Wednesday, May 6, 2015

Giant Step

      This week has been full of ups and downs, I've been trading a bit off using more size then usual, but its paid off in a big way. Monday I hit a milestone I promised myself I would hit before the age of 24, then got cocky and ended the day red. Tuesday was the same result. I was frustrated with myself and questioned my sanity. This week I was tested, retested and passed. I can gladly say I've netted 1million in the stock market. A special thanks to my mentor Nathan Michaud, and a special thanks to the following people; Eric, George, Phil, Nikko, Christian, Brandon, Tim P, @d4ytrad3, Tim G, Tim R, Shar, David V, @NasdeqCowboy, @BullZoneTrader, Bao, Tom K, Miltona, Shane, Emil, Mike, Corey K, Steve Baldwin, @danshep55, @markflowchatter, Sando, Tanner, and Gregg AKA LX21

     Lucky to be a part of the Investors Underground community. This has forever changed my life. Thanks again guys. See you in Chat


Wednesday, February 25, 2015

Trader Meets Short Squeeze

     You heard it right, most new traders end there career within the first few weeks of trading. I've seen it time and time again, one squeeze after another and it's game over.

    The current market is nuts, you have GENE, BIOC, ADXS, SGNL,CAPN and many more squeezing traders and testing your rules. These companies are complete garbage and yet they run? Let's ask ourselves why

   -Negative News

        News plays an important factor via fundamentals. So if everyone sees bad news and shorts the piss out of it and it holds trend, soon they find themselves in a scary situation. Knowing how to spot short squeeze or a high demand for inventory is paramount.
  -Big names shorting or promoting

         We often see big TWTR names going short and I mean BIG, what does this do? It causes their followers to short as well. Just remember are you the follower or the leader?

   -Kool-Aid readily available everywhere

          Ah yes the idiots who eventually lose. The cult followings who chase the stock so high it pops the balloon. These guys are the trolls on TWTR, they promote the stock at every turn.
 -Dumb PRs/Chasers/Believers

           The bs PRs that are put out there to scare the shorts, but make the believers chase at even higher prices  and squeeze out the stubborn.

    -Small traders do the add thing. 
            I see this often, a trader shorts a small amount of shares, then quickly realizes the trade is going against them, they do the add thing, by the time they know it, they have used their entire Buying Power on one trade. They then realize their account is near death and cover that size on the ask. 
    -Low Float Mania
          When shorting a stock, look up the float. If its small and its traded the float within a few hours of trading and its some ridiculous number like 50x the normal amount of shares traded a day. Then yeah those are at high risk for possible short squeezes. 

    Wait shouldn't some of those reasons cause a stock to drop? Nope quit the opposite really. Supply vs demand is what should concern you more then anything.

     Supply & Demand: An increase in supply will lower prices if not accompanied by increased demand, and an increase in demand will raise prices unless accompanied by increased supply 

Here is a basic run through supply and demand in a chart. BIOC for example:

    Do you see how this mornings gap held as support after the sell off? Support equals demand, can we break support is the question. After that initial move, it held and ramped to nhods, then it washed and the previous high became support hence demand. It grinded and resisted the break of a new high, supply line, then held support again. This is in hindsight, so playing your resistance lines and support lines is paramount. Another thing to keep in mind is the volume during a sell off or breakout. That will tell you weather or not the stock supply is greater then the demand or quit the opposite. 

      So in reality the above is a recipe for short squeeze, remember sometimes you have to flow against the curve and look out for what other traders aren't seeing. For example GENE a lot of people chased that short and got squeezed. A lot of folks gave up on it and big names made $ when they found the supply was greater then the demand. 

    Remember in high school when we where taught in science class about how to form a hypothesis (educated guess)? When picking your entries and exits remember it's all an educated guess, not an emotional one or you'll fail your science class!!!! Be smart about your entries and play those support lines and resistance lines. 

    It's not everyday we run into a market like this one, where its penny stocks, then fuel cells, camera, ebola, then bios stocks. One after another. Sometimes stocks don't hold up, but when they do you have to be careful, just because everyone shorts a stock doesn't mean it's the next squeeze, just have to take your best guess at the next squeeze and manage your risk verse reward.

