Report Card #24

Dear L.,

Last Friday was a pretty good trading day. I waited for my opportunity and executed it when I saw it.

I only traded on ticker, PRAN (Prana Biotechnology Limited, Biotechnology Sector). After an unjustified move on this low float stock on Tuesday, I eyed to short PRAN. When I noticed pre-market that a well-known chat pumping trader was about to buy PRAN, my conviction was even stronger. My plan was to wait for the open and short after a possible stuff move into $2.6/2.7.

The stuff move came and PRAN dropped from a high of $2.91 to as low as $2.55. Having learned from my past mistakes, I did not want to chase this unwind. I planned to scale into my position. I shorted 1/2 position at $2.65 and the other 1/2 at $2.7 into the VWAP move. PRAN did end up bouncing more and I honestly was lucky that my stop above $2.8 was not hit when PRAN hit a high of $2.79. However, this lower high was all that PRAN could do and it was weak for the next hour. I covered 1/2 of my position into the wash at $2.54, covered 1/4 at $2.55 a little later and finally covered the last 1/4 at $2.46.

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I am quite satisfied with this trade. Even though I eventually want to enter more aggressively on the stuff moves, I am happy about how I followed my plan in both scaling in and out of this trade.

Given my goal of improving consistency and R/R this day receives a B-.

Best,

Nils

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Report Card #21, #22 & #23

Dear L.,

after a weak of sitting on the sidelines, I´m finally back. Monday & Tuesday I did not put on any trades. Wednesday was the 4th of July holiday and this morning I did not see a lot that interested me either.

Later in the morning however, a chat room pump helped me out of this misery.

CCCR (China Comercial Credit Inc., Credit Services) announced the entering into a non-binding letter of agreement with Lexiang Technology according to which CCCR will acquire 100% of the outstanding shares of Lemon Green Inc. “non-binding” & “letter of intent”? You see, these were no news of considerable substance. CCCR started a meteoric ascend however, hit the circuit breaker halt and reached a high of $1.68 from around $1.15 earlier in the morning. Directly after hitting its highs, the unwind followed and CCCR flushed below VWAP. I located shares and promised myself to be patient. Since CCCR seemed very weak, I put in my short order at $1.43. I indeed get filled and CCCR bounced up to VWAP – I was too early again. VWAP rejected however and the bagholders took over. CCCR experienced one red candle after another one. I took half my shares off at $1.33 and the other half at $1.28 just before a washout to $1.24

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It is good to be back with a win. As so often however, my entry still was too early. Furthermore, given a stop above $1.50, a basically had a R/R of 1. I keep referring back to this issue and I am still thinking about how to improve this flaw.

Today´s trading was quite good and I´d give myself a C given my goals of improving consistency and R/R.

Best,

Nils

Report Card # 17, # 18, #19, #20

Dear L.,

even though I should have written this report card daily, something happened last Tuesday that made me rather reluctant to trade for the rest of the week or even review my trades. A few days later, here I am, and I think it is very important to review what happened.

Last week it seemed as if every low float stock went parabolic. News? Not needed! Strong fundamentals? Who needs that? If there was a sub 10 million float, it was very likely that the stock was to be manipulated. However, being aware of these manipulations, traders obviously have to manage risk accordingly and I failed to do so on Tuesday.

One of last week´s hot stocks was CLDC (China Lending Corporation, Financial Sector). Not having seen any volume and volatility in previous weeks, this is what the stock did last week.

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Tuesday, on day 1, there were no news justifying this price action. I thought CLDC was a typical one-day pump and dump and set out to short it as in previous opportunities.

Yes, I come back to this topic again and again but while my overall trade thesis was ok, the most important thing, my entries and exits were terrible.

