Day 5 of Trading at Webull with $2,000 (High Short Interest Squeeze) transcript

What's up, everyone? All right, today is day five of my brand new small account challenge of trading in a $2,000 cash account using Weeble as my broker. And guess what? It's my fifth green day in a row. My account is growing slow and steady. It's my fifth trade because in this small account challenge, I'm following the rules that I set out for all of our students at Warrior Trading. Whenever you're funding a brand new account, one trade a day, get in, get green, and get out.

When you limit yourself to just one trade a day, inherently you're going to be focusing on the highest quality setup, and so your accuracy will benefit as a result. Now, I don't expect I'll be able to maintain 100% accuracy indefinitely. I will have a loss, but early on, I've been pretty picky, waiting for good quality setups. And so what's interesting is the stock that I traded today, I actually looked at it just the other day because it was on a list of stocks with elevated levels of short interest.

That means a lot of people have actually been betting against the company, selling shares on the open market, hoping the stock will decline in value so they can buy them back at a lower price. That's what happened with GameStop. And yet when the stock suddenly started squeezing up last week we had another one just like this that started squeezing up 100% 200% 300% 400% suddenly all of those short sellers are forced to cover their positions.

The way they cover is by buying back which fuels more buying volume which sends the stock even higher. Now, GameStop obviously was a really incredible scenario. That doesn't happen every day, but just last week, we had a stock that actually went up about a,000%. From $67 a share up to a high of $78. So, that's what prompted me after seeing that big move to look for the next stock with elevated levels of short interest.

So, the stock that I traded today, it was actually on that list. Okay, so let's go ahead and jump into the screen share. I'm going to start breaking down my trade from today. Now, before we do that, as always, I want to check in with where we're at on this fundraising challenge. All of the profit that I'm making from these small account challenges, all the trading profits getting donated to charity, but you guys are helping increase that match, that donation, because I'm doing a dollar for-dollar match.

Every time you guys hit the thumbs up, I'm adding an extra dollar to how much I'm donating. We have already raised over $183,000 for charity. This is fantastic. And these are the different organizations that I've donated money to. So, since uh day four, I have updated this because I've donated some more money. I've actually, as of right now, donated $185,000, which means um a little bit above um the 183 that we've raised, which means I hope you guys will hit the thumbs up on this episode to add up um to get us up at least above 185,000.

So, since my last update, I decided instead doing one really large donation to split it up across a number of the charities that you guys had recommended I donate to. So, thank you for those of you guys in the comments. We donated $5,000 to Wounded Warrior, $5,000 to the Hole in the Wall Gang Camp, $5,000 Wings of Life for Spinal Cord Injuries, $5,000 to the Ronald McDonald House, $5,000 to America's Vets Dog, America's Vet Dogs.

These are service dogs for veterans. $5,000 to the Genesis Foundation and then $5,000 to No Kid Hungry and another 5,000 to the Food Bank of Western Mass. So, these are donations that I just made um over the last week. Some of them I made on um Friday, Thursday and Friday morning, and others I made uh just this morning. So, these um are all, you know, my my way of paying it forward. I appreciate you guys who have all hit the thumbs up here and helped uh with this small account challenge and this goal of raising some money for charity.

So, we're paying it forward. We're doing a good thing and I think you guys are learning about trading in the process. Okay, so here's the breakdown of day five. I'm up $19657, which means my account now has a total profit since I started of $1,3840. The account is up 65%. And you can see this is my new small account balance. So the account as you can see is growing. I'll bet uh albe it a a little on the slower side. I wish I could get a couple more big trades.

One of the challenges is that uh the stock that made that big move last week was a little bit higher price and I didn't feel I could take the risk on it. So these are the stats since day one still maintaining 100% accuracy but only uh five trades in. Now, one of the things that I share um with all of our students here at Warrior Trading is um this uh as part of our trading plan that I teach you guys in chapter 14 and chapter 15.

I give you guys these seven phases of learning how to trade. It begins with the alpha phase, which is usually when you're trading in the simulator and you're just trading a ton. You're trading everything that's moving. So, this is good. You want to gain experience. You want to practice trading, reading level two, and just, you know, really sinking your teeth in. So this is the opportunity to trade either in a simulator or with real money, but with really small share size.

But then you get to the point where you want to see, do I have what it takes to actually trade with real money. And so what I encourage folks to do is to do the beta phase dry run, which is one trade a day for 10 days. One trade a day for 10 days. And then if you are successful with the one trade a day for 10 days, you switch and do it with real money. So right now I'm doing phase one real money in this small account challenge at Weeble.

It's basically repeating the dry run phase. So I do one trade a day for 10 days. Now if I successfully complete one trade a day for 10 days, I proceed to phase two, which is increasing my share size. And usually phase one, by the way, is with 100 shares. So I go up to increasing share size. So actually I'm already here because I'm taking bigger share size, but I'm still doing one trade a day. Phase three is when we start taking more than one trade a day.

Phase four is when we get into scaling in and out and being a little bit more aggressive and we continue with that in phase five. So my limitation right now for this small account challenge naturally is that I don't have a lot of money in the account even with $3,300. What I'm basically doing is I'm going allin on each trade that I see. And so I take one trade and then I can't take any more trades till the next day. So SBEV is the stock that hit our scanner right here early this morning.

