COPY This CRAZY Simple 98% Win Rate Trading Strategy

That Trade was a $668,000 day. So it took me eight hours to make 400,000, which equivalent to 50,000 an hour. That's pretty good to me. And you could see I had locked in 38,000 on one trade, locked in 410,000 on the other trade, locked in 20,000. And I was sitting at an unrealized $235,000. So all in all, I had locked in $468,000. And as I'm recording the goddamn video, I'm sitting at another unrealized 230,000 for 700.

So seeing this P and L fluctuating in this way, you.

How do you handle that psychologically?

So the biggest thing for me that.

I've learned is this is like your a star setup.

This is a plus plus. This is the best of the best of the best. This is my Super Bowl. This is the bread and butter, though. This is exactly what I'm looking for. These, these type of setups, these type of things. I wish if they happen every single day, bro, I'd retire. I'd have an island. I'd be good to go. Unfortunately, I would be stupid not to risk more. If you are so confident and the setup has happened over and over and over again and you know that it has a 98 rate when it's actually going to happen, that you want to be as big as possible to maximize the trade as much as possible. Because then again, it only happens four times a year. Stock tanked $40 a share. While other people are using that area to reduce their position. I'm actually getting in big. I'm sizing I'm size. If I just had. And we'll see what happens here. I'll show you.

Welcome everyone back to Chart Fanatics, the go to channel for all of your very best trading strategies and concept breakdowns with the very best traders in the world. Talking of which, today we have a verified a figure trader with us. We're going to go into a concept called the first Red Day, which he has done close to $2 million in verified profits with. And we're going to get that exact deep dive into that strategy with live chart examples as well. He is the founder of my investing club. You already know who it is. It's the one and only Alex Tammies.

Good to be here.

It's a pleasure, man. Thank you for being here with us today. And I'm very excited to get into this, man. And huge congratulations. When we did our podcast, we were just shy of the 10 million mark. And amazingly, we've gone over, not only gone over it, we surpassed it by a very good amount. But where are we going to start today?

So first let's start with where this pattern came from. So this pattern was created by my mentor, Bow, the guy that taught me how to trade. He was the king of OTC Back in the day he was trading the OTC penny stocks. The stocks are like 2, 3, 4, 5 cents. So he would make money on the way up and he would also make money on the way down. What he found is this setup of the first red day not only occurred then, it is still working to this day today. So the concept is actually really, really simple. It's the first day that the stock goes red. So I want to kind of just show you an example of what that looks like. Because a lot of people, what they think is when they first hear the strategy, they're like, if it goes red after one day, that's the first red day. But it has a lot more nuances than that. So for me, what I want to see is I want to see multiple days of extension. And then the first day it goes red. Not one day it's green and the next day it goes red. Not two days it's green and then it goes red. Not a stock that goes from 2 to $2.20. I want to see parabolic action, multi day runner and then that momentum subsiding. So let's get into it. So the basic way to explain is imagine the daily chart. So I'm going to be drawing the day chart. So.

Day one, green, you know, and.

For this strategy, is it primarily for stocks?

Primarily for stocks.

Got you.

Primarily for stocks. But there are certain opportunities where you could use this with an option. So on the example we're going to talk about, SMCI is a stock. But if you want to multiply that, you could use the option to get some more leverage on that. So day one.

Running out of space here.

So imagine day one, two, three, four, five. Right? Daily chart up, extend. Let's say, let's make some prices on here too, to make it easy to understand. So this is $1. And then on this day it's $3. And on this day it's $8. Let me get rid of this.

And then on this day it's $16. Then on this day, let's say it's $35. So you could see a parabolic move is occurring. Day one it's at $1. Then day two it extends to $3, then extends to $8 then extends to $16, then extends. What ends up happening is after I get multiple days of extension on the daily chart, the first day that it goes red, it triggers something like.

This.

It triggers that. So you could see day one, day two, day three, and let's just say day six. So all of a sudden, the stock that was starting at $1 went up to $35. The first day went red. It had this absolute destruction. And on this destruction, that is what is repeatable. And that's how I make the money. So this is the example on the daily chart. Let me show what that would look like on this day on the intraday chart as well.

So is it a case where you're trying to capitalize on the move before it's. Before that red day is taking place?

So what I like to do is when I first started, I was trying to anticipate when that day would come. I would say it's been up for three days in a row. It should probably pull back on the fourth is up for four days in a row. I should probably pull back. But the reality is you don't know if it's going to pull back on the third day, the fourth day, or the fifth day. So it's a lot safer to wait for it to go red and then hit it rather than trying to anticipate it. So let's say, for example, let's say we're drawing again, let's say this.

This dotted line here is the previous day's close. So previous day close.

So the stock opens up, trending up, trending up, trending up, trending up. And all of a sudden you start to see a little bit of momentum subside, maybe a bounce, momentum subside, bounce. Okay, right over here. When you see the stock finally going red, you attack.

Attack. Now is important for price to go up first in this occasion versus coming lower.

I prefer when we get the parabolic move up and then come down. But there are plenty of examples where on that final day, it gaps down. Okay. It starts the day red. And then you'll look for a bounce towards the red to green resistance to then get it. So in this example here, this is kind of, let's say this is the SMCI example. The moment that it goes red, you attack here, and then boom, it's just straight down. So what I found is, oftentimes when I first started doing this, I'd maybe short a little bit here, maybe I would short a little bit there. And then you might see a little bit of a bounce it's not confirmed. So if you are shorting ahead of time, if you are anticipating the move, be prepared to not use a lot of size because you might have the wrong day. It might come.

You know, it might end up doing a little bit of this kind of comes back down right before it's about to do it, it rebounds back. Right. So if you're going to take a little bit of a piece, you could take it before, but you have to reserve your size for when that moment that it crosses under the previous day's close. Yeah, it's relatively simple and that's why it was working so well for me for such a long time because it didn't require too much brain use. To be honest, I would say it's multiple days of extension and that first day that it goes red, it pulls back now.

Hey guys, I hope you're enjoying this episode so far. And don't forget we send every single strategy breakdown from every episode for free on chartfanatics.com so the link for that is in the description below. So just make sure you click that. You just put your email in and every single week we will send you an up to date PDF strategy breakdown for you to keep, to learn from, to reference for free. And don't forget, we're also launching Chart Fanatics Live where your favorite traders from Chart Fanatics will be live trading every single day. I will also be including special guests on the live Chart Fanatics edition. So make sure you go subscribe to that YouTube channel right now. It's linked on the main profile of Chart Fanatics so make sure you're ready for that. But let's get into this episode.