Anyways I hope this helped
See you in Chat
Derrick J Leon 


Friday, February 20, 2015

The Setback, Then the Comeback

              Feel a bit inspired to talk a little about my journey last few weeks/months. As you are all aware I took the worst loss of my career on $NDRM after being up 35k realized that day. I did the add add add thing. I choose to put my ego aside when I saw my accounts down 100k on $NDRM saw as this could be my career ender trade. If I didn't cut the loss I'm sure the damaged that day would've been the loss of my main account and secondary account. I had 470k equity that day spread throughout 3 accounts. I did the math at $18.5 on $NDRM that day would've lost approximately 400k. Risky stuff. The journey begins.

              The following days I made my money back and then some. To be honest $NDRM started something that day, I've been trading recklessly ever since that day, taking unnecessary draw downs. I let $ADXS grind me out for 30k and a few other losses over 10k each. After this $GENE trade I plan on cutting accounts down yet again and focusing on the grind. As I feel I am not ready for this level of trading. I want to hone down on my entries and exits and want to use way less size. Going back to the grind and pushing forward. I'm young and I forget ego runs me sometimes. I am working on that as well. Anyways I am expecting to change my trading habits, because the current habits will only lead my to my ultimate defeat and failure.

                  I suggest every trader who reads this today, please do some soul searching and ask yourself is the current path your on good for your future, health or sanity? If not look for the problem and shut it down. Have a good weekend

Derrick J Leon

Wednesday, January 28, 2015

New Traders

New Traders

       So I get the question, "how did you turn x amount to xxx amount?" How do I become better? How this or how that? Why this or why that? Just want to write a quick post.

        In my experience, new traders will either make a lot of money or loose a lot of money quick. The few that actually grind it out like @stock_choices on twitter for example has been learning Nasdaqs for quite some time. He's grinding out the learning curve, being patient and knowing when to size in for a real trade. You guys that are trying to be the next overnight miracle are just going to cut your trading careers short. Sorry to be brutally honest, I've been getting so many questions, maybe its the New Year, I don't know.

        My suggestion if you have an account less then $5,000 be patient wait for your cup of tea trade, don't take trades you're unfamiliar with, don't relay on others for trades, and most importantly study up and don't be lazy. I'm just tired of hearing all these sad stories, take my advice or not but remember I was in your shoes. Quit chasing losses and add to winners.

        I can tell the difference between a lazy trader and one who actually wants it. If you tweet at me and I don't respond, ask yourself "WHY." Not being a dick by why would I waste my time with you if you can't even help yourself? I'd rather help someone who is actually driving to succeed and not gamble away their money. Just a rant I guess

Derrick J Leon

Saturday, January 17, 2015

Elements of Successful Trading

Elements of Successful Trading

I had an awesome run and exploded like never before, got on the right side of some sick moves and nailed it. I used several elements in my trading better and I want to go over what helped me go parabolic these last months and maybe you can grab a few golden nuggets from this blog. After all I want to see a lot of you succeed and if I can assist in any way that would make me happy.

Element 1) Patience

 Lately it's been about patience and having the right entries, shorts or longs, take your pick. I've found myself ignoring the first 5-10min of the stock market open. If I don't see anything I like, I sit on cash all day. We don't need to trade every blipping day. Be patient, and wait for the right move. Over trading is a bitch so stop doing it in this choppy market. Forcing in this market does not help, the right trades will always come along, just have to wait for it.

 One good example is this guy I know named @NasdaqCowboy on twitter. He waits for the right setups then bamm nails it. If he doesn't see anything he like he takes off. 

Element 2) More is Less, Less is More

    Above I talked about patience and knowing when to hit it or quit it lol, but in all honestly knowing when to size in the right trade can be very profitable 

   I've found myself sticking to 1-3 stocks a day and I wont shy away from that. It has improved my winning average and has improved my profits. More focus = better trading. Sometimes to let a stock workout we need not focus on it, but this market is nuts. A lot of traders out there scalp many different stocks, I've reduced my scalping. I now look for the bigger picture moves.

  This doesn't mean go all in and hope for the best. Means trade the size your comfortable with and be patience and respect your stop losses

Element 3) Sizing In and Sizing Out

  My bread and butter trading style. As you can see in this intra-day chart, I shorted FEYE twice. I took this trade Nov 5. I shorted with the anticipation of 30 fail and added at 29.5 because it failed to hold there. I covered half at previous high support line and the rest where it broke out from. This is one example of my trading style.
Sizing in and out has greatly improved my trading both more profits and better win ratio. I suggest you learn how to do this if you have a bigger account. For those with small accounts this can be difficult to do. 

