Sunday Mailbag - Send in Your Questions!

by | Aug 31, 2015

A few weeks ago, we gave people the opportunity to ask questions related to day trading, which we later answered in a YouTube video for everyone.

We're back for round 2!

This "Sunday Mailbag" series is designed to be a supplementary educational resource for those who have watched the DVDs and still have more questions.

Please post your questions about day trading in the comments below.

You can ask almost anything you'd like, but here are a couple of things to keep in mind:

- Questions should be specific and thoughtful (do not post questions that can be answered with a simple Google search)

- If your question is covered in Textbook Trading or Tandem Trader, we will just refer you back to the DVDs

33 Comments

  1. Hello Nate! Thanks for these Q & A's! These are really helpful to me being that i am studying all of this on my own. Anyways! Here my question: At what percentage gain or loss do you consider a chase? If a stock is up 30% or more would it be consider a chase? What if you see and ABCD patter forming? Would you get it in even though its up so much? Or are you already anticipating a retrace? Same if a stock is down 30%...are you already looking for the bounce? Thanks again

    Reply
  2. Hey, Thanks a million for sharing your view 🙂

    Risk Management Question
    I've been working on my own system for shorting Parabolic's in the Morning and sometimes I'd be required to get out into the spike (See Example). My problem is - where do you put you limit order for the cover, so that you avoid getting caught in a squeeze?

    Example
    Let's say you got into OHGI (on the 28th May 2015) at $2.85, there was Daily Resistance at $2.95 so you put your Mental stop above $3.... Now that it broke that Daily Resistance, the next Daily Resistance was at $4. So it could potentially run that far. So when it breaks $3, where do you put your cover order so that you can get out as quickly and as low as possible? so that you would not be carrying a low average up.

    I really want to figure this out as to avoid getting squeezed & squeezed & squeezed by changing my limit price and then ending up getting the worst price so I'd really appreciate it.

    Reply
  3. Hi Nate. What do you look for premarket and how do you anticipate a trade. Stock with range, volume, price action, gap up or gap down and general market emotions?

    Also what's it mean when you box shares?

    Thanks

    Reply
    • Ronnie this Q and A is an extension of our products - as I wrote I'm going to skip questions that are covered in our education material and how I trade pre market and use pre market action to my advantage once the market opens not only is covered in the DVDs but we went over it last webinar. My goal here is to help those who have already purchased the products get more value out of what they have learned. If you're purchased the DVDs already I'd suggest to go back through pre market scanning/action in Tandem Trader if you have follow up questions feel free to ask. Also the last webinar went in depth on this.

      Box shares I will discuss.

      Reply
  4. HI Nate,

    I have a few questions about some of the trades you took and your thought process and reasoning behind actually making the trade.

    First is from TRVN day 1. How did you know to go long at the immediate washout to $7.8 support right at the open? It could have easily faded from there as well.

    Second is BVXV right at the open. I saw you essentially top ticked the opening candle for a short. You said that was a morning parabolic but what made you short right there when it could have gone much higher especially considering the float?

    Two runners: TRVN and BVXV and one you go long and the other you short. What are you looking at that help you determine how to trade these?

    Lastly, you went long ARIA in the 6.90s and 7s after the deal didn't go through. How did you know to go long there? Was it because that is where the price was before the deal was announced? And if so, would you have gone long if it hadn't had gone all the way back to the original price?

    Thanks for having another of these Q&A.

    Reply
    • Are you a chat room member? If so - please check the last webinar we discussed all of these in depth. Let me know as I am doing the video today.

      Reply
  5. Hi Nate, thanks for the forum. A few questions. First, do you scan for OTC/PK stocks as part of your nightly process? And if so, how is it different than you standard process?

    Secondly, do you require knowing a company's float before getting involved in a trade? I notice the warnings you give to shorts are for the most part on low floaters and was curious if you make sure you are aware of the details before getting involved, especially with conflicting info out there on various sites.

    Lastly, during the pre-market, are you just looking at your watch lists and scans or do you have a centralized location that tells/alerts you on tickers that are moving?

    Thanks!

    Reply
  6. Hi Nate, thank you for teaching us from your experience and lessons learned you easily delivering by demonstrating on the chart. I've been profiting (by listening what market move tells me and respecting the trend). By understanding front side and down side of the move, plus combining staff movers, ABCD, and parabolics it helps me unticipate the move and go with them.

    What is challenging for me now is to find stocks with big range and volume to trade on a daily basis. I hope I will work on it and will be fine. I will let the time come to me.
    For now I follow your daily scans, your tweets and momentum chats.

    Again thanks, man.

    Reply
  7. I'm not a great day trader since I have (another) a full time job, but have made an okay profit recently. Because of my full time job I like to have relatively tight trailing stop losses (in case the boss calls me away for the charts). I normally put the initially stop loss at about 95% of the purchase price (or a recent support level).