What is the reason that it does this? Yeah, right. So let's just again have that little example here of all those extending charts and you know, whatnot. So what happens day one, day two, day three. What ends up happening is on this next day, this next day here, everyone that missed out, let's say you're joining on day three, you're seeing this move. Yeah, you missed out on day three and you're like it's going to go up again. So maybe I should buy. Or even this guy here, maybe, you know, it's up, I think it's going to go up again. So what ends up happening is they fool the, whoever's manipulating these stocks, whoever's running these stocks is fooling traders into believing that's going to continue forever. Right. The saying is that when everyone is saying that stocks are going to go higher, the inverse happens when Everyone says the stocks are going to go lower. The inverse happens. So what ends up happening is they trick traders that are late to the party to keep buying.

Yeah.

They're like, oh, it keeps going up, it keeps going up, it keeps going up. But eventually when that momentum subsides, there is absolutely no reason for the stock to continue. Traders that missed the move the previous days end up trying to buy the dips. They try to buy the dips, they try to buy dips because it worked so well for so long. But once the momentum finally subsides and once the trend finally changes, it's not coming back. Right. It's like there's the example of SMCI that we're going to get into that was the top forever. It hasn't hit that as we're recording this. It happened on Microstrategy. Still hasn't rebounded to that same area, you know, all these different stocks, it ends up realistically becoming the top because there's so much people stuck from all these. So when it's finally happens, right. When this finally happens here, there are so many people that are stuck from these levels up here. There's so many people that are stuck from these levels up here. And all these guys have already sold by the time it happens that they keep averaging down and averaging down and averaging down.

More liquidity for this. Correct.

And then eventually what happens is these toxic companies, they do an offering, they end up raising money at a dilutive price and then at that point more supply enters the market at a lower price and it just doesn't pushes even more.

Yeah.

So that would be what it looks like on the intraday basis. So you know, we've seen these examples happen over and over again. And the reason why it happens is human greed. Humans always end up getting greedy or wanting more and more and more and more. Right. They keep thinking that it's just going to keep going up and up and up and there are certain opportunities where, yeah, it ends up going up further than expected. But I think we both know that gravity has own rule of working as well.

Yeah.

Nothing goes up forever. So for a healthy chart, a healthy chart needs like to go up, consolidate down, go up, consolidate down, go up, consolidate down, go up, consolidate down. You know, there's some price discovery, price acceptance, price discovery, price acceptance. So you need steady consolidation for a healthy move up.

Yeah.

When you're starting to see a, you know, let's actually keep it here. When you're starting to see.

You'Re starting to see a rocket ship. Right. The Same way that gravity comes back down, it consolidates. Because this is such a rocket ship, when it does finally come back down, it doesn't come back down a little bit, it comes back down a lot. Because the velocity, the velocity of the move is so extended that the same way that velocity goes up, the velocity comes right back down.

That's it. And plus, to kind of coincide with that, the, the way we're pushing, sort of accepting, pushing, accepting, there's orders are being collected along the way, people are getting a chance to sort of get the next wave. While in this case, there's a lot of chasing, there's a lot of emotion involved on the way up, just as there will be on the way down. And therefore all these people who are getting in at the highs and highs, highs, they're just fueling that move to be able to just drive straight through price.

It's like one of the most historic examples is that day of GameStop where Robinhood turned off the buy button.

Yes.

Right.

Yes.

So that is. Actually, I think I should have a screenshot somewhere. I'll send it to you. I think that day was another one of those first red days for about 300,000. Now, why was that important is because everyone that was buying GameStop was just buying it based on the hype. They were buying because like, oh, GameStop, it's a meme stock. Oh, it's going to 200, it's going to 300, it's going to go to a thousand, it's going to go here. And then what ends up happening is the moment that Robinhood turns off the buy button, all of this is not natural price action. This is not moving based on a catalyst that's legitimate. It's moving based on hype. And whenever there's any type of movement based on hype, gravity eventually comes back down. So my job as a trader is to not only identify when these extended moves are happening, but to make sure that I don't get chopped up on this day and I don't get chopped up on that day. I don't get chopped up on this day.

Yeah.

Because at the end of the day, what I've recognized is the moment that it turns red. Right. Let's say again, intraday basis. Yeah, yeah. The moment that it turns red, that is a momentum shift. The momentum is shifting, the trend is changing. It is different this time.

Yeah.

Versus trying to anticipate it. So I tried to anticipate it a bunch of times and I found that the simplest way is when it goes right now not always is it as clean as it goes red and then it goes straight down. So what I like to do is, let's say I attack here.

Yeah, right.

I attack there. Now my thought, what's your stop? How do you manage risk? What do you do? So what I like to do is I like to risk a reclaim of that red to green area. So if my first initial entry, you know, maybe I have a FOMO entry here, right. Let's say I have 10% of my size here, okay. I kind of cure my FOMO there and I go in 100% of my size here. So what I will do is if it ends up reclaiming the red to green area, you know, I'll cut off that 90% add that I had, right. I added 90% of my size, I cut that off and then the rest I'll cut off right here, same place. The problems that occur is that the entire thesis is based on stock going red and staying red. So the moment it reclaims red, my trade thesis is no longer valid and I get the hell out.

Yep.

So that's how I manage risk on these setups is attack when it goes red. And then most of the time it's going to bounce a little bit. It may not bounce, but then you could see traps happening and it comes back up. So that's what I do is if the trade thesis is based on the stock going red, if the stock goes red and comes back, the thesis is negated and the trade is over. And I wait and you know, sometimes it might come back and come back down. I take the trade again.

Yeah.

But oftentimes if it's going to work, it's probably not going to reclaim.

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Now let's get back to the episode out of interest. Well, just to cover a couple things here. So going back to this example, the reason why the parabolic side of things and then why we're able to sort of look at this level as our entry point is during that parabolic stage, we're not really coming back. We're not going red really because that's the whole nature of it being parabolic versus the other example of price going up and sort of accepting the parabolic nature is we're not getting that reclaim. So that's why that becomes significant because we're not seeing and not seeing and not seeing. It might even be 6, 7, 8. It could be however long. Right. I know we covered sort of like one to three days, but that's just example for. We don't have enough space. Correct.

