This is Steven Dux.
Today I want to talk to everyone about OTC breakouts and how to deal with emotions such as the fear of losing, the fear of missing out and how to control those emotions.
Winning too much.
When you’re winning too much and you’re steady, you’re getting into bigger positions to make more money which leads to getting greedy, you’re taking a big loss and then wanting to make your money back.
Those are the two debt circles you don’t want to step into because once you get into the habit of making your money back very quickly or you’re making a lot of money because you’re are winning too much, those two things will cost you big last and give you big lessons.
So try to avoid that as much as possible.
Taking a big loss.
So what happens when you take a big loss?
When I win too much or have lost a lot, I cut my position size in half and I will manage my maximum loss. If my maximum loss is $1,000, I no longer feel comfortable and will reduce to a value that I don’t really care if I win or lose anymore.
After you build your confidence back, you can keep going and add back the position size that you feel is winning. My one suggestions for going into the stock market is that if you’ve lost a lot, take a break at this point and start taking some positions to gain your confidence back.
The OTC Market
How it works, and the perks.
I also want to touch on how the OTC market works and what perks are focused on. The OTC market is generally very volatile and hard to execute so showing strength and buying weakness is really, really hard to do but also really important. Make sure when you buy you’re buying weak and when you short, you’re shooting strengths otherwise you will probably get caught in a circle of losing money over and over again.
Moving on to OTC breakout, typically you want to see volume.
I look for one year resistance or two years resistance for longer term and I look for six months for a shorter term resistance. For UAHC, there is resistance around 40 cents and if you look at even longer term such as five years, there’s still a 40 cent resistance. Typically when I see this kind of break-out, I want confirmation. I want to see break-outs at 50 cents so that I can look into getting a pull back around the resistance level. So with this risk I want to get in at 43 cents to risk 41 cents.
I'm going to cut my losses if it's under 40 cents, but first I want a confirmation of the breakdown and then I would get a balance.
So trading OTC is a completely different game than NASDAQ because once you break down, you are out. Whereas with OTC, you need to see the confirmation first. This gives very different entry and exit points. From my personal experiences and what has worked for me, I’m suggesting this strategy so you can start noticing what’s going on in OTC market.
Make sure to memorize the OTC breakout strategies and if you can find it, don’t be hesitant to pull the trigger as long as you have a maximum loss that you’re comfortable with. It might sound weird but to feel successful in the stock market you do want to think about how much you will lose before you think how much you will gain. So if you have a comfortable loss, then the odds are in your favor.
When I trade by the odds and I’m comfortable either way, that puts my emotions outside of the stock market that’s where you become consistently profitable.