were trading
the breakout of this dayâs high at 19.8,
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which is also an important daily pivot line.
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So with 3000 BP you can buy 150 shares of
pinterest stock, and you take the stock up
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for for 1 point to 20.80.
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So the profit would be the same 150.
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Yes its the same 150 profit.
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But the stock is way less volatile and much
less stressful than trading small cap penny
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stocks.
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The key is that large cap stocks like Pinterest
are more likely to form a trend, and stay
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in the trend up or down for an extended amount
of time.
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Of course not all large caps are like pinterest
stock here.
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But generally speaking, they are way less
volatile than small cap penny stocks.
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So once you get in long on the dips along
this trend, as long as the trend holds, you
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can stay in it for 10.
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20 or 30 minutes and more.
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Its much easier on your emotional health and
allows beginner traders to practice patience,
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which you need for either trading penny stocks
or large cap stocks.
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I remember when I started out in 2014, I was
pulling my hair out trading these volatile
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penny stocks.
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I swear I aged like 5 years in 6 months.
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I was like, no way man, I donât want to
have to deal with this sort of emotional hurdles
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up and down.
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If i keep on trading only these trash stocks
Im gona start looking like my real age.
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What really helped me with growing a small
day trading account years ago⊠is by tapping
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the like button at the bottom of this video.
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Be careful guys, Iâve gotten some complaints
that people are breaking their mouse and phones
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doing this.
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I really appreciate your support guys but
please be gentle with that like button.
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So what helped building my small account,
is to only trade small cap stocks during the
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hot cycles, and while the small caps are slow,
i would redirect my focus to the mid caps
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and large caps which are trading in much bigger
range and volume.
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Yes, focusing on one or two penny stock long
setups definitely helped, but more importantly,
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I only trade and look for these small cap
stocks in the market conditions that favor
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those set ups.
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Why?
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Simply said, most beginner traders starting
out only have the account size to buy or go
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long stocks.
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But as i had mentioned in this video on market
cycle psychologyâŠ
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Small cap sentiment rotation happens almost
every few weeks.
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Some weeks are going to favor the longs, while
others favor the sellers.
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This year pretty much most of June to September
was like that.
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We didnât see much continuation to the upside
on day 2 or day 3, and most of the premarket
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gappers just sell off right at the open.
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And if you were trying to look for long set
ups to build your account, well, there wasnât
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that much ideal setups.
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In this situation many people would go for
sub-par set ups, and chase the one or two
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breakouts that looks like it âcouldâ be
the turning point for the small ccap market.
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What happens next may sound familiar, Iâve
certainly done it.
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Iused to lose all the profits i made from
the hot markets favoring the longs in March
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and April, slowly in June to September where
everything is selling off.
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Like I said, Iâve done that years ago too
where Im expecting the same penny stock long
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strategies thats worked for a few days to
a week, to stay working the entire year.
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And that's just not going to happen.
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Unless you run a very large chat room with
thousands of followers where you could alert
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all of them to buy the pump after the half
a second internet speed latency.
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I mean, that sounds like a pretty smart and
solid strategy actually, why isnât anyone
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doing that?
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Man Iâve gotta put that 1000% winning strategy
into my âHow to make lamborghini money DVDâ.
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So what changed the game for me as a trader,
was to adapt.
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When I didnât have shares to short the penny
stocks in the market conditions that was against
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my long strategies, I started working on trading
mid cap and large cap stocks, instead of giving
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back all my profits from the months before.
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In the mid cap and large cap markets, there's
almost always daily fresh news and headlines
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that will provide opportunities for us traders.
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It could be China tariff news, earnings and
guidance , FDA approvals with biotech stocks,
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street analyst upgrades downgrades, or deals
and agreements between these publicly traded
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companies.
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As you may have seen in my weekly recap videos
posted every Saturday or Sunday, I trade the
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small cap pigs such as XNET, CANF, ISEE long
and short, and I trade many large cap earnings
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gap up and gap downs such as Tesla, BYND,
Etsy and Pinterest as well.
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Now I know most beginner traders just want
fast cash and make fifty thousand dollars
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in twenty seconds, but a lot of times, taking
10 minutes to read the earnings and guidance
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reports will allow you to form a solid trading
plan on these earnings plays.
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In large cap trading, you have your volume
as a reliable key indicator, and the trend
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to follow.
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What works really well for me in large cap
trading, is trading gap up break outs and
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shorting the gap fill.
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And yes, while I don't buy breakouts in penny
stocks, I donât hesitate to buy break outs
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trading large cap stocks.
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The good news is, many of the text book technical
setups like the descending triangle, or the
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wedge breakout, or the lambo flag formation
works really well in large cap stocks.
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What im trying to say is, if you want to trade
purely based on technical patterns, trading
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large caps could be a friendlier choice.
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Whereas when trading penny stocks, its much
more important to use trader psychology, not
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follow the crowd, the alerts, and trade the
traders on the other side.
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Because if youâre not trading against the
dumb money in small cap penny stocks, then
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you could be the dumb money.
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If you want to know more about trader psychology,
make sure to check out these videos.
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Stocks like AMD, NIO, SNAP, GRUB are all in
a manageable price range for small accounts.
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Another benefit is that these mid caps and
large caps are much more accessible for small
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accounts to short.
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If you have a margin account you could pretty
much almost always find free or cheap short
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borrows on them.
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And do not have to worry about not being able
to access hard to borrow penny stocks.
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I think all in all, traders with a small account
should focus on one or two set ups that theyâre
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really good at, and only them in the cycles
and the months that those set ups works best.
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If your go to strategy is to buy penny stock
gappers, then generally speaking March to
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April and October to December are the months
that favor that set up.
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And maybe in the slower months that doesn't
favor your set up, thats the time to paper
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trade and practice large cap set ups.
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The focus should be to preserve your capital
and profit youâve made already with your
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small account, and not to force trades using
the same strategy every single day.
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If you want to see more of how I trade large
cap stock earnings gap up and gap downs, make
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sure to check out my weekly recap videos.
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I talk about my approach in details there.
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And many of those set ups are friendly to
build your small account.
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And if you have any questions feel free to
leave them down below.
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And If this video helped you out, please remember
to always tap the likely gently for the Youtube
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algo.
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