Yeah, we keep going up.

Exactly. But could keep going. But essentially the characteristic of it is that we're never really getting below that daily open. We're never really getting there. So when it does finally happen, it's a strong indication that the party's over. Almost. Right. But on top of that you mentioned about gapping down. So let's say we were here. When you say gap down, do you mean that we gap down below the open but we still have a parabolic move and then have that move?

No. So I'll show you. That's actually a great, great call. So let's say, okay, so we're going to draw the daily chart and we're going to draw the intraday chart. Again, so daily chart. And what I need to see here is, is I need to see at least three days worth of extension. If it's one day green and then it goes down, it doesn't really count. Yeah, Like a stock could go parabolic 500%. It's not going to come back red on the day that it goes 500%. The second day, it's not really enough. I at least three days worth of major extension. So now this is day one, day two, and day three. So this is the daily chart. Right. Let's do day charts. So now where are we at on the intraday? So the intraday. Let's say let's draw a previous close.

So let's say, you know, stock, you know, kind of close somewhere around here. So kind of started coming down towards the end of the day.

Let's.

So we open up somewhere here. Let's say this is five. I'm just again, five dollars. And let's say this is two dollars. Whatever. Actually, let's do a bigger example to kind of emphasize how extended these may be. So let's say this is $30, and this is $25. So. And then we started the move here. Let's say we started the move at $2. Let's say we were here at $15.

And over here we close at $30.

Yeah.

Okay. So now we're opening up on day four at $25. So like I said, I would prefer if on day four, we gapped up again and then went red. But there are certain times where on day four, it opens up weak or something happens. And what I'm looking for here is I'm looking for a bounce without the previous day's close reclaiming.

Okay.

So I want to see it bounce to the previous day's close and fail.

Yeah.

Proving once again that the profit taking is occurring. You know, sometimes it may just push a little bit and come back down. Other times it may push right back up and come back down. But I personally prefer when there's that final day of another gap up, because that's once again, more exhaustion.

Yeah.

Because what ends up happening is let's say we did gap up to 45. There's people that bought in between that then now get stuck, and that entire gap will get filled all the way back down, plus more.

Yeah, because you need that. You need, as in essence, you need them to be stuck.

Correct.

Facilitate you.

You want those people to start to become sellers, and they will be a lot more sellers if they're buying at 41 42, 43. And then all of a sudden when it's down to 30, they're like, holy shit, what did I just buy? And then it keeps going down.

And then. So in essence, your a star for this playbook that we're covering is where we're, we're starting a higher, and then we, we come down and take out that correct open. This would be where it's still valid, but it's not as sort of appealing. It's not really what we want.

I'll still take it. I'll still take it. And instead of the daily chart turning into a gap up and go down like this, you know, what ends up happening is, you know, we gap down here.

Yeah.

And make that move. Right.

How do you go about executing this one though? Is it a bit more sort of nuanced and discretionary?

Yeah, this, this one's a lot tougher because I want more meat on the bone. The higher it goes, the more room it has to the downside.

Yeah.

So by nature, if it gaps down, that downside is reduced. But then again, is it really because the stock is still up from $2.

Exactly.

You almost play a trick on your brain because your brain gets greedy. And it's like, I wish you more. I wish it went up. You know, I wish it went up so I have more room to make more money to the downside. But this still is very viable as well. Again, not every time is it going to be as clean as a gap up and then break red. So you have to also be prepared for those times that it does gap down, because what ends up happening is this. The day that it gaps down. You as a trader think in your head, ah, you know, I missed it, I missed it. Or, ah, maybe let it just bounce a little bit and then I'll do it. And then the bottom ends up falling out. You shouldn't really think that if you, you missed it. When the stock is up, you know, 500, 600,000%, it's down 2, 3, $4. You know, like it's, it helps to have it gap up and make another parabolic move which further emphasizes it. But I feel like a lot of traders, they end up forgetting about it because on this day that it gaps down, another crazy stock is moving. They'll trade the other crazy stock and they'll forget about this one.

Yeah, man. Where do we go from here? Do you.

You tell me. So I think we could show some more examples of actually this happening. Or, I mean, this is just pretty simple. It's. I Told you before, we were starting to record as well that this is a very simple concept for most people to understand the difference is not classifying everything as a first red day. Because people will see a stock that goes from, you know, they'll see a stock that goes from two to four and be like, that's a first red day. Not really. Not really. You want to see a parabolic move. You want to see 2 to like 12, maybe 2 to 25.

Yeah.

Right.

So for this concept to work, for this playbook to work, you need that parabolic move. It has to. The name of it, the name of it makes you assume, yeah, first red day after green candles were in. But it's not the case. It's more after a parabolic move. Our first red day is what we're looking for.

Exactly. It's like if Tesla goes up one day, it goes up, let's say 8%. You have people say, oh, the next day's first red day, it's going to go down. It doesn't really work like that. It doesn't really work like that. But if you have multiple, multiple days of extension.

So like MicroStrategy, prime example, you know, we had such a heavy run.

Up, up, up, up, up, up.

That's our first red.

Exactly.

And we have an example of that, right?

Yeah, I can show you.

So before we get there, though, let's just do the pros and cons of the first red there. So if you just put pros on this side in the green, and then we'll do red on the cons. So again, just for everyone at home, cons wise isn't that it's necessarily bad. It's more so something that you need to be aware of when using this. Something that can be helpful or something that could be bad. Right. In terms of maybe it's timing, et cetera, with this particular one, probably not timing wise. Pros wise, though, of course, it's a very large move. You know, it's a very. Probably a large risk to reward trade.

Right. So I'll keep it even simpler. It's easy to spot.

Yeah.

Right. It's easy to execute. Why sway for it to go red.

Yeah.

You have the signal red.

Huge profit potential.

Yeah.

Right. If this stock is making a parabolic move to the upside, gravity is going to kick in. It's going to make a parabolic move to the downside. Right. Easy spot, easy to execute. Huge profit potential. I also think that, you know, it is available.

In every market cycle.

Yeah.