    Recently I've found the stocks too be almost too volatile (not nice grinds up but quick jumps up and down) and I've been stopped out a few time later to be proven right.

    TRVN is an example from today (which I did not play, although I could come up with a number more from the last month which I did play). Buying it at around $10.75 at 2:55pm would have been nice given where it is now, but chances are I would have been stopped out on the snap back to $10.55 at around 3:05 before the power move to $11.40 (now 3:30pm).

    It had a nice pull back and consolidation from 2:45pm to 2:55pm which looks like an okay entry, but the volatility (even with a good upward trend) keeps killing me.

    How best can we deal with this phenomenon.

    Thanks (and love your work).

    Reply
  8. what are your scan requirements to search for stocks with volume and vollatility

    Reply
    • Scans are covered on both DVDs - I cover finviz more in Tandem and HOD list in the first

      Reply
  9. Q #1)

    1) How do you focus on multiple charts and not miss an entry or exit?
    2) Are you making a 3rd dvd?
    3) When do you know its time for the "next level" with a persons trading? How does one know what that next level is?
    4) In your experience, do SSR stocks have a higher chance of a squeeze?
    5) How do you trade stocks like $WAVX (on 09.02.15) that are so illiquid and each candle seems almost random and far apart as opposed to $OAS where there is tons of volume, each candle is next to one another, no awkward gaps intraday?

    Thanks Nate!

    Reply
  10. Q #2) ABC Pattern vs Failed Follow Thru Momo

    Both ABC and FFTM are identical till "Z". How does one justify that shorting at Z isnt going to turn back around and grind higher, forming ABC pattern. Do you just take the bet based on the daily chart, and overall market health/direction ($SPY)?
    -Some times at Z, for a few mins the candles work out the weak hands/go over-under and what not before it picks a trend (whether thats consolidate at Z before heading higher, or b/d). What do you look for intraday that helps you see which direction Z will go?

    Thanks Nate!

    Reply
  11. ~~~~The order of questions is in reverse, please answer them in order from 1-3~~~~
    Q #3)
    How do you decide on being short or long bias? (excluding shorting paras/over extended charts, or when they start to fall on the daily, and long anything up with a bullish trend etc..)
    -Lets take the news, earnings reports, rumors, press releases, contracts, and even daily charts out of the equation, because sometimes they just simply do not matter to price action.
    -Looking at the example i provided, $TRVN (09.02.15, blue line is vwap) has some crazy moves. It has multiple bottoms, tops, lower highs, but also higher lows. Its completely directionless.
    ~ I would have shorted it at the second test of HOD, covered.
    ~ Then seen that double bottom and longed, then sold it,
    ~ Then shorted again at the lower high at 10-10:15am, covered.
    ~ Then longed again around 10:30 as its grinding with higher lows (or shorted as it hit resistance at the blue line at 10:30)
    -Sometimes it does this dance midday as im anticipating it to fade till EOD.
    -Having only 1400 in my account, i need to use x6 margin. Its the only way i can make a few bucks over commission, so this directionless dance is killing my account from having to cover or sell (i don't go in too big, i use size appropriately for my account size and volatility/$ range).
    -How does one find conviction in a long or short bias and direction of stock when they do this sort of thing? Does one just ignore the stock all together or wait for trend to truly unwind? Or do i keep playing as i do, waiting for one of my trades to be the moment it chooses a direction? (stock jumped $2 from 10:30 till close for those who dont know)

    Thanks Nate!

    Reply
    • Long and short biased and how I come to that is discussed on Tandem Trader under scans section when I go over three different days and how/what I am anticipating the next day.

      With $1400 in your account your focus shouldn't be making money right now it should be solid education, potentially paper trading and making sure you "get it" and are making the RIGHT moves. Once you prove that entries are good exits are good THEN move onto real money once you've saved some up.

      Most try to make small accounts work and just grind down because they are more interested in the "get rich" thought process vs. taking the time to understand things first. Education is always most important.

      Reply
  12. Q1--- What do you think is the reasoning (macro-economics or whatnot) behind why BVXV went down so easily without a fight? pre-market it was kind of "the one" in play with major volume. My thnking was, since it was day1 and it had a 2M float AND it was like the only action pre-market.... that it would have definitely run. Do you think it was a crowded long squeeze out of the open? Was preparing to be long biased (in the "dont just short gappers" sense). Really confused on this.

    Q2--- As i tweeted you, do you think its a good idea to scale in 100 shares at a time (and build a good average around 1000 or so shares) for an account that is small? After watching guys like @JGram135 and @AT09_Trader I realise they scale in MANY times. I tried this and find its much easier to "find the top"/good average and much easier on emotions too. Of course with SureTrader its commissions per ticket, and yes scaling in a good few can make a single trade cost 50 dollars just to enter, but when it moves, you can make that back and more. would like your thoughts on this versus going in once/twice with 500 shares or so. Do I need to grow a pair and play bigger size?

