With less than five hours a day and one laptop, an internet connection and 32 trades made (7 losses and 25 wins) on the Nasdaq, it led me to turn a $70,000 account into $1.15 million, resulting in a 78% win ratio on my trades.
In the month of June 2020,
…during the midst of the pandemic we’ve been living through, I’ve spent a lot of time at home.
I haven’t been able to take my normal trips out to California and to other states to spend time by the beach. Instead, I’ve been quarantining and spending my time working in the stock market. And I can see that it’s the same for a lot of other people, especially those who have been either forced to work at home instead of their offices or even worse, being laid off from their jobs or having their businesses fall apart due to the change of environment that this pandemic has caused.
In the recent few months, while many people have been forced to stay home by their governments, I’ve seen an uptick in trading volume in the stock market. Volumes of orders have increased by two to three times, which means that many people are looking for a way out to earn some extra income while spending time at home. The problem is that many of these new traders are inexperienced, and with the lack of knowledge of how to trade, over 90% of them are destined to fail unless they learn how to understand the psychology and the science behind the market.
DETERMINE STOCK MOVEMENTS
It’s simple mathematics backed by human psychology, yet many people look at stock tickers to try to gauge whether or not they will win on a trade. They study patterns and strategies that they find online, but many of these are either made for beginners to learn or are publicly pushed out by big traders in order for them to win, by being on the winning side of the trades while beginners are bound to fail. When most people go out and study new patterns, they don’t put them to the test with paper trades to confirm how effective they are.
In my early years of trading when I started out with an account of $27,000 that was supposed to be used for my college tuition, I spent so much time putting stats together to generate trading results to figure out what strategies were working and which ones weren’t.
Many that I learned from the courses from gurus or from books just didn’t pass the test when I put them to paper.
FOR A WINNING STRATEGY
An effective strategy is one that works over 65% of the time. Almost every single strategy you find online, whether it’s on Investopedia or another day trader’s site, are bound to work around 40-60% of the time. That means if you’re playing with a strategy that’s working 4 out of every 10 times, you’re destined to be a part of the 94% who fail because you will lose six out of 10 times. That’s because you’re losing more times than you’re winning.
There are very few strategies that work over 65% of the time.
Most of the strategies taught online for free don’t win at these percentages. I usually operate with eight strategies and I teach those to my students, and 20% of the students I work with end up turning what they learn into a profitable new career. But this last month, I had my biggest one ever and broke $1.15 million in trades. I wanted to outline exactly how I did it and how it could work for you.
In theory, if you made the exact same trades I made at the exact same time frames, you could have earned the same percentage on your portfolio as I did.
Now while I have made over $5 million dollars trading from the age of 19 to 25, I didn’t use a $5 million account to make all of this happen.
WAS IN MY ACCOUNT
Instead, I started my account with less than $100,000. The amount I put into this particular brokerage account was $70,000 and I turned it into $1.15 million. Some people may think it’s a lot of money to invest, however, if you think about it, many people who work at a job and max out their contributions towards a 401k have this type of money after working at the same company for a decade or less.
Others who are good at saving money or making other investments could have this type of money laying around. Some people who are financially savvy make sure that they are smart with their money.
Now a lot of people think that day trading is gambling, some go as far as thinking that it’s a scam. But the truth is that the market is absolutely predictable. As long as you’re working with strategies that work over 65% of the time (optimally 75% or 85%) and bringing returns upwards of 25%, you can continue to bring a profit each month.
POTENTIALLY EARNED TRADING THESE STOCKS
…and following the strategies I used.
I recommend that many of my students start with at least $3,000 when they begin trading. In theory, if you made the exact same trades I made with a $35,000 account, the account could’ve turned into a $575,000 account. Or with a $7,000 account, $115,000 by the end of the month. This is just for example purposes, as the results are not typical and it does take years of practice, learning strategies that work from a mentor, testing them in Excel, doing paper trades and making real trades to where you are able to spot opportunities as quickly as I am able to. A side note is that most brokerages that allow you to get hard to access stocks usually require you to operate with at least $30,000 in capital.