Why? It's because human Greed and human nature doesn't change. People always want more. They're always going to get greedy. They're going to say it's up, it's going to go higher, it's going to keep going. This is going to change everything. This is once in a lifetime opportunity, whatever it may be. So it's available in every cycle, whether you're in a bull market or bear market. This is still here. One of my biggest trades ever, which we'll get into, was on Indo. That was a stock that moved when Russia invaded Ukraine. All the way back when. Yeah, it was an oil and gas stock. So the price of oil skyrocketed and this small cap company went absolutely parabolic. Right. And if you remember, when Russia invaded Ukraine, the market started going down. So this setup was available even when the market was down. So that could be some great examples of the pros. Let's talk about the cons.

Okay.

So for the cons, you have to make sure that you're not having fomo. It's very, very easy to get in before the confirmation. So you have to make sure that you are being patient enough not to attack on day one, not to attack on day two, not to attack day three, day four, day five, day six, is to wait for that confirmation to happen. And oftentimes you get intoxicated by the opportunity again a little bit too early.

So another con may be it doesn't happen every day.

Yeah.

I would say it probably happens once a quarter. So let's say four times a year.

That's more than enough there. It's plenty of.

You have to make sure that you know if you miss it when it happens, not to take. So this is more of like a mental thing where if you miss that first red day setup and you know that it only happens four times a year and one out of the four, you missed it, you screwed it up, you got an early. You have to make sure that doesn't screw with your head for the next couple of trades that come because there's been plenty of times where I executed improperly. Maybe I got a little bit of fomo. Maybe I was in a little bit too early and I missed it. What I would end up doing is take those same emotions into the next age trade and end up losing money. Right. So I guess controlling.

Emotions. Sorry, my handwriting is like, doctor, it's horrible. You can't reach chicken.

Everyone says it, don't worry. But another con I would say is in terms of you have to make sure you actually maximize profit.

Right.

The Actual holding out with that volatility, which can be hard to do potentially because otherwise if you don't, you kind of wasted the trade in a sense. Like the whole, I think the whole thesis of the trade isn't just in terms of the first red day and the execution side, but it's actually trying to maximize that downside.

Right?

Ready to get that P and L. Because otherwise you could be still a great trade, but it might not be really what you actually meant to be going after with this strategy.

Correct. There's been plenty of times that the first red day set up comes. I'm like, I wish I had more money, dude. I wish, I wish I sold my car, my house, my everything, put it into the account and attacked it. And that's because if I know that this has such a high probability of working, if it is indeed that first red day setup that I am looking for, then I would be stupid not to risk more, right? It's like if you are so confident and the setup has happened over and over and over again and you know that it has a 98% win rate when it's actually going to happen, that you want to be as big as possible to maximize the trade as much as possible. Because then again, it only happens four times a year. And another thing that, I mean, it's not really pro and con, but it's mostly something that's important on this is I treat regular trading, the day to day trading like the regular season games. You know, you're staying limber, you're practicing, you're playing. But when these first red days come, it is the Super Bowl. So if I was just to be a type of trader that only could trade one setup, I would only trade this. The problem is that it happens four times a year. Let's say maybe give or take one or twice, right? Happens only four times a year. So what ends up happening is if you are not actively trading and you are not kind of knowing what's the current theme, what's going on, this and that, you will not be able to execute it properly because you'll trade based on emotion. You're like, all right, I haven't traded for three months here, let me make sure I do, right? Oh, but I'm in a little bit early. I'm this or that. So I treat this as the Super Bowl. You want to participate, you want to trade, you want to be at the market every single day for the regular season games. Make sure you understand what's moving the market. Make sure your executions are Good. Make sure you're still stopping out properly. But when that super bowl does come, you better make sure that you execute because there's only one winner when it comes to the Super Bowl. You better hope it's you.

Well, this is like your a star setup, right?

A. This is the best of the best of the best. This is my Super Bowl.

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And that's why, you know, as you mentioned, having your games is to give you the capital as well. One, keep you sharp, right? Keep you in the game, keep you, make sure you're actually in tune with the market to identify it, number one. But then two, it will allow you as well not to hesitate because you know when you haven't traded for a long time, you're not as trigger happy if you work, which can be a pro in a sense too. But then most of all in terms of the size for an A star, you're not just going to want to just size into it using all your own capital versus the profits to the profits that you've made from those base hits and those regular playbooks essentially is for this, for this moment. Because even if it happens once a year, but you've done those base hits, this could make up pretty much the largest portion of your pnl, right?

It's usually, if not always, this is the largest portion of the P and L. Because you know, these days it depends. But some days, let's say it's 200,000 to 400,000 that I'll make on each of these setups. So rounded up to 300,000. If you have four of these, it's 1.2 million, right? So just on the first red day setup I can make 1.2 million. But on my other day to day trades, maybe it adds up to another 800,000 to a million. So by participating in the day to day, not only do I have something that I feel is very high probability to improve my P and L, I still have the ability to generate more P and L by participating and getting that confidence, getting that staying in tune with the market. Because no matter what happens, whenever you take any type of time off from the market, whether it be a day, a week or a month, you are completely disconnected to what the true nature of the market is going on at that moment in time.

Love that. Well, it's finally time. We're going to look at some trade examples using this exact setup. So we've now got the charts out. After breaking down that incredible strategy, going over the pros and cons, now we're actually going to go through actual chart examples that Alex took these trades. I think there's one that was a mistrade if I'm not mistaken. But otherwise some phenomenal multi six figure trades using this exact strategy. Right?

So let's start with smci. So this is one that I under capitalized on. This is one that had the potential to be a six figure trade, maybe even a seven figure trade. But I just underperformed. I underperformed and this was a setup where I underperformed and still made 50,000. So it's not so bad when you underperform and do that. So let's kind of go over. So what happened here on smci? SMCI had a big, big, big breakout when Nvidia started breaking out. This is like the most classic, classic example of like the first red day. You see people on Twitter, social media, everyone. This was a big one back in 2024. So you could see extension, extension, extension, extension. And then it really started to go parabolic over here. And this is split, adjusted. This was back then, I think it was trading around like $500 maybe.

Yeah.

