Today I want to cover two recent runners, $YECO and $INFX, when looking at bad habits form out of boredom or inexperience.
$YECO consolidated for a few days, and the price began to neutralize after a massive bounce short.
Because there was a lot of resistance up ahead, the price didn’t move much, and still traded a thin volume. When we see this slow grind, it becomes challenging to short into any spike, especially in micro float. It’s important to ask yourself if the ticker you’re looking at is worth the risk-reward when you float rotations cause the spikes to break resistance.
If you’re looking at a spike less than 50%, then answer is no.
This behavior can entice people to forget patterns if they’ve been trading in a dull market and want to profit no matter what, but that’s not how this works. Filtering out bad trades based on criteria is how forming good habits benefit the long term. If you know what to look for and whether it will work in your favor, then accepting a boring day without profit won’t seem like a loss, but a win.
Having this attitude will directly affect your confidence by making you afraid to lose and cautious of doing just that; we see this in the next ticker as well.
$INFX is an example of a reverse split stock, a topic that I’ve covered before, but want to explain again because it can be alarming to those new to the industry.
For those who don’t know what this means, $INFX came off as a supernova as it was up 2,000%; however, that’s not true. In order to understand the exact parentage, we want to calculate the float divided by however many times the stock split, and we want to take the stock price times the same number of splits.
So because the stock was up 2,000%, you’re looking at 1-200, putting the stock price…
…times 200 and the float divided by 200. Traders who are unaware of this concept think there’s a possibility for another spike near 20-30%, which isn’t the case, especially when it’s highly likely to have warrants in a reverse split. Having a company with warrants can cause a spike to fail and drop 50% of its own high, and that’s exactly what happened with $INFX.
$INFX was only trading close to 40,000 shares...
…which means those that were shorting were chasing into weakness with thin volume and that only plays out so many ways. You’ll also be affecting the stock when you notice that it’s time to get out because covering will only push the stock more, and there’s not enough bid to sell into.