Element 4) Top 5 traders = You

  Another thing that has improved my trading was getting to know top traders. I have a group of close traders I talk to daily. We go through trades together. Remember your bank account reflects the top 5 people you hangout with. Truth. Don't like it go complain to mama. Lets say you hangout with a bunch of people who want to go on vacation, bam you are more then likely to join. Now picture all those you hangout with making crazy amounts of money? Bam your chances of making more money increases. Why? Because they influence you.

  If you hangout with a bunch of people who talk about improving themselves but yet take no action, I bet you're in the same boat.

  Focus on yourself as much as you can. Don't be worried if Trader A makes a shit ton of money. His lifestyle may not reflect yours and he may have a bigger net worth that allows him to make more $. Don't get caught up in his profits, you are your own worse enemy. Don't get caught off guard taking larger positions or trying to be someone your not. People want to do what I do, but you have to understand it too. I'm willing to loose XXX amount to make this amount. Remember if you loose XXX amount can you afford to pay your bills next month? If not don't take the same size.

  Remember be careful who you trust and who you hangout with. You may wind up like that person or worse. Show me your friends and I'll show you who you are. Simple but true words.

Element 5) Walk In, fuck shit up, walk out

  Did you ever see the picture of the cat I posted? Truth be told its not a joke. When you walk in and do great, why stick around and trade more? Greedy? Go out relax, reset, workout, be ready for tomorrow again. No need to over trade.

If I have a great morning I'll leave and go workout, hangout with family or friends. Trading is stressful, why prolong it? 

Element 6) Great brokers with crazy borrows

  Ebola? Where? That's right. To my knowledge many brokers did not have the borrows on these stocks. My broker had the borrows and I am forever in there debt. I took a 65k account too nearly 300k in Ebola Madness month. So find the right broker, remember your broker should be your friend and not a blood sucking machine. Find one with great customer service and ask what they can do for you.

Element 7) Mental and Physical workouts 

  Trading sucks the soul out of you, be ready for it. Prep Prep Prep!

  You have to be ready ahead of time. Sleep well, meal prep just in case your stuck in a trade and don't have time to cook, and make a schedule for the gym. Stressful job requires a stress relief. 

  Do something small everyday that can help you improve over a long time. 
  Read a book, study up, do math problems, just do something that keeps your mind sharp. Board games, doddle jump, strategy games, you get the point.  

Element 8) Belief vs Conviction 

  When you're in a position in the market, traders seem to believe the setup is going there way, when they take a position. Belief can get you killed and can destroy your career. Instead of beliefs have conviction. Conviction puts facts behind your trades. If there are no facts, there is no edge whatsoever. Consider the difference. 

  I was leveraged into an OTC stock called FNMA at the beginning of this year. Account Value was 75k or so. I had 35k shares with an average of $4.5 and the stock was trading at $3.3. My belief was the stock had to bounce hence add add add on the way down the next support line was $2.3 if it had hit that my account would have been gone and today I wouldn't be here. Straight up gamble and no conviction. I added on the way down due to a belief it would bounce. Recognize the difference between a conviction and belief its paramount to your success. 


Element 9) Practice makes perfect
   I often get the question, "Do you think I should start out paper trading?" My answer will always be yes. Some traders my not agree with me here, but here are my points.

     - Would you let your son/daughter take out your car before they take a written exam on the rules of driving? Same point here. Why trade real money when you first start out? You need to get a hang of things first

     -You can see what potential gains and potential losses look like when they happen via paper trading.
     -Paper trading helps you determine what type of trader you might be off the bat and will also help you determine where you will stand once you do the real thing

  A newer trader should defiantly trade smaller size at the beginning and yes some brokers charge high fees for small accounts and its really unnecessary and unethical but you have to deal with that nonsense. When you start getting a hang of things don't just jump a flight of stairs. Slowly increase your size.

  Fact. The day you start trading your belief is so high but yet your skill levels or so low this can hamper you down. You need to practice till both reach the same level.