The reason I got into day trading in particular is because English isn’t my first language. As someone who immigrated to America from China on an F1 Visa when I was in high school and looking for opportunities to make money, the only thing I could find that had an extremely low barrier to entry based on my limited knowledge of the English language was the stock market.
I couldn’t understand the complex contracts that were involved with real estate and a lot of the other things I wanted to potentially invent would’ve cost too much money to get up and off the ground.
HOW I GOT INTO MOST MY TRADES
I live in Ohio, in the midwest of the United States, so where I am based, the Nasdaq stock market opens in my time zone. Throughout the month of June, I spent each of my days waking up between 7:00am to 8:00am each morning. After I brush my teeth, I would go straight to my work station. I don’t have any of the fancy multi displays that you see a lot of traders have. Those give me a headache. Instead, I just use a single gaming laptop (that I usually use to go and play Starcraft and other games).
Using this singular laptop, I start my day by looking for what stocks to reserve to borrow to either short or go long. Shorting is when you sell a stock at a particular price, then buy it for a lower price. For example, if you sell a stock at $10, you want to buy it at $8 so you can make around 20%.
On the other hand, longing a stock is when you buy it at $8 and sell it at $10 so you can make around 20%. With shorting, you want the stock to go down in price. When going long, you want a stock to increase in price.
As counterintuitive as it may sound, most stock traders look for a stock to rise up and they want to jump in for the ride up. Yet, many of these stocks hit a resistance point and then start to go down afterward. And then traders get stuck, hence why over 90% of them fail. If you understand this simple psychology, then you know that by doing the exact opposite of what others are doing, instead of looking for stocks to win, you can focus your time on stocks that are losing to make money.
USING PRE-MARKET SCANNERS
TO DETERMINE MY POSITIONS
My mornings are spent scanning through the market with pre-market scanners. I look for tickers that fit the criteria of what I look for based on the strategies that I continually use and that I teach my students. Once I find the stocks that fit my criteria and I consider are tradable, that’s when I start borrowing those shares. I look for stocks that I consider are moving in the right direction to set up a good trade, so once the market opens, I could purchase those shares before anyone else.
I track a lot of statistics to narrow down what the maximum size I can type into our standard ticker.
When I make volume trades, there’s usually a certain amount of positions that are available for a ticker. Generally, there’s a rule that the current data query cannot exceed over 5%. It takes a while to figure this out with the statistics to figure out what positions to trade into, but this is usually acquired after experience and after a while, it becomes second nature.
The whole goal of this is to reserve your shares early in the market so you don’t have to worry about getting into these positions later, but you don’t actually start trading until about 9:30am in the morning.
MARKETS I TRADE AND ONES I AVOID
All of the trades I make are on the Nasdaq because this market is usually flush enough to fulfill orders immediately. I don’t day trade on either the Pink Sheets or the OTCBB because there usually isn’t enough volume to fulfill orders and many traders get stuck in these markets. That becomes problematic, especially if you want to move a lot of money in and out of a position.
And if you don’t get stuck in the position, your trades don’t execute in real-time as there are a few minute delays to trades, so you can end up moving in or out of a position with losing money that you thought you already made.
Stick with credible markets instead of looking at smaller markets because these have already been time tested.
These are some of the wins and losses I made in June and were the biggest factors of turning a $70,000 account into $1.15 million.
Stock tickers I traded in June
These stocks usually range between $1.50 to $15 a share
The reason I choose penny and small to mid-cap stocks that are $15 or less is because they have more volatility than blue-chip stocks. What that means is that these stocks will have bigger movements throughout the day, whereas blue-chip stocks, such as the Teslas and the Microsofts don’t have as much movement.
The reason I pick more volatile stocks is because there is a higher probability to earn a bigger percentage per trade. The downside is that these stocks are also riskier and if you aren’t an experienced trader, could end up causing you to potentially lose a lot of money.
