Trading a Chinese Short Squeeze! ThinkorSwim Small Account Challenge Day 4

What's up everyone? Welcome to day four of my brand new small account challenge. Today is the biggest day so far in this series and that kind of makes sense. On day one, I had $2,000 in my account. We had a couple of stocks that made a nice move. I found one really good setup and I made $416. Awesome trade, 20% growth on day one, solid. So, I took that profit, boosted up my balance and the next day for day two. So, day two I've got $2,400 in my account. We have another stock that pops up. I like it. I jump in. I end up making $800. Awesome. So, now going into day three, I've got $3,200 in my account. Sweet. I take another trade, end up making over $1,000. Today, I had about $4,200 going into the day and that meant higher balance, ability to take a bigger position, locked it up today taking two trades. Interestingly, today each of those trades was a little bit smaller. So, although it's the biggest green day, I only made about $100 more than yesterday. So, the profit is not scaling kind of directly straight up. There will be some days where in spite of having a bigger balance, the trade that I pick and the setup that I take doesn't end up giving me a really big move. Some days I'll get it, some days I won't. So, this is the thing with trading. We can control how much we're willing to risk, but we never really know exactly how much we'll make. We can recognize the potential for profit and we use that to give us the justification to take the risk cuz you don't risk a thousand dollars if you can only make 15 or 20 dollars. So, you look at the potential for profit, but you don't ultimately know how much you'll capture. So, I'll break down the two trades that I took today and walk you through essentially how I was looking at risk, what I was thinking was the reward potential and then kind of explain why they fell a little bit short of what I was hoping I would get from them. As always, all of the profit from these small account challenges gets donated to charity, and every time you guys hit the thumbs up on the episodes in this series, I add an extra dollar to the amount that I'm donating. We have already raised over $300,000 with the goal right now of donating money to a children's hospital in every single state in the United States. So, thank you guys for helping make this possible. I've now donated as of right now over $319,000. So, we're a little bit shy uh on you guys hitting the thumbs up. So, hopefully you guys are able to play a little catch-up and hit the thumbs up on the episode uh today. All right. So, day four, let's start with context. Big picture, we're in a very volatile market market. There's no question about it. We had a 5,000% move on Monday, a 2,000% move on Tuesday, a 950% move on Wednesday, and today we already have several stocks that have squeezed up over 2, 3, 400%. However, it does feel like the ranges are getting a little bit compressed. They're not as big as they were at the beginning of the week. Shorts are maybe feeling a little bit more confident. Longs are starting to get a little bit more cautious, especially as a number of these stocks are squeezing up with seemingly no underlying news catalyst. And that is a little confusing. We'll get into that in a moment. So, day four, the leading gainer once again was a Chinese stock with no news. The ticker was GLXG as you could see right here, up 243%, $3.35, 36 million shares of volume, and a float of 3.21 million shares. We had this squeeze here from 90 cents all the way up to a high of 573, and then by 7:00 a.m., which is about the time that I sit down to begin trading, it had already pulled back. Now, you might say, "Ross, why don't you sit down at 4:00 a.m. so you could capitalize on these kind of moves?" Well, although it's true that we are seeing some momentum periodically between 4:00 a.m. and 7:00 a.m. Most retail traders are blocked out from trading during this window because most brokers don't want to offer customer support starting at 4:00 a.m. Eastern Standard Time. They probably would have a hard time finding um enough US residents to staff and then they'd have to get into having a European office, da da da da da. So, the result is most brokers start at 7:00 a.m. Now, uh given that cur- current constraint, um the volume that we see between 4:00 a.m. and 7:00 a.m. is typically a little bit lighter. Um however, there are exceptions and this market that we're in right now is pretty hot. So, we are seeing more volume. Nonetheless, didn't get up at 4:00 a.m., didn't take this trade, didn't take this first pullback even though it was nice. It just is what it is. So, this however set the tone for today. This is the context big picture. So, on our high-day momentum scanner this morning at about 7:18, we had the ticker EDHL hit the scanner at $4.17. It's got a half million share float. It is Chinese. It has no news. It was also on my five-pillar scanner as it started to move up a little bit in price as the relative volume increased cuz I need higher relative volume for it to hit that scanner. So, this is how I traded it. Initially, it pops up here from 350 to 450, no trades. It pulls back, it rips up to 550, up to six, up to seven as you can see right here, hits a high of 750. It then dips down and right down here, I'm a buyer on that dip right there looking for the first candle to make a new high. It's the micro pullback strategy that I shared with you in episode one where I revealed that I'd be resetting my account to $2,000 using Charles Schwab as my broker. I'll have a link to that episode at the end of today's uh recap. All right. So, anyways, I get in down here and we get this curl up to 850. Boom, that's the trade. I'm in and I'm out. So, something that's kind of interesting is that