  If you belief is damaged get yourself motivated. I've been so far in the dumps that the only thing that pulled me out was, "If that guy can do it, so can I."

Element 10) Pay attention 

   I've seen it time and time again someone goes short or long and doesn't cut the loss. You choose to ignore the signals and go short add add add or long and the same result. Losses turn ugly quick. I have a few fresh ones that I added to and kept adding into it., & I also had some trades I added into go south and then comeback. I was down 32k the other day and came all the way back to end green. Its easier not to add to losses and a have a stress free life. @Modernrock preaches this all the time.

   When your trading make sure you pay attention to news feeds for your stock. A great follow on twitter is @markflowchatter aka T530, he's legit. He's saved my ass a few times

11) Trust/confident in right plays 

  This is where most traders fail to stay confident. You see a nice trade line up and you say to yourself I'll short/long small and you sell quickly because you loose your confidence. If you see a trade line up respect your plan. Don't sway from it. If you say I'm gonna risk 1 to make 2 and you sell at the 1 mark. Guess what? Your risk was 1v1 not 1v2. Have confidence. 

    @Siricor, has really exploded this month. He only trades certain setup hes comfortable with and it has turned out well for him. He trades only what hes good at. Ever heard the expression, "Why would I change something that works?" True stuff here. I've been asked multiple times, "Why don't you move to options?" I give that same answer each time.

Congrats @siricor for your biggest trading day!

Here are some examples of my confident plays

Element 12) Tools

  Invest in your education. Businesses invest millions to educate their employees. Trading is your own business, but no one will invest you in, you have to invest in yourself to become successful. There are many tools out there I use They're huge if you want to surf through the learning curve. 

  A great service is Stock Horizon.The gazer gives real time alerts and price targets. There average is over 75% win ratio. Highly recommend this.

  For daily scanners I use and for daily scanners I use Equity feed. Imo Equity Feed is the best intraday scanner out there.

Element 13)  This is a business not a lotto ticket 

    Ah yes, "The get rich quick scheme." Like most of your so called opportunity businesses. Need I say more?

    Some of you are treating this like a gamble. Its not, there is actually strategy behind this. Now I've been insulted before like many of you have. "Isn't trading a gamble?" hmm isn't the 40/40/40 plan a gamble? Everyone in a different career will always have something negative to say about some other career and if that's their thesis, ignore and block that person. They will do you know good in life. Except if they're your in laws then your $%#$ed

     Now the get rich quick crap. I see newer traders lose all their money and seen some make a lot of money and then loose it. Hmm? Ask yourself is this a business? or a hobby? If its a hobby GTFO your gonna lose a lot of money.

     Point A- Treat this as a business and not a play thing
     Point B- Invest in your business
     Point C- Plan Plan Plan
     If you own a business and you have an employee who is a terrible, emotional, insecure, and unpredictable, what do you do? Fire him!!! Some of you need to fire yourselves. No joke. Some of you just need the learning curve like any other employee. Some catch on quick, some slower and some just never. Some of you need to cut your trading losses and move on. Sorry if this is to hard to handle. For those who are actually working there asses off, studying, reviewing, asking the right questions and putting in the hard work its all a matter of time before you hit it big. If you ask me a question in chat. I can determine the type of trader you are buy your question. Think I'm joking? I got a question the other day, "What does a wash mean in a stock or r/g move." I felt insulted.
   I really hope you grasped something here that will help you in your trading, remember be patient and things will come in due time. Have a great year. 

Derrick J Leon 

Wednesday, December 31, 2014

My most Influential traders of 2014

   These traders have helped me grow into the trader I am today. I want to say THANK YOU!!!! If it wasn't for this group my trading what not be what it is today. They are no doubts in my mind if it weren't for them I wouldn't be here.

 @InvestorsLive (Nathan Michaud) 
    My mentor, teacher & friend who taught me how to trade Nasdaq's. He deserves the credit for not only running the best community of traders, but for changing this kids life. Looking forward to a great 2015.