Now, like I said, this stock was already on my radar. I wasn't paying attention to it specifically this morning, but when it hit my scanner, I saw the ticker SBA, and I immediately thought elevated level of short interest. I noticed the float was sub 1 million shares, as you can see right here. And this thing went from $169 up to a high of 204. Now, it didn't end up making as big of a move as I had hoped for, but the fact that it had this elevated level of short interest being about 32%.

So you can see it's increased recently. It's about 32% of the total float and the cost to borrow has increased by about 300%. Which gives it a short score of about 80 out of 100 according to Ortex. This is software that a lot of traders were using during the GameStop short squeeze because they are uh provide very accurate and and very up-to-date short interest even for um you know more thinly traded stocks like this one.

So the my workflow on this was stock hits the scanner. I'm immediately familiar with it. All right. So that's important. I'm familiar with the stock. So I'm thinking, "Yep, I I already know this one is interesting. I like the price because it's cheaper, which is good for the small account." The float is great. The relative volume is low, and I'm not totally clear on what the catalyst is, but I see it squeezing up, and it's making me think of this big move from last week.

So this is our uh our chart where you can see this stock starts down here at $56 a share squeezes up to 10, pulls back and goes up to 10, then goes up to 15, 18, 20, 30, all the way up here, squeezes up, then it pulls back. Next day it pushes higher, goes up to 40, to 45, up to $50 a share, pulls back, goes all the way up to 70. Sorry, it's not 78, it was $7654. and then it sells off a little bit and then today it bounces from 32 all the way back up to 66.

Now I did end up trading this one in my main account. Um, and I made money in it, but I didn't trade it in the small account because it was just too expensive. The the approach for the small account is one trade a day. And what I'm focusing on doing generally is trading stocks between like a$150 and$6 or $7 that I think have the potential to go up 30 or 40 cents a share. And my goal is to try to capture 20 cents. Now, on the lower end price like um uh like SBEV was today, I may not end up capturing uh that total uh type of gain.

So, you can see on this one here, um this was the profit of $196, but my position was 1,600 shares. So, I bought 1,600 shares. I got filled at 175, $1.75, and I ended up getting out at $187. So, I actually only made about 12 cents per share, but nonetheless, $200 a day. You know, you average that over the course of the year, that's $50,000 a year from a tiny account. That's pretty solid. Now, my account wouldn't stay this small over the course of the year.

It would continue to grow. So, presumably my gains would would get bigger, but nonetheless, it's still uh it's still really solid. So, this was our move. Initial pop up. It sells off. Then, it squeezes up here to a$185. It pulls back and this was our nice little pullback right here. That is a micro pullback. That is a setup I love trading. I love buying the dip after a nice fresh breakout. And you know what's kind of interesting is we actually had another stock today that put in a pretty nice micro pullback.

Let me show you the other example of it from today. So it was PLRZ right here. Now PLRZ ended up giving us a really clean micro pullback. uh as this thing ended up going up over 100%. And you know what? In hindsight, I would have loved to have traded this in the small account, but I'd already taken my one trade of the day and so I wasn't able to. This is the this is the curse of trading with a cash account. You're just limited how much you can trade.

So, that was a really nice pullback right there. And I did take that trade in my main account. Now, the total profit in the main account on PLRZ, $45,37327. I also traded SBEV in my main account, but I only made $215 there. So, it wasn't really a big winner. Well, that's okay. You win some, you lose some. I'm grateful to be green. I'm green in both accounts. But again, I suppose this highlights um sort of two things.

Number one, the downside of trading in a cash account. Sometimes you end up blowing that one trade on a setup that you know you liked but you know as it turns out doesn't end up giving you as big of a move as you hoped and then you just got to wait for the next setup. But on the other hand this also showed the importance of spending time creating a profile of the recent big mover. So because we had that big move last week we had a 1,00% move.

I had sat down and I had evaluated what was the price, what was the relative volume, what was the news. Then I checked what was the short interest. I saw it was about 37%. And then we were looking at of course the float which was also about 750,000 shares. And so the price on that one was about $5 a share uh when it started. The relative volume ended up increasing over time. But that made me think that this is what I'm going to look for. you know, similar price, similar short interest because that felt like the most important part of the catalyst that gave us that big move last week.

Now, unfortunately, this one didn't end up continuing higher. It was a good idea. It was worth a shot and nonetheless, it was a base hit. It was a small green trade. And now, I've got another $200 in the account, and I'll be able to use that buying power on my next trades hopefully tomorrow. So, for those of you guys who haven't already learned about it, this is the small account growth strategy. Trading every single day, 7 am to 10 a.m. using about 10% risk, 10% profit target.

My target accuracy is 75%. I'm exceeding it right now. The growth in the account target, 25% per week. I'm actually a little bit shy of that right now, but the account is up uh 65% which is good. So, for those you guys who haven't already checked out my full length episode where I teach this strategy, I'm going to put a link to it right here. here. And let me remind you as always that trading is risky. There's no guarantee you'll find success whether you trade with me or you learn on your own.

So please make sure you manage your risk and practice these new strategies you're learning in a simulator before you ever put real money on the line. So make sure you check out the small account growth strategy episode and day six which will get uploaded and added to the end of this episode right here once I lock it up. All right, hope to see you guys for the next upload real soon.