the way I trade in my small account is different from the way I trade in my big account. In my big account, I have a big cushion. I've already made a lot of money this year and I can afford to take some risk. I can afford to hold through a drawdown, 15, 20,000 dollar drawdown and that doesn't kill me. In the small account, I can't do that. The small account, I've got to get in and then the second I see an exit indicator in that account, I sell. In my big account, I might hold through a couple of those initial exit indicators because sometimes they're wrong and the stock will continue higher. And again, in the big account, I can afford to give it a little bit more room. But in the small account, I've got to be a lot more disciplined about locking up profit because what I don't want to have happen is that it pops up and then I don't take profit, it reverses all the way back down and I end up selling it for a loss. And actually, I would say this is a market that's been kind of frustrating because it would have been very easy to get in, you know, potentially whatever, get out or or even get in up here thinking it's going to go higher, stop out for a loss and then 5 minutes later, it's ripping back through the high. And you might think, you know what, next time I'm just going to hold this. I'm not going to I'm not going to stop out down here. And that's all, you know, fine and dandy until you get one like this which does a big reversal. So, this is the other stock that I traded today and this is actually a perfect example because as you're going to see, these are the two stocks I traded and I made money on both of them. Now, this one ended up going from like, you know, my 250 entry which we'll talk about in a moment or 350 entry all the way up to four, but then comes all the way back down to a dollar eighty. So, if I hadn't taken my profit on that, absolutely would have been a loss. In fact, it was a loss in my big account because I took a similar trade. We'll cover that when I do my main account recap. EDHL, this one was a winner right here, but I got out at $8 and it ends up going to a high of $17 a share as the day goes on. So, you could say, "Geez, Ross, why didn't you just buy it, walk away from your computer for 10 minutes, and sell it up at 18 over here?" Well, as you could see, I would have had to be up, you know, $500, whatever, back to break even, potentially red, still not sell. That's not good risk management. So, this is how I traded it. I took my starter at 683 and I exited at 814, locking up a profit of $782.55, which is a pretty decent trade. And so, this is the trade right here, getting in right under seven, right there, 683, and then exiting as it broke over eight. Now, it did go higher, you know, again, all the way up to a high of about nine, but I locked up my profit. It's a good trade. It's a green trade. That's solid. However, yesterday I was up about 1,100. So, today is a smaller green day as of the first trade. But, I ended up taking a second trade and it was on FGL. So, what ended up happening was EDHL sort of rolled over for a little bit. It sells off and then all of a sudden FGL starts popping up and I thought, just like yesterday, that attention might shift. So, all of a sudden the attention is shifting and boom, we've got this stock that squeezes up. It goes from $2 all the way up to 250, to 260, 270, 280, up to three, up to 350. It pulls back and right through here, I say, "You know what? I'm going to punch it." I got in right there for the break of 350 and I was looking for the squeeze up to four and I was hoping this would continue higher up to 455 and we would have another big move on our hands. That didn't happen. So, you can see my starter down here at 345, my exit at 3:84 gave me $500 of profit, putting me up 1,200 on the day, but it was a smaller winner. So, as of right now, my account is up 176% in 4 days. I've taken a total of five trades, but my average winners has decreased from yesterday. My average winners yesterday were $733 per trade. Now, I'm down to 706 per trade, and that's mostly because that second trade was a little smaller. So, from 2,000 up to 5,500, great progress. I'm grateful the account's growing, but yes, FGL today, this is a great example of why if I hadn't taken the profit, it would have been gone, right? And being more aggressive in my big account, as you'll see if you watch that recap later, didn't pay off. Now, fortunately, continuing to be aggressive in my big account on ED EDHL paid off nicely, and so it is another big green day in the main account, but this is what EDHL continued to do. So, we ended up that I had my first trade right down here in the small account, and then it sells off, comes back up, and I didn't trade it again. At this point, it started getting too expensive, but man, it kept going. So, I kind of switched gears and said, "All right, I'm trading in the big account. Let's see what I can do." And when you tune into that recap later, you'll see I did pretty well. All right. So, this is where I sit as of the end of day four. Tomorrow will be day five. If you guys have not already checked out our two-week trial, we've got two-week trial at Warrior Trading where you can use this same software that I'm using every single day, the scanners, the charts, the newsfeed, and you can even be in our chatroom and tune into my live audio-video broadcast, so you can listen over my shoulder and see my profit-loss statement in real time as I'm getting in, as I'm getting out. Everything is there. You see the gains, you see the losses, full transparency. So, check it out if you haven't already, and I'll remind you that trading is risky. My results aren't typical, so please manage your risk, take it slow, and always practice in a simulator before putting real money on the line.