CLDC spiked from $2 to $4.6 where it seemed to top out. Then, there was one big red candle right into VWAP. What did I do? I saw this as the “beginning of the end” and shorted CLDC at $3.9. Let´s summarize here, there was a red candle, into support (VWAP) on no significantly higher volume and I shorted right at support. Obviously, CLDC bounced directly and I was under water. How should the entry have looked like? Well, I could have waited for a clear fall through VWAP to short a little later. At least, I would have seen a clear confirmation then. With my entry, I was directly underwater. CLDC tested support at VWAP once more, before it bounced and shortly broke the high of the day. I got stopped out at $4.42. CLDC however, failed to reach no highs. These two green exhaustion candles actually indicated a rather bearish development and presented a great short entry opportunity. Two big red candles followed, and I chased my entry yet again, shorting at $4. What I have said before can be repeated here. I could have shorted the high of the day fail, the definite crack of VWAP or a possible bounce. Instead I chased. With my terrible entry, I chose a stop at $4.4 yet again, even though it had been shown to be not effective just a few minutes before. To show me how stupid this was, I got stopped out just before the next stuff move at $4.4. From this level, CLDC should reach a low of $3.4 within the next 30 minutes.

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CLDC however found support and squeezed shorts later in the day again.

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On these two trades I basically lost what I had gained in the two sessions before. Thus, even though the losses were not terrible, the sheer stupidity of these entries made me seriously doubt myself for the rest of the week. Terribly entries and terrible stops: this was a clear F grade trading day.

Best,

Nils

Report Card #16

Dear L.,

I most likely wrapped up today´s trade and wanted to tell you about them. I traded twice and the result was two wins – pretty nice.

So… let´s just right get into it.

GEVO (Gevo Inc., Basic Materials) was one of the three stocks I was watching. We have encountered this stock already previously. Basically, this is a dilution machine, having traded at more than $60k split adjusted years ago. Last week, it experienced an incredible rise, followed by an equally strong crash. After Friday´s bounce I thought that GEVO was about to continue selling off today.

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Coming into the trading day my plan was to see how GEVO reacted at previous support around $8.8. Right out of the gate GEVO climbed towards this anticipated level. When it could not break $8.85 I shorted at 8.73, chasing a little bit. GEVO did pull back after the failure to break through resistance. It fell through VWAP and I covered half my position at $8.35. Instead of further selling off, GEVO bounced and tested the $8.8 level again. Even though it failed, VWAP supported this time and therefore I took my other half off at 8.55. This was early as it turns out. GEVO traded as low as $8.15 in the following minutes.

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Later in the day however, GEVO started to squeeze doing this.

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All in all, I am quite satisfied with this trade. Relating to my previous comments about the need to improve my Risk/Reward, I am especially happy about this entry close to resistance. The loss given my stop was relatively small compared to my target price (which I did not achieve though).

The second stock that I traded was CADC (China Advanced Construction Materials Group, Inc., Industrial Goods). CADC had been pumped on Friday and was pumped again today. After having pressed the “locate” button on my trading platform about 500 times, I finally was able to locate shares during CADC´s pump.

CADC hit the circuit breaker halt before topping out below $10. When CADC felt very weak, I shorted at $8.75, expecting VWAP to fail. And VWAP did fail. CADC washed to $7.8. I tried to cover half my shares at $7.8-$7.9 yet CADC was very illiquid and I failed in doing so. CADC even crawled back over VWAP. At this point in time, liquidity basically disappeared and even another pump seemed not impossible. When CADC fell again below VWAP without selling off considerably, I covered 2/5 of my position at $8.05 to protect myself. Finally, the bids for CADC where pulled and the stock washed to $7.6. I covered the rest of my shares at $7.7, which was way too early as it turns out.

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I am quite satisfied with this trade too. The only thing to criticize in my opinion is my full cover at $7.7. I should have left on at least 1/3 here.

Given these trades I think that I deserve a C+ for today´s discipline and execution.

Best,

Nils

Report Card #14 & #15

Dear L.,

after no trades on Thursday, I put on three trades today and surprisingly the result was three wins.

Let´s have a look at today´s opportunities.

Because of an analyst upgrade this morning SLNO (Soleno Therapeutics, Inc., Healthcare Sector) gapped up. In general, analyst upgrades are no news worthy of a 20%+ gap. This and the fact that SLNO has very weak fundamentals, made me quite bearish. When the market opened, SLNO tried to spike but failed in doing so. I entered my short at $3.27 when SLNO seemed to fail VWAP. I was a little on the early side but a few minutes later SLNO did fail and washed down to $3 where I covered at $3.02. SLNO bounced and I put my short back on again at $3.23 to cover at $3.04. When SLNO bounced for the third time, I was ready to reshort again. The stock did not reach my anticipated entry level though. After failing crucial support at $3, SLNO went to lows of $2.8. This once more demonstrates that I am not patient enough with my exits. After my second short, I should have left some shares on instead of covering all. In fact, I did expect support to fail. Trading in this way however my risk/reward still is not acceptable.