So it was split, adjusted. These are all split adjusted things. So start going parabolic, parabolic, parabolic. And all of a sudden, it's not even having a red day. Right. These red days that it's having here are kind of consolidation. Yeah. So it's creating consolidation days versus extension, extension, extension. And then what we saw here is now that three days, 1, 2, 3. So you see multiple, multiple, multiple days of extension. But then the next three days are extend, extend, extend, gap up. Okay, so how did I trade this? Well, this is actually a great example because I have a live recording of it. So I have my exact trade and I'll show you as it happens. So you could see here on that day, Right. So let's just go back on that day, this day here, this day that it finally gapped up. Right. What I do. So you could see the gap up day here, it gapped up and starts to wash out. It starts to create a trend. And what I want to do is if I do have a little bit of FOMO like I showed in the chart, that I'll take a small piece. So this arrow here is my entry, my first primary, short entry. So I took. And this dotted line is a previous day's close. So I had a little bit of fomo. I got in a little bit early. I waited for it to break the low of the day. It set its range and I waited for it to break the low of the day. So now what did I do?

Even with that range, you can see how it brought by, you know, really induced the buyers in with that reaction.

Correct. So now we're watching the stock boom. So let's pause here. So it went red. What did I do? I add to my position there. So I took my first initial starter and then it went red.

How are you going about the execution there? Is it like a stop order is a manual execution?

So that's actually a great question. So what I was first doing when I first started is I was Actually using a stop order, because sometimes it would happen so fast that I would miss it. And by using a stop order, you kind of control your fomo, because it'll only trigger if the stock goes red. Yeah. Now, I've gone a lot faster with my mouse, and I'm able to kind of point and shoot. But for anyone that's kind of first starting out or if they want to control the discipline and control the fomo, definitely set a stop order. It makes it easier. You just. If this is the day you set your order and you wait. Right. But I. Like I said, I had a little bit of fomo, I got a little bit early. I added to the winner here when it finally went red. So if you see here, 1025, let's say 1025, just to make the math easy, the first entry, add at 1005 here. So what is that? Maybe that brings my average to 1015. Right. Just to kind of say something along those lines. Now it goes red. What happens next?

Almost instantaneously, it goes down $30 a share instantaneously. And now here I am looking at the chart, looking to see what I'm doing, trying to make the triangles larger. But now, $50 a share, it's down from red. Right. So just pausing here real quick. I took my first initial starter when the range broke, and I added when it went red. Now, you could ask yourself, look at this straight down. But you ask yourself, where did I go wrong? Well, I went wrong not being super, super, super aggressive. I'm seeing the stock bouncing, and I know, all right, this is the first red day. This is setting up. This is it. I want to add to my winner. I don't want to just take it off here, because, remember, the stock is extended like crazy. So even if it falls again, just to make the math easy, let's say it falls 5.6 points on the split adjusted price. There's still plenty and plenty and plenty of downside. So where other people are using this area, they said, all right, stock tanked $40 a share. While other people are using that area to reduce their position. I'm actually getting bigger. I'm sizing. I'm sizing. If I just had. And we'll see what happens here.

I'll show you.

So we're seeing the stock trend out. We're seeing the stock trade out. It's trying to consolidate. Maybe. Maybe it's not. And then let's see. It's bouncing. But as we continue with the video, you could see that the bounce is starting to fail. Look at that. Yeah. So now what ends up happening here is that short bias traders end up taking their profit instead of adding. And long biased traders start to average down. They're like, oh, you know, it's going to go higher, it's going to hit 950, then bounce 1100, and that ends up trapping the next round of people. So I had two opportunities to get in bigger on the stock. The first initial move, it went red, and the bounce. And both times I hesitated. Maybe I think it was the past couple days. The day before, maybe I was having a shitty trading day. Maybe I was fighting with my girls. It could be any reason. You know, this was a year and a half ago. I don't even remember. But I just remember that wasn't at my tip top shape. And you could see within these are one minute candles. So within 1, 2, 3, 4, 5, it's down nearly $100 a share.

Wow.

And I took my first initial cover. Right. So now what happens next?

Stock is trying to bounce, try to do its thing.

Bouncing a little bit, and then all of a sudden, the bounce fails again. Now what happens? Well, all of a sudden, now you start thinking in your head, wait a second. Everyone that is buying the dip is now underwater. If you bought this gap up, you're down nearly $150 a share. If you bought the gap up, if you bought on this balance, you're now down $40 a share. So what happens?

So the low of the day is right around 920. Let's say we're trying to retest, see what happens.

And all that's doing is drawing in more of the buyers.

Correct? Because, Riz, it was just up to 1070, 1080. Why isn't it going to bounce this time?

And it's actually only like 15, 20 minutes ago. Right. It was like.

And now the low of the day breaks as it continues to go down in my favor. I'm reducing, and I even reduce a little bit too early. Right? I reduce a little bit too early because as you're going to see.

It just keeps falling and falling and falling.

Remember, the first red day was triggered when the stock broke the red to green line. Let's say 1,000 now. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10. Eleven minutes later, it's at 883.

It's kind of exactly what we talked about. Even though you did make $50,000 on this trade, we spoke about how one of the cons is making sure to maximize this concept and this strategy by holding that volume as much as you can, which isn't easy, no doubt.

Correct.

No doubt it isn't easy. But this is a great example where you still made money, but now that what could it have been? Do you know? I mean, what do we want to know?

So here's the P note 50,000 and if I remember correctly, so this stock, it ended up trying to bounce a little bit at 860. If I remember it had a midday sell off and sold off as low as 750. So it got absolutely decimated. Now if I traded with just stock, I probably could have made 100, 150,000. But on this trade specifically, the reason why the opportunity was so big is it was Friday at options expiration. So had I bought instead of shorting the stock here, maybe I bought the 950 puts or the 900 puts. I could have taken that same position size and probably made a million dollars because of the option going up a thousand X. Right. So I don't even remember how many shares I had here. Maybe it was maybe five, I don't know, 500, maybe a thousand shares. I can't even remember. But if I use that same capital on the option, I would have probably made a thousand percent, maybe even more. And that's what would have led to this trade being a lot exponentially bigger. So ever since this day happened, that taught me a lesson that if there is ever a first red day on a mega cap company that trades options, I want to be more focused on the option side of that trade rather than the stock side. Because then again, thousand dollars a share is pretty expensive, right? Pretty expensive. But with the options, I remember seeing people post an option that went from $3 to $60. The puts. Yeah, you know, so this was an example of I didn't capitalize as much as I should have, but it taught me a lesson for future trades to now utilize the options. So that was one example. Now let's talk about another example.

