+986% Short Squeeze for Day 32! transcript

Welcome to day 32 of my small account challenge of growing a $2,000 account using Charles Schwab as my broker. Today, we had a stock that squeezed up nearly 1,000% and what was incredible is that the stock made the majority of the move in just one candle, one one-minute candle. That's unbelievable. How does that even happen? Well, I have a theory and I'm going to share it with you during today's recap. When I was getting dressed this morning, I put on my green shirt cuz I said, "I need some good luck to start the week." Those of you guys who were tuning in for my recaps on Friday, Friday was a small green day in my small account and it was a huge red day in my big account, the biggest red day of the year.

And so, I had to make a decision coming into Monday morning what I would do. I knew that I needed to try to make some progress at recouping some of that loss in my main account, but that I did not want to risk having a subsequent big red day. You have one red day, that's bad enough. You don't want to have two, three, four red days in a row. And part of me thought, you know, maybe I'll just focus on the small account this week and just put my big account on the shelf and kind of forget about it for a few days and let the dust settle.

And then on the other hand, I thought, you know, that's kind of like falling off a horse and then putting the horse in the barn for a week and not getting back on. It's better to get back on the horse and just not let it become a big thing where you just carry this fear and emotion. So, I said, "You know what? I'm actually going to put the small account on the shelf and trade just in my main account." Well, this morning, we ended up having a couple of stocks that made huge moves and one of them I was able to trade so well that it made back nearly all of Friday's loss just on a couple of trades on that stock this morning in my main account.

So, once I done that, then I figured, well, maybe I'll break the ice in the small account today as well, and I did, and that's what we're going to be breaking down during today's recap. So, here we are. It's day 32. We have now raised, by the way, over $442,000 for charity. I donated to two additional children's hospitals today, which means we've donated to 42 out of the 50 children's hospitals across the United States that I had wanted to donate to.

The goal of donating to one in every single state. And thank you guys who have been hitting the thumbs up on the episodes in the series, because every time you do, I add an extra dollar to how much I'm donating. So, today's day 32, and our leading gainer, uh I had traded it in my main account, but not in the small account. Just Not because it wasn't suitable for the small account, it certainly was. I just was trying to focus on building a cushion in the main account, and one of the things that I have struggled with a little bit is um when I trade the same stock in both accounts at the same time, you know, I sort of have different risk tolerances, and usually, if the market's really strong, I'll just be green in both accounts, it doesn't really matter.

But, when things start to get a little tricky, that starts to become difficult, and it was tricky on Friday. And since I didn't want to have a repeat of Friday, I decided to just begin this morning by just focusing on the main account, building my cushion, and going from there. So, this was JWELL, J W E Well, and you can see this nice move. This was our leading gainer, which I didn't trade in the small account, but a nice move from $1.50 up to $5.24.

It pulls back, it comes back up, it pulls back. We get a really nice breakout here, a squeeze up to about $6. It pulls back, comes back up to six, ends up being a double top, pulls back a little bit more. Okay. So, that kind of set the stage today. We had a stock that made a pretty big move. It was the leading percentage gainer, as you can see right here, up over 178% at $4.31. 50 plus million shares of volume, 2 million share float.

It's a Chinese stock with no news. That's been the theme in the current market that we're in. Okay. So, then at about 9:00 a.m. we had SCKT hit our scanners. Uh priced at about 53 cents a share and squeezing up on news. Now, to be honest, I just thought, well, it's another distraction stock. I don't like trading these cheaper penny stocks. I don't usually do well in them. You know, in order to make good money, you got to buy a lot of shares, but when these stocks are trading below $1 a share, one of the problems with them is that unfortunately, they trade down to the 1/100 of a penny.

So, I just turned on my whiteboard camera. So, let me show you what I mean by that. So, a stock at 90 cents could trade like this. 90 by you might think 91. Well, not quite, because it trades down that's trading down to the 10th of a penny. Um or sorry, down this is just to the penny. This is the 10th of a penny. This is the 100th of a penny. So, actually, they could trade like this. And you take away the 91 and it's .002.

Now, this would be kind of ridiculous to have a spread um that tight. It could happen, but what's very common is that you'll trade um you know, something like 1 0 by um 9, you know, 2 5 or something like that. And so, if you bought 10,000 shares, you need this thing to make $1,000 to go all the way up to $1 a share. And so, how many price increments is that? Well, it See, this is the thing. It's actually 1,000 price increments for it to go all the way from 90 cents to a dollar a share.