    Thank you!

    Reply
    • Are you a member? If so Q1 I went over in the last webinar best to watch that vs. a specific stock in this sorta Q and A session.

      Will discuss Q2

      Reply
      • no. haven't been a member for a while. will come back soon again. just getting my shit together. thanks nate.

        Reply
  13. hey nate 2 questions:
    PM/AM action. What are you looking for that will help you make a decision on how you think a stock will react out of the gate. what are you looking for in price action/volume that helps make these decisions. Also what does the pm/am range tell you?
    Secondly - interpreting volume. You mention in the dvds about b/os or break downs having to happen with volume, are there any other ways to interpret volume that help you pick entry/exit points?.

    Reply
    • You are a current active member aren't you? We went through this first question last webinar.

      Additionally PM action is discussed on Tandem and also tells you why I wouldn't trade AHs and how the two are not related.

      I will discuss the second question.

      Reply
  14. Hey Nate! I have another question. Can you help with the understanding the front side and back side of a move? What are some key indications you use to say a stock is now reversing? Failed to retest? Lower lows? etc....What if the stock looks to be making lower lows BUT the overall trend says its moving upward? Are you going to be more patient at that point?

    Reply
  15. Hey Nate.

    I have a question for you, this has lost me quite a bit of money this week. How do you know when it is wrong to buy the HOD breakout. I lost money on $PBMD (you tweeted "Thanks for chasing after"), and again $UNXL today. When you see the big resistance on the ask get broken through shouldn't you assume that it will break out? How do you guys time the shorts so confidently without being afraid it will shoot up higher?

    My biggest weakness comes in discipline and chasing in fear of missing a play. But I just end up losing. I have the technical and setups down, and somehow I manage to lose due to discipline.

    Reply
    • Do you have the DVDs yet? doesn't sound like so -- but I think you answered your own question - why buy HODs? If you do, why buy a full position? If chasing HOD should only be partial so you can add to a winner on dips. Focus on entry not emotion.

      Reply
  16. Let's say that you want to buy 1000 shares of stock on a medium/light liquidity company that has maximum average bids/asks of 500 shares. How do you place your order so that it fills at the price you want?

    Thanks

    Reply
    • I would suggest the educational products we offer as mentioned above this is an extension of Tandem Trader and those who have purchased the DVDs and I'm spending time answering questions of those who have taken the time to educate themselves. Setting up orders/how to enter/where to place a bid or take an offer and tips and tricks of that is all covered in the educational material we offer.

      Reply
  17. Must you wait for support to break/backside of move before shorting pops? Or how do you add to a position successfully, assuming you got in on the front side.

    I'm not bad at getting a good average on the front side in the morning but how do you add to the position then into "pops"? Like How do you know it's a "pop" and won't keep going up and break the HOD?

    I've seen screenshots of many traders enter into the morning parabolic and then add into the next "pop"/bounce. I keep putting "pop" in quotation marks cause I don't fully understand the definition of them or how to identify them during the trade. Hindsight is 20/20.

    Then how do you know when it's time to start scaling out rather than still adding?

    Thanks Nate.

    Reply
  18. Hey Nate. I purchased your DVDs and always give positive reviews when I can, I really enjoyed the material. With that being said, I was wondering how you manage your time during the trading session to keep track of stocks. In other words, will you be on the computer the whole day, or do you take breaks from time to time? If so, how long are you typically away for? If you could run down a typical trading schedule, it'd be really appreciated.

    Thanks!

    Reply
  19. Hey guys, I loved what I learned from Tandem Trader but when I saw you make those plays on August 25th I couldn't help but ask, how did you anticipate those rebounds?

    I mean, how was it possible for you to be in all those plays simultaneously? If you could explain your thought process behind those plays and strategy for making concurrent executions, It'd be great!

    Reply
  20. Hi Nate, I have a question. I noticed that during the market, say 11:00PM or 3:00AM you tweet or post on chat symbols with big bounce that you don't scan or put on watch radar. Do you use some tool that alerts you stocks with big bounce in a middle of day or what?

    Thanks.

    Reply
  21. I mean 11:00AM and 3:00PM.

    Reply
  22. I have a small account so would like to partly focus on short squeezers. How do you typically scan/search for them and what are the tell tale signs of a potential short squeeze (not just intraday) other than there being a a high short float %?

    Reply
    • This is covered in Tandem Trader under scanning section

      Reply
  23. What are your thoughts on trading gold futures? I previously successfully traded gold until the MF Global debacle and have stayed out ever since. Anyway looking to get back in and came across your site. Your service looks quite professional so there may be a better way.

    Reply

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