So this was the setup that I was telling you about, Risk. The Russia invaded Ukraine, oil and gas sector play. So if you look before this happened, right, let's kind of, let's, let's go back a little bit. So before this happened, the stock was trading around $4. It was trading around $4 for the past forever, right? And then Russia invades Ukraine and all of a sudden this oil and gas play goes from $4 to a parabolic move of at the highs $86.

Wow.

Okay. Why is this another big one? So if you see here, right, if you See here? Yeah. It kind of had a little bit of consolidation here, a little bit of price acceptance, but the price never really extended. The price never really just kind of made this abnormal parabolic move.

Yeah.

Until it started happening here. It went from 17 to 25.

Yeah.

And then it went from 22 to 49. And then it went from 42 to 86.

And then it had the first red day set up.

Yeah.

Right. So let me actually see if I can zoom out that far.

So give me the first red day. Is it. Are you just trying to capture that red day, but essentially trying to get out by the end of that day, or are you holding even further?

So when I first started, I would just capitalize on that first red day, but now, as I'm realizing, it ends up going down lower after that. So that example of smci, if we just pull it up, you could see that the day after it went red, it had two more days of downside. So as I've been more mature with the setup as I was, as I'm kind of learning more, I may hold like a 10 overnight or just a little bit, because you never really. After the top is set, chances are it's not coming back.

Yeah.

So let's go back to this imdl.

Because with this woman in particular, that one falls off entirely.

Right. So give me a sec here, Riz. I'm gonna.

Yeah.

Spend like five minutes just zooming out of this so I could show you the exact example.

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Now let's get back to the episode.

This is the bread and butter, though. This is exactly what I'm looking for. These. These type of setups, these type of things, you know, I wish if they happen every single day, bro, I'd retire. I'd have an island. I'd be good to go. Unfortunately, the extended nature of these moves, you know, is few and far between. I mean, it's like the same thing as a GameStop. If we had a game stop every single day, every single week, every single month, it'd be totally different.

There you go.

Yeah.

Okay, so this was that first extended day that it had that major, major day where it went to 87, right? So that stock ends up pulling back, right? And it ends up closing. So for reference, we're going to use this yellow line as the red to green area. So you can see the next day, the day that it had the first red day, it gapped down a little bit. It gapped down a little bit, tried to bounce a little bit, you know, even tried to bounce towards 9, 29, 25am but still it is not breaking above the previous highs. So, okay, now this is a little bit different. It's a gap down, right? The previous day's close is over here. So it's above the previous day's close, but still technically considered under the previous day's highs. Right? So it's not breaking above the highs and still kind of above. Remember, this is going to be our previous day's close line. So what ends up happening is right at 9:30am right, at 9:30 around here, it kind of comes back down, right? So at this point, I'm thinking in my head, the stock is unable to break above the previous day's high. Yeah, it closed week the day before the market opens, and it washes out. It tries to bounce, but can't even reclaim. And at this point right over here, which I'll zoom in on at this point right over here, when it tries to bounce again, now, it's coming at the red to green line. And if you notice, when the red to green line finally broke, the stock halted down.

Yeah.

So this move here was from 65 to 56. The moment that it broke, it was already down. And then for the rest of the day, it just sold off and sold off and sold off. So all you had to do was wait for it to go red and attack.

Was the timing important as well as added confluence and added sort of benefit? Especially because we gapped down, then came back up.

Right. So what I like on this is the fact that it gapped down and it tried to rebound.

Yeah.

But it could not even reclaim the previous day's high of the day.

Yeah.

Right. So it's under the resistance area. So that is already telling me that the momentum is a little bit weaker.

Yep.

So I have the gap down. I have a bounce, unable to break the previous day's high. And then a little bounce and fail. A little bounce and fail. And if you notice here is, you can see it just came right there. Right. About to break the red to green, and it bounced.

Yeah.

And then when it finally broke, it halted down and just went straight down.

So this trade and that rebound onto that yellow line there is a vwap.

That's a vwap. Yeah, that's a vwap. And that Trade was a $668,000 day.

Incredible.

And you can see the same thing here. First red day. Right.

This is the same principle as well. Like, start scaling out as you're going lower and lower.

Right. And I think on this one, I probably waited until the close. If you see it close right at the low of the day.

Close right at the low day. And this is the daily chart again, just for the reference.

Oops.

It's interesting because, as you say, it's that parabolic move. And normally the way they say right with selling anyway, is that you. The buyers take the stairs and the sellers jump out the window. Right. Tell me how it goes. In this case, it's like the buyers are on a rocket ship, but then it explodes and everyone falls back down.

Staircase up, elevator down.

Yeah.

So that's another. So this was probably one of my bigger setups. Right. Obviously, 600,000 is an incredible setup, but let's move on to the next one.

Is this the trade we referenced in the podcast?

Right. I think so, yeah. I think this is November. So this was djt. So this is actually the one that we talked about on our last podcast. So if you see pretty much the same type of thing so this DJT was running up in anticipation of Donald Trump becoming the president. So everyone's like, oh, my God, he has a publicly listed company. If he's going to become president, this is going to go crazy. It's going to go crazy. It's going to go crazy. So the stock started off its move right around 11 to $12 and kind of came up maybe a little bit of consolidation. Came up, consolidation. And then once again, we saw the three parabolic days coming up. So from here, this was around $11 and it went as high as 50. $55. $55. So how'd I trade it? If you see here, if you see here, that first red day, it gapped down.

Yeah.

So what did I do is I shorted, right? This was very early. It's like 4am So I couldn't, I couldn't wait to go trade this. I was awake in the morning, I was ready to go and I saw a gap down. So rather than trying to say, let me wait for it to balance, let me do this, that let me at least take a piece of. Right. So I started scaling in on the short side. And as it came down, I took some profits off. I took some profits off as a way for me to build a profit cushion that way, just in case it pushes up and it doesn't really have that natural first Friday, it reclaims. At least that way I'm making sure that I have some of my profits locked in and I could use those profits to turn the trade into a bigger trade. Stock ends up washing out and ends up rebounding. In this blue line is the V WAP line as well. And I'm starting to see that the stock is acting heavy and heavy and heavy. So I just keep adding and adding and adding. And my plan was to get very, very aggressive if that red to green ended up failing. So the red triangles are shorts, the green triangles are covers. And actually I think I have a more zoomed in version. So you can see here that as the stock bounced at the market open, it failed. So we're red on the day we're red, we're gapping down and we're starting to have some weakness. So whereas other traders are like, oh, the move is over, it gapped down. It's this net. I'm aggressive, I'm adding. And if you remember when SMCI broke the low of the day, that's kind of where I started to get a little bit more aggressive. The same thing when DJT started breaking that low of the day, I added Covered. Short of the bounce. Covered. Vwap. Now, VWAP is acting as a natural area of resistance. So I'm adding again, because view, I'm.