The 100th of a penny times 10 cents is 1,000 increments. Whereas, for a stock to go from a dollar to a dollar 10 is only 1 2 3 4 5 6 7 8 9 10 cuz it's only 10 cents. Once a stock trades over a dollar, the lowest spread is a dollar. So, a dollar Sorry. Uh what am I doing? One $1 $1 right here by a dollar 01. And that's the tightest spread you can have once the stock is over a dollar. So, it when I saw SCTT squeezing up, the thing that I thought to myself is, "Yeah, it's interesting if it can hold over a dollar." Now, what often happens with these stocks is they squeeze up to a dollar a share and then they get really heavy as a lot of penny stock traders just put an order to sell it at $1, just a even round number.

And so, when it came up here, it first squeezes from 40 cents up to 70, pulls back, nice micro pullback. No complaints there, but I didn't trade it. It goes without me because I thought it was too cheap all the way to a dollar and 15 cents. Little topping tail candle there, it drops back down to 95 cents, and it gets back up to a dollar, and I had my order ready to add if we broke over a dollar and 10 cents looking for the squeeze to a dollar 15 because what I know is that once these are holding over a dollar, they can get interesting.

However, what I also know is that as stocks like this are squeezing up, you know, 100% 200% 300%, these are huge moves. A lot of short sellers are shorting as it's squeezing up waiting for it to roll over. And so, the more it goes up, the more they add, the more they add, and they're not expecting it to break over a dollar because it doesn't usually happen. And so, what made this a little bit different was that we actually had breaking news.

Socket Mobile partners with 3 I technologies to expand industrial mobility solutions for Apple-based frontline operations. Uh-oh, keyword Apple. All right, US tech company. And so, what ends up happening is it breaks a dollar, goes to a dollar 15, dollar 20, dollar 40, dollar 60, 80, $2, 240, 260, $3, 350, all the way up to a high of nearly $4 a share. How does that happen? It happens when a short is auto liquidated.

So, what created this move essentially were marketable buy orders. Buy, buy, buy, buy, buy, buy, buy. Just going through back-to-back-to-back-to-back-to-back-to-back. Now, in the market, you can't send an order for more than 10% above the current price. So, you couldn't just do a 1 million share order for $4 a share and it would just go all the way up until it order filled and then in the price maybe comes back down.

So, it was uh back-to-back orders that kept pushing the stock higher. And I would suspect that there's a trader somewhere in here that was adding, adding, adding, adding, adding short, adding, adding, adding, adding, adding short, and then most likely maybe they did it on leverage, doesn't matter. Suddenly, it breaks over a dollar 15, dollar 20, and right around here to dollar 50, their broker auto liquidates, starts pressing the buy button for them.

It the the broker has taken over the account to minimize the damage. What ultimately happened is the broker in a way maximized the damage by buying at the market what ended up being over a million shares of volume. And so, there have been cases where traders have tried to sue their broker for saying, "You got me out at, you know, $3 a share. That's preposterous." And the broker says, "Look, we had to manage our risk.

We didn't know what the stock was going to do. They had news. It could have gone to 15 or $20 a share. We got you out. It's a margin call. You owe us the money. That's your problem. You should have managed your risk better." And at the end of the day, the broker's right. And so, it drops back down because once it makes that big squeeze, there's no real buyers other than that one person who was buying at the ask. So, it comes all the way back down here to $1.40.

As it starts to curl back up, I added right down here in my main account, and then I said, "You know what? I'm going to take this trade in the small account. I actually kind of like what this thing is doing." And so, I got a trade right through here in both my main account and my small account. We ended up coming back up. I was getting really close to punching it up here for it to squeeze back through three, wondering if maybe we got to move higher.

We didn't. It rolled over. That was the high of day. I locked up $2,925.50. Not bad at all. A total of 22 orders between buying and selling with 160 fills. And you know what? I'm grateful to be green. So, now the account is up to $68,000, a little over that. We've raised another $10,000 for charity between Yes, uh let's see, Friday's episode and today's episode. So, we're just continuing to make progress. I'm excited, and I'll be back at it bright and early tomorrow morning for day 33.

So, for those of you guys that haven't already checked out our 2-week trial here at Warrior Trading, there's a link pinned at the top of the comments and in the description. Come on over and check it out. It's 2 weeks for 20 bucks. You get to use the same software I'm using every single day. That's Day Trade Dash, which uh I'll just put up right here. So, this is for charting, scanning, breaking news. Plus, you'll have access to my chat room and my live broadcast while I'm trading, where you can look over my shoulder and see when I'm getting in, when I'm getting out.

And you'll also have access to a selection of classes from our Warrior Pro curriculum. So, I hope you guys check it out. And but I'll remind you, as always, trading is risky, and my results are not typical. There is no guarantee you'll find success whether you trade with me or you learn on your own. So, please manage your risk and practice in a simulator before you ever put real money on the line. With that, I'll see you guys bright and early tomorrow morning at 7:00 a.m.

Eastern Standard Time.