A trader explains the "first red day" strategy: buy after a stock surges for multiple days in a row, then sells the moment it closes lower. The pattern shows stocks jumping from $1 to $3 to $8 to $16 to $35, then reversing when momentum breaks.
The first red day. The concept is actually really, really simple. It's the first day that the stock goes red. 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. I want to see parabolic action, multi-day runner, and then that momentum subsiding. Imagine day 1, 2, 3, 4. So you could see a parabolic move is occurring. Day 1, it's at a dollar. Then day 2, it extends to $3. Then extends to $8. Then extends to $16, then extends to $35. What ends up happening is after I get multiple days of extension on the daily chart, first day that it goes red, it triggers that. So you could see day 1, day 2, day 3, and let's just say day 6. All of a sudden, the stock that was starting at $1, it went up to $35. The first day it went red, it had this absolute destruction. And on this destruction, that is what is repeatable, and that's how I make the money.