Showing you the average of all these orders, correct?

The average price that's being held of the stock on the day.

Yeah.

So now. Now it's kind of coming back down, coming back down, coming back down. All of a sudden, the stock that was at the day before, the stock that closed at 51.50, now all of a sudden, it's down to 39. And now from my first initial entries, I'm making $10 a share, you know, and then that led to 400,000.

It's incredible. So that's just another relatively fast as well, right? These are all minute candles.

These are all minute candles. So, I mean, look, I was awake at. Right. So if you count from the exact moment I entered to the exact moment I exited, so 1245. So what is that? 5, 6, 7, 8, 9, 10, 11, 12. Eight hours. So it took me eight hours to make 400,000, which equivalent to 50,000 an hour. That's pretty good to me, dude.

100%.

That's pretty good to me.

You know, just to highlight, though, for the people at home, like, that is incredible. And that is the reality. You know, it's a multiple, you know, yearly average salaries for the US and most of the world. If anything, however, the patience, right. They don't happen every single day. They happen, as you say, like three to four times a year, give or take. But you still have to be prepared. You said, like, you had to be up at 4am for this one corrected to execute properly. You still have to track throughout the day. And to achieve that result with this one, it was more of an aggressive play. You know, I'm really making sort of size in and sort of playing throughout the day and being able to handle that, psychologically handle that in terms of understanding the play that you're doing. These are all things that are so important to achieve that 400, to basically earn the 400,000 and the multiple figures.

And honestly, I was actually a little bit pissed because if I remember correctly, we recorded our podcast in November, and that was when Trump first got elected. And if you saw over here, this is a separate setup, but this is a sell the new setup. So DJT was gapping up on Trump winning, and then as soon as he won, stock sold off. So this was an example of when we were both in Dubai and I was unable to capitalize on a separate setup because my wife would have killed me if I traded that. So that's another one. Let's talk about mstr, the one that I missed. So mstr, I missed this one because once again I was in Dubai on my honeymoon. My wife would have killed me if I traded. So if she's watching this, we missed out on a new house. I'm not going to say anything. But anyway, just so you know. So this is another one which was pretty amazing if you think, if you look at the long term chart, the extreme long term chart of this microstrategy, you know, going from trading at, you know, 13 all the way to 500 is pretty incredible. But let's talk about this. So same thing. So mstr, if you remember the same type of breakout that SMCI had before its parabolic move, this had it too. So look here and then look here.

Yeah, almost identical, man, almost identical. You know, almost identical.

Literally. Yeah. Even on the other side as well.

Yeah. So anyway, so this mstr, so this MSCR started an extent and then what do we end up seeing? Day one, day two, day three. So I'm looking for at least three days worth of extension. At minimum. At minimum, you know, five days. The more extension the better. Yeah, I hope to God it goes 15, 20, 30 days in a row. Right. Because I know for a fact that when that moment finally does happen, because.

Even with this one, like you can see, as you say, the last three days in particular, parabolic. But even before that, yes, you have red days if you want consolidation. But you have, you can still see the parabolic nature of this. For from the lows, obviously much slower to begin with, but it did, you know, from here you start to see a lot of more volatility, a lot more aggression.

Correct.

Slow down again. But then it just almost like a blow.

I mean you could make, you could make the argument that you could short this first red day. Right. You could, you could make that argument to short that day. But it's not enough for me. Yeah, it's not enough. I'm sure there's traders that trade that it's profitable. Good for them, no problem. It's not enough for me.

You really need to see.

I want to see something crazy. So what I see here is I see the day one, day two, day.

Three, and even the price levels of that. Why is that?

So this is from 340 all the way to 540.

Yeah.

Right. So now let's get into it. So 1119, let's say 1120, 1122. So this is MSTR. So we're going to use this yellow line once again as the red to green area. So the day mstr the day before the first red day is starting to close a little bit weak. It's starting to close a little bit weak. Pushing up, come back down and then lo and behold, the next day. Gaps up. It gaps up. We're gapping up. We're gapping up. We're gapping up. Now what happens here? Well, just like smci, it starts to break the low of the day, right? It starts to break the low of day. So if you really want, once the structure is created and it breaks the low of the day, you could take a starter. You can see that it ended up bouncing a little bit, which is fine, but then the bottom started really coming out. And this is the red to green area. So if you wanted, what you could do is you could take a starter on this area and maybe set a stop at the high of the day. Yes, there's a lot of range. Yes, there's a lot of meat on the bone. Yes, there's a lot of everything. But if you're just sticking to the same thing that we saw, which is the structure is created and then just like smci, when the low of the day breaks, you could take a starter. Just like indo, when the low day breaks, you could take a starter. So for me, had I been there, had I been trading this, I would probably taken a starter here at this 520 mark, I would have probably given it towards the high of the day or the pre market high of the days to stop out. And then as we start to see it fail more, as we start to see it break that low the day that it created, you could add more. So I would say a 10% starter here, you could probably add another 10% here as it starts to break the structure. And then the moment that it goes red size up, you get that first initial move down, you could take a little bit of coverage and then it bounces. But lo and behold, it does not reclaim the red to green area. Yeah, it does not. And then what happens next, it just waterfalls. It waterfalls down. And on top of that, it ends up having a midday sell off again. Wow. So all of a sudden the stock that was just at $550 closed at $370 on the day.

Wow, that's a missed one.

And that's a miss one. And that has been currently ever since we're recording it. That's been the top ever since. Yeah, yeah, that's been the top. Forever.