For the first 18 days of the month, day trading pulled in close to $700,000 in profits in my $70,000 account.
SOME EARLY TRADES WITH CARV AND CHNR
Some early trades with CARV and CHNR helped me take the $70,000 account I had and grow it to close to $700,000, so I could invest more money into bigger trades at the tail end of the month, resulting in bigger profits that broke me across the $1.15 million mark.
Because I shorted many of my early stocks, I borrowed shares from the brokerage to leverage my plays. The downside to this is if you borrow too many shares and the stock goes in the wrong direction, you could end up owing a lot of money to your brokerage. I made sure to have financial reserves outside of my account in case that were to happen.
BREAKTHROUGH AT THE TAIL END OF THE MONTH
I was able to break through the $1.15 million mark by trading a ticker called VXRT, which I will get more into later. That stock alone brought in $365,000 total and if I played it out longer, could’ve earned $600,000.
From looking at the account summary, you can see that a lot of trades resulted in wins or losses under the $20,000 mark, many ranging from a few hundred to a few thousand dollars. I won’t go over specifically why I took these particular trades, but I will mention that what I do is go into a stock and hold it for a few hours. Whether there is direction or not, I usually end up pulling out of my positions after a few hours. This way, I prevent myself from overtrading.
There are a few stocks that I wanted to highlight though, and explain what strategy and method I used for the position, how long I held it for, and why I took it. I will also cover this for a few of my losses as well.
Stock Ticker: EDSA
Date invested and price: June 15th, entered at $8.86 a share
Date sold and price of stock: I covered at $5.90 same day
Long or short: I took a short position on this stock
Profit generated: $73,958.99
Strategy used: Gap up short
I invested a total of $132,769.32 into shorting this stock with 15,000 shares. I held my position for three hours. As the share price decreased, I ended up bringing in a profit of $73,958.99 back, so I earned a return of around 60% on my investment.
With this stock, I followed a gap-up short strategy in combination of the micro float strategy. I also used the gap-up short strategy for two other stocks I will be talking about, which are for ROSEU and EKSO.
A gap-up short is when the stock tends to go up, they generally go up in the pre-market, which is at times referred to as the post-market. The pre-market is different compared to the real market. The pre-market usually trades between 4:00pm to 9:30am, then after 9:30am, you enter into the real-time market.
A gap-up short is when a stock goes up in the pre-market and performs a specific pattern after the market opens. The win percentage on a gap-up short is between 70-80%, but is usually a strategy used by advanced traders since most beginner traders do not understand how to read the pre-market charts.
Stock Ticker: CLIR
Date invested and price: June 16th, entered at $2.54 a share
Date sold and price of stock: I exited at $2.32 a share same day
Long or short: I took a short position on this stock
Loss generated: $1,563.60
Strategy used: Market Experience and Reading Level 2s
I invested a total of $100,000 on CLIR. There wasn’t much movement in this position, so I exited after a few hours. My total loss on this position was $1,563.60. You can’t expect each stock to win or lose big. Some positions you take hardly move.
I decided to get into this stock because of two strategies. The first one I used was my market experience that I’ve accumulated over the past five years of trading. The second strategy I used is reading Level 2s. Most beginner traders only know how to read primary charts. By reading Level 2s, you are able to track a secondary data point to see whether a stock has the potential of moving significantly. Reading Level 2s usually has a 30% probability of working.
Stock Ticker: ROSEU
Date invested and price: June 16th, shorted at $5.20 a share
Date sold and price of stock: I covered at $1.48 a share same day
Long or short: I took a short position on this stock
Profit generated: $130,194.51
Strategy used: Gap up short
I invested a total of around $200,000 on ROSEU and made over 80%.
This is another stock that I used the gap-up short strategy on. When you see a stock that has five letters, these are generally stocks that perform really poorly. When people try to blind buy into stocks like these, you will want to short your position. Once you decide you want to short and locate your statistics on how a stock like this moves, you should be good to go.