   @OzarkTrades  (Phil G)
    Phil has taught me to be patient and wait for the right setups. Size in and size out. My trading improved watching this guy making live calls in chat. His timing is impeccable & he is constantly reminding me to size down lol. He was gone the day I lost 110k, needed his reminders. I blame him for my loss. Joking. Anyways was good to put a name to the face at T4AC. Thanks for the time you dedicated to me this year and during Ebola madness month

    @Elkwood66   (Eric W)
      Long time friend. He was around when I had $5,000 to my name. He always responded when I had questions about stocks. This guy has taught me conviction, the most important arsenal in your trading. "Derrick if you know the trade is going to workout, by all means go for it." He picks me up each time I have a bad day and gives me advice when I need it.

     @Splendores (Sandro S)
         Man I've been trying to get good at swinging s.s on stocks. This guy is my go to guy. Surprised he doesn't get annoyed with me. Anyways this guy has been around since my inception as well. Very humbled trader, pushes me to dream bigger and use less size. I had my biggest s.s swing because of this guy +65k or so.

     @FreeFlowFinance (Tanner)
         Tanner pushed my trading to a new level, he use to send me his p/l daily when I asked for it. I would make $300-$800 a day and when I looked at his p/l it motivated myself to push harder and press. When I was a small time trader I aspired to mirror my trading profits with his. I learned a lot of basics from him and his commentary in chat is impeccable. Plus he gives me lifting advice for free, he's my Personal Trainer ha.

      @Crawfish (Brandon G) 
         At the beginning of the year we had a massive run in the marijuana sector, my account grew exponentially. He one of the most consistent traders I know. Humble guy too and he just got married, congrats on tying the not.

          Although I just met this dude, not in person. His calls in IU chat are on point. I have a lot to learn from this guy in the year to come. Looking forward to it. He gained my respect fast and today he helped me make 43k on $NRX. Looking forward to the day I meet him in person

       @Markflowchatter (T530, Marc)
          Can't tell you how many times his alerts in chat/twitter have saved me from a mess. His news alerts are always on point, one of the biggest assets in IU chat. Thanks for your commentary throughout the years. Love it

       @ModernRock (Bao)
         Preaches consistency is key and cut losses. He success has motivated me to push harder, and not only that but this guy lives a crazy lifestyle, he is the definition of freedom, fun and fulfillment. Thanks for your advice and commentary on twitter this year buddy!

       @FlourWaterYeast  (Dough)
           Learned a lot of stuff from this guy, how to spot breakouts and breakdowns. He cuts losses quick and has been there to smack me around if I do sometime stupid. Thanks for your comments in chat this year.

       @Stock_choices (The Canadian)
          Chris has a great story behind him, true inspiration and glad to have him as a friend.
        @Autumnalcity (Tim)
           Last but not least. Great guy, has helped with my blogs this year. We trade ideas all the time, great swing trader and friend most importantly. Will be learning swings from him this upcoming year. Thanks for the help this year.

            I can't name every trader and sorry if I missed you but the above list are the guys who took my trading to the next level. A shoot out
@MiltonaTrades @kroyrunner89  @johnwelshtrades @lx21 @offshorehunters @danshep55 @stevebaldwin25 @siricortrader @hillmf @cuzmane @VeritasGreen @SmenzTrades @MicrocapTrading @shaneblackmon @TradingVirtuoso @TomKellyLV @GreenspudTrades @Nikkorico_ @EpicaCapital @BullZoneTrader @InvictusProp @NasdaqCowboy @EdsonDefreitas1 @CHINEY98 @plur1188 @dveprek @ParadoxTrader
@swedepilot @ArjunTrades @AT09_Trader @sotorious

Anyways I hope you have a great New Years and a happy 2015. Lets make this upcoming year a year to remember.



Friday, August 22, 2014

Knowing When to Sell

If you’re a momentum trader like me, this post is definitely for you. I’ve been reviewing my trades lately and I was surprised to find out that 80% of the time, I’m selling too early. It’s true that you’ll never blow up an account taking profits, but knowing when to take profits can be difficult. This blog post was written as much for myself as for anyone reading it. Writing stuff down helps you improve as a trader: remember that.