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You know, what an incredible strategy, honestly, and you know one of the pros as we mentioned, is that it is simple, it's easy to spot, easy to execute, not easy to manage. I think that's where the bit where you know the nuance, the experience, the reps comes in because it's important at the end of the day like yes, something might be simple and easy to spot and execute on. But to manage it is a whole different story. And really, the management is where the P L is made up. Right. In terms of being able to size in properly and spread your size properly if necessary, and being able to scale out properly. You know, if you scale out too soon, yes, you may still be profitable. But in terms of the opportunity costs and what's left on the table can be significant. Correct.

Let me show you another one real quick. So this is going to be amc. So AMC Parabolic move all the way up and ended up closing right around.

16. So probably right around here. So what happened on AMC? AMC ended up gapping up this day, but there was something different that happened. AMC ended up gapping up and then out of nowhere, there was a news catalyst that came out that they did an ATM offering. So I just happened to be at my desk at the exact perfect time at 7am when they announced their ATM. So this was an example of a news catalyst helping that first red day set up even more. So we got that news catalyst on amc. So we had that day of extension, we gapped up, and then it's kind of doing a whole lot of nothing. And it ends up having a news catalyst ATM boom. Washout right here. Red to green, size up. So you could take a starter when the news comes out. Yeah, size up as it goes red on the day. And all of a sudden this move here from 73 comes all the way down to 53. Right. You could take a little bit. And then you see it tries to break that red to green. It breaks a little bit, then kind of comes back, breaks a little bit and comes back. So that same area of red to green is so, so, so important. It's such a big area that if it does reclaim, it negates the thesis. But if it does end up holding, then you come down.

Does the vwap help as well in this case because of, you know, its position?

Correct. And then all you see is push up at the open and go from 62 down to 41, bounce back up and down to 37.

These are the levels you potentially are scaling in.

Correct. Because at the end of the day, you're making $30 a share if you get it right, or even if you miss it, and just short right at the market open, you' making $25 a share. This ended up having a midday rebound because I think, if I remember correctly, they completed their ATM intraday. So they announced an ATM at 7am and they were able to sell enough stock that it was done intraday. It ended up rebounding the stock, but it came right back down and just kind of sold off. And this is actually an interesting one because I had myself trading it and recording the video. And you could see here. I mean, I'll try to slow it down a little bit if I can. Let's see.

So you can see here, I'm taking the camera.

So I'm keeping it a little bit slow so you can see it here. And you can see. So right here. Pause. Pause it. I had locked in 38,000 on one trade, locked in 410,000 on the other trade, locked in 20,000. And I was sitting at an unrealized 235,000 doll. So all in all, I locked in 38,000 plus 410 plus 20,000. So I had locked in $468,000. And as I'm recording the goddamn video, I'm sitting at another unrealized 230,000 for 700. So if you see here, you'll see the prices are changing in real time as the stock is trading.

And how do you handle that sort of P and L. So obviously, you've already locked in a really good amount, but still seeing, you know, before you even locked that in, no doubt it was even larger. You're seeing this P L fluctuating in this way, you know, thousands within seconds. Right. How do you handle that psychologically? And again, that's kind of one of the cons in terms of what we mentioned about being able to handle that, you know, not get emotional, cut early.

Right.

You know, seeing these fluctuations. Because even here, you know, if you were to be in here and you see that bounce back, you would have taken some off, no doubt. But still, to see that some of that position completely. Right. More than half. But then go again, right. Are you handling.

So the biggest thing for me that I've learned is if you do not take some off to cushion or to pad yourself, you're dead. Because then you get emotional. So for me, exactly like you said, imagine. Imagine I didn't take off anything here. Imagine I took nothing. My profit would disappear. And I just like, all right, it comes back here. If it just comes back here, I'll cover, I'll be done. But by taking some profits off into the dips, it gives me that profit cushion to be patient. It gives me that extra P and L to either take home or to use as risk to turn the trade into a bigger trade. So my biggest advice would be, whenever you're taking any type of trade doesn't have to be this giant one. It could be any type of trade. Lock in a little bit of P and L to help you be patient, to help you cushion. And it's like a little bit of an insurance policy. You don't know what's going to go wrong. Like for example, like this is a pretty substantial move right here. From if you look at it, it's.

9:36 to 9:54 in 20 minutes. It goes from 62 to 41 in 20 minutes.

Wow.

So in my mind it is very easy to get greedy and very easy to say, you know, it's going to go lower, it's going to do this, that's. But because I was able to lock in my profits, because I was able to lock. And this is another, it's kind of continuing, but I think I might have covered some profits live on camera. So let's see, I was at 410,000.

And you see my shares reduced there. Now I'm at 533,000 locked in. So as I'm even recording this video, I am locking in those profits that allow me to be patient. So by locking in those profits, by having that 400,000 realized in my head, I thought I was gonna make a million dollars that day, right? I was just short by a couple hundred thousand. But in my mind I used those dips to give myself that realized P L cushion to then when it bounces, get back, get back in, get a bigger P L and do the whole thing.

Incredible. And it kind of goes to our point as well though. Like imagine if you weren't getting base hits and you just try to take this one execution like once in the year. Imagine handling that P and L switch when you've not even been in tune, you've not been seeing any P L swing at all. The emotional nature of that for even the greatest traders, no doubt would be difficult to manage. Correct.

And the best thing is I was awake early enough that I caught the atm so I had already, before the market even opened, by 7:30am I had already locked in a bunch of my probably like 50, 60, $70,000 on that ATM that I then use as P L cushion to push the trade even further.

And just shows you how important it is to stay locked in regardless of, you know, how good of a trader you are, your P L, even if you're hitting those base hits, etc, because you don't know what time, you don't know when exactly correct our setup or the first red day setup is going to present itself you get an indication because obviously the you know, the whole thesis is that it's after a parabolic mood. So you do get to kind of start to prepare yourself of when in terms of the day could be coming but in terms of the time you don't know.

And it just so happened that that day as well, this day right here which was top forever.

Wow.

Top forever.

Phenomenal man. Well Alex, I really do appreciate you going through this a star setup that you've again come close to $2 million in profits with. You know I'm sure the audience at home have plenty of comments, plenty of questions. Feel free to throw them in the comment section below. Links for Alex will be in the description below. Check out these videos because obviously they are recordings from when they were live. So check those out Also. Hit subscribe hit like other episodes are on screen and this has been Charter Fanatics Take care.