Here's the Video Transcript:
We all know penny stocks can be sketchy. But when is it good to buy a small cap penny
stock and hold it overnight? One of my favorite day trading strategies
is buying these small cap penny stock runners overnight and sell them the next day either
for a spike in price, or even better, a massive gap up premarket sometimes in dollars. In this video i’ll be teaching you this
overnight swing trade set up so you can add this to your current day trading playbook. If you like what you hear so far, make sure
to hit the like button and subscribe. So let’s get right into this overnight hold
strategy. We’ll use my recent overnight play on KEG