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In the afternoon, chat rooms went crazy and pumped a list of stocks such as CHNR, CADC, CCCR, YECO and CREG (China Recycling Energy Corporation, Industrial Goods Sector). Because I was not able to locate shares for the most extended stocks, I shorted CREG.

CREG reached a high of $2.06 before trading off. When a very bearish candle appeared on the chart, I expected CREG to wash below VWAP and shorted at $1.9. I was too early though. CREG made a final attempt to break the high of the day. When it failed however, it went below VWAP and was not able to reclaim this anymore. I covered at $1.8. As we may see on the chart, CREG reached a low of $1.7. Once more, my failure to exit properly and a bad risk/reward are demonstrated. I should have taken off half into the wash and set a stop on break even above VWAP for the other half.

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While I am happy about the three wins today, I have as well realized that I truly need to improve my exits. Without patience, I obtained a D+ today.

Best,

Nils

Report Card #13

Dear L.,

today I learned about A+ trade setups. When these setups present themselves, one should size in (which I did not do) and take full advantage of these gifts (which I partly did).

The last few days have been incredible in the small cap world. Therefore, my watchlist was quite full this morning. On the top of this was LTBR (Lightbridge Corporation, Basic Materials Sector). LTBR gapped up more than 70% on patent news (not very impressive ones). I checked the fundamentals and fell more and more in love with the short trade. Firstly, LTBR´s fundamentals are… let´s say they are questionable. Secondly, with a float of well above 20 million shares, the danger of a pump was very limited. Thirdly, there was one incredible fundamental aspect to this trade. In March LTBR entered into an “At-the-Money Issuance Sales Agreement” with an aggregate offering price of up to $50m. This means that shares will be dumped into any spike. From the perspective of demand and supply, supply will greatly outweigh demand. I expected LTBR to sell off all day.

Recently NBRV was a similar setup. This is what happened to NBRV.

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My plan was to directly short LTBR when the market opened with a risk of the pre-market high. However, I did not think about the fact that LTBR most likely would not wait until the marked opened to sell off. Instead, after hitting a high of just over $2, LTBR grinded lower and lower during the pre-marked trading session. I was aware of this great opportunity and even though I had promised myself not to enter the trade premarket, I chased LTBR on weakness and shorted 2/3 of the planned size at $1.63. Of course, one may say that the decision to trade pre-market given the circumstances was mental flexibility and necessary in this case and I agree to some extent. However, I did chase weakness here which is not acceptable.

LTBR sold off more until the opening bell rang. At this point it completely lost it, selling off without even bouncing once. I took half my shares off at $1.43 and the other half at $1.33, leaving quite some money on the table. At the time of writing today´s low on LTBR was $1.11.

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Today, may chased entry was very bad. This is something I have been working on and I must not do this. Besides this I am very satisfied with today´s trade. However, I would have wished to be in this with bigger size. Today was a grade C.

Best,

Nils

Report Card #12

Dear L.,

another day without a trade. Since Monday the market has been nuts while I have been sitting on my hands. Today, I had a plan for NURO (NeuroMetrix, Healthcare Sector). However, my criteria were not met and hence I did not trade.

But let´s have a look at the opportunity. This morning NURO gapped up on news of receiving a $3.8M payment. Given the fact that NURO only had around $6M on their balance sheet, this news do not look quite as bad as other PRs we have seen recently. Nevertheless, I was quite bearish on NURO. Firstly, the magnitude of the gap was not justified in my opinion (from a close of around $1.25 NURO reached a pre-market high of $1.99). Secondly, NURO has been a supreme dilution play for years. This means that the stock sells of until they reverse split the stock. In there, the company raises money from time to time. This process continues and continues, only hurting existing shareholders. Below you can see a monthly chart ranging back years. Here you see that split adjusted, NURO traded at almost $6000 years ago versus around $1 nowadays.