First of all, let’s talk about taking profits into an ABCD-type setup. A stock that has an ACBD-type pattern usually has some sort of continuation after an initial move—not always, but usually. This is where I often go wrong. I will buy the perfect spot in a breakout pattern and then BAM—I’ve sold most or all of the position. If it’s the first breakout day on the daily chart, why would you sell everything into the first move? Maybe it’s my own itch to touch the mouse, or just the urge to take profits. So here’s an idea for you and I: sell a third, or half. Risk the rest and use the previous HOD as support. I’ve been studying these,and about 70% of the time a stock that ABCDs will have some sort of continuation. So try taking partial profits, and then sellingthe rest into a secondary move. Or, hold for a lottery ticket runner if you have a great average. Take JRJC, for example, during its big initial move on Monday: it gave you essentially no reason to sell if you bought at $6.50 - $7.25, because it had no retracement whatsoever (it eventually hit $9 afterhours!). Or, on Tuesday, let’s say you bought below $8 first thing in the morning: you had no reason to sell until the lower at $9.3 after the second HOD breach at $9.6. If you had bought at $8 and sold into the first move at, let’s say, $8.75, you gave up more than $0.50 in potential profits. Some people say, “sell when everyone wants something.” In this case, It should be: sell when buyers/sellers are indecisive = lower highs.

Next up are scalps. It’s important to know the difference between a scalp long and a long that’s worth holding for a bigger move. Don’t quote me on the stuff in the last paragraph if you’re in scalp mode. Don’t get me wrong—my scalp longs are my favorite plays. I usually go long and risk .05-.10 to make a quick .30 and sell. I don’t marry a scalp, and I’ll sell almost immediately. I’ll often risk to over/under whole or half dollar marks on these.

Then you have short squeeze longs. This is my area of expertise. These right here are my most profitable trades. I’m seriously considering cutting all other types of plays out of the playbook and just looking for short squeeze plays from now on. So what do I look for when I spot a short squeeze in the making? First of all, I’ll check for the short % of float. If the stock has 20-40% of the float short, my mouth drools. I’ll also check from time to time, as it shows you more accurately how many shares were shorted on a stock the day before. Of course, the stock has to have some sort of momentum on the 1 min chart to be in play. USU, PLUG, LIVE, JRJC, CAMT, STXS, SR, and WWE are all examples. These are the plays that have taught me how lucrative it is to be long into short squeezes. I won’t go into detail how I got so familiar with these plays, but suffice it to say that I was a stubborn short one too many times, and I learned the hard way.

So, how do you spot one of these setups? Let’s take JRJC on Tuesday as an example. After its run to the $9.50s, it pulled right back to $8.40s, and then re-ramped to $9.05. I was long at $8.5, $8.53, and then $8.7 for the $9 push. That $8.7 add was questionable. What I saw was that JRJC was holding the $8.50’s after the flush to $8.40. It’s all in the half dollar marks. They act as mental support and resistance for traders. So I hit the longs, and I was going to risk .05 to make .30-.40. And that’s the move I got, and more. Grinding action is what determines a lot of these squeeze moves: the panic volume slows, a lull in the action occurs, and the many stubborn or bent shorts that don’t cover get squeezed back up towards highs. I simply take advantage of that when I see it. Having the ability to see these setting up gives you a big edge. Additionally, it’s easy to cut these plays quickly if the support doesn’t hold, because if you’re wrong, a “potential” short squeeze could go the opposite direction quickly. That’s why I only risk .05-.10. On these types of plays, don’t use lower highs to sell as with the ABCD-type setups I talked about above: sell into momentum. Remember, it’s just a short squeeze; nothing more. Take profits and move on.

Lastly are ABCD patterns WITH short squeeze setups. These are the best trades and often the biggest moves, because they are very dangerous for shorts.  You’ll definitely want to sell these into lower highs, instead of the first push. Why? Because these moves can go a lot further than you think. If you sell the first move, I can almost guarantee you that you sold too early. Again, use or other tools to determine how big the potential short squeeze could be. DGLY was a perfect recent example. A huge short float + an ABCD type setup that led to a massive ramp.

I won’t go into bottom play longs. These are for very experienced traders. I recently tried to play the bottom on KATE, and you saw how that worked out for me.

Let’s recap. There are several different kinds of longs: scalps, ABCD patterns, short squeezes, and bottom plays. On solid ACBD type setups, selling into lower highs and topping action may be more profitable than selling into the initial move, because you can usually expect continuation. Study your charts and see it for yourself.  These solid breakout plays are where I have left the most money on the table. I will fix this, and this blog post was the first step.

Learning from your mistakes is easier than repeating them.So study up, folks. I’ll see you in chat.

Yours from vacation,