Stock Ticker: VXRT
Date invested and price: The afternoon of June 25th at $5 a share
Date sold and price: June 26th in the premarket at $11 a share
Long or short: This was my first long trade of the month
Profit generated: $300,000
Strategy used: Multi Day Breakout and Industry News.
Announced News of an oral vaccine for COVID-19. (see here: https://finance.yahoo.com/news/vaxart-inc-signs-memorandum-understanding-120010645.html)
I went long on this stock and bought around 60,000 shares, which cost me around $300,000. So I made $300,000 when the stock doubled in price from $4.70 to $8.70, resulting in a 100% return on my investment in half a day.
With this stock, I followed two strategies. The first was watching the news, which has an effect of working about 60-65% of the time, which is on the lower end of how effective a strategy is. However, this stock also followed a multi-day breakout, which has a 70-80% chance of succeeding. The combination of these two strategies made this stock a sure bet.
A breakout pattern is when a stock breaks through its 52 week high. The longer it takes for a stock to do this, the better. I look for stocks that are consolidating for a year and then break through their 52 week high. This is an indicator that makes the stock bullish.
The longer the time gap between the breakout is, the better the breakout. Breakouts usually range between multi-week, multi-month and multi-year. The longer it takes for the breakout to occur, the better. I bought this stock in the afternoon and sold it pre-market the next morning, so I held it for half a day.
After I went long on this stock, I decided to implement another strategy called the reverse short. The reverse short is effective about 26% of the time. After a stock breaks out and reaches a new all-time 52 week high, the probability of it going down is extremely high. The reason for that is because a lot of traders want to take their profits and exit out of the stock, thus driving the stock price down. That’s why I decided to go on the other side of the bid, and with that, I earned an extra $167,000 by playing a reverse short immediately after taking a long position with the multi-day breakout the day before. This additional position helped me secure another 60% return on the second day of trading.
I sold this stock a little bit too early. I made $467,000 on this ticker alone. If I held onto it for a little longer, I definitely could have made close to $600,000 on these two positions alone.
Stock Ticker: BLNK
Date invested and price: June 29th at $3.78 a share
Date sold and price of stock: June 29th at $3.50 a share
Long or short: This was my first long trade of the month
Loss generated: $77,685.22
Strategy used: Multi-day breakout
One of the biggest losses I made was in the stock BLNK. Investing into that stock was a mistake. This was my first of two long trades in the month. I bought the stock around $3.78 and sold for around $3.50. After I sold, the stock went up to $8. If I had held this stock a little bit longer, I could’ve made up to $300,000 to $400,000, but because I had sold, I took a loss of $77,000.
I tried investing in this stock three times for it to hit but lost all three times. As a general rule that I have for myself, if I don’t see a profit by the third time, I won’t invest a fourth. In each of my trades, I lost around $20,000, so by the third trade and with all of the brokerage fees added to it, I lost a total of $97,000 on this stock.
As you can tell, from most of these trades, I only worked for about four to five hours a day and just followed the trade patterns on average of 1-1.5 stocks a day. The reason for that is if you spend all day in the market trading, then you subject yourself to overtrading, which leads to losing money instead of earning more. Within those four to five hours I traded, my time I was spent doing the following:
How I Ended Each Day
How You Can Potentially Earn Money Trading Stocks
Due to the pandemic and the stay at home order, I didn’t really do anything to celebrate for the month, since in Ohio, we all have to stay at home. In fact, after I made my trades for the day, I just went to bed and went to sleep and took a nap. But I’m looking forward to helping you learn more about the stock market so you can potentially turn this into a full-time career for yourself.
It definitely won’t happen overnight, and it will take years of studying, doing paper trades and testing and proving strategies that work, but if you’re like the 20% of my students who take this seriously, you can potentially turn this into a profitable new career for yourself, take vacations to relax like I will continue to do after the pandemic is over, or even save for your children or future children’s college tuition.
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