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Given my thesis my plan was to wait for a morning wash and then short into the VWAP bounce with a risk of pre-market highs at $2.2. However, NURO directly sold off, thereby not giving me the chance to enter the trade according to my plan. As expected NURO was very weak all day, not spiking above VWAP even once.

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I am happy that I followed my plan today which does not mean that my plan was well chosen. Given the pre-market risk and the weakness that NURO had shown before the market open already, I probably should have shorted right at the open. However, this is hindsight now. Since I followed my rules and did not chase, I´ll give myself a C for today.

Best,

Nils

Report Card #11

Dear L.,

I did not trade today. However, there was a very impressive stock today that I want to talk about. This morning GEVO (Gevo, Inc., Basic Materials) gapped up on rather low quality news. My plan was to short into VWAP. Unfortunately however, GEVO is a low float and I was not able to locate any shares. In the first hour of the day, GEVO was very weak and VWAP rejections worked perfectly.

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When GEVO failed to make lower lows however and finally reclaimed VWAP, the trend completely changed. This is what happened up until now…

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A combination of shorts being squeezed and longs chasing GEVO has brought GEVO to a current level around $11.70 form less than $5 this morning. The pain of the shorts became especially apparent when GEVO broke $7. It seems as if some short threw in a market cover order since GEVO quickly jumped 50 cents on big volume.

I really hope that GEVO closes strong and that locates will be available tomorrow. In this case this may offer some great trading opportunities tomorrow.

Best,

Nils

 

Report Card #10

Dear L.,

I did not trade on Friday. Nevertheless, there is still an update on a trade on CHOOF (Choom Holdings Inc., Medical Cannabis Sector) that I made this week. The Cannabis Sector has been on fire in the last few months and on Wednesday CHOOF finally followed suit.

Breaking out of the 86 cents level, CHOOF reached multi months highs and closed at $1.04. I entered with a very small position size at 82 cents and held overnight. My plan was as follows: Despite the large gain I expected CHOOF to appreciate more in the coming week. Therefore, I decided not to take shares off on Thursday morning despite the fact that I expected CHOOF to have a weak day. Recently we have seen this pattern in the OTC sector. A stock breaks out and sells off the next day just to find its strength again on day three.

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Coming into the trading day on Thursday my plan was to stop out below 85 cents. I was ok with giving back my profits up to this level. CHOOF indeed was very, very weak all day, giving back most of Wednesday´s gains. It found a low of just above 84 cents, thereby stopping me out.

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Coming into Friday´s trading session I did expect CHOOF to bounce again. However, since this was rather a hunch than strong conviction, I did not put another trade on. My hunch turned out to be correct and CHOOF closed close to this week´s highs.

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While this trade is unfortunate, I followed my plan all along. I bought the breakout, accepted the sell off on Thursday, got stopped out and did not want to gamble on Friday. The only thing to criticize may be me stop level at 85 cents. I think that it was too close to the support level. The fact that I almost got stopped out on the low of the day closely demonstrates this.

Best,

Nils

Report Card #9

Dear L.

today was a pretty uneventful day in the markets. I took one trade according to plan though which turned out pretty nice.

NNDM (Nano Dimension Ltd., Technology Sector) is a trash stock we already have visited earlier this week. Since its gap up on Monday, it has been selling off. Today I thought that the most likely thing was some more sell off below VWAP.

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When formulating my pre-market plan, I decided to orient myself of the $2.46 overhead resistance level. When NNDM could not break this level in the first few minutes after the market had opened, I shorted the stock at $2.41. I tried to cover into the first was down to $2.3. However, there was not a lot of liquidity and I did not want to chase NNDM up again. After another VWAP reject, I was able to cover for a second test of the $2.3 level at $2.31. Later in the morning, I tried to re-short at $2.34 but I did not get any fills.

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At the moment it looks as if NNDM is headed lower. I´ll continue watching this and see if it can become an all-day fading stock.

Regarding my goals of more consistency and a better Risk/Reward, I think that I deserve the grade C+ today.

Until tomorrow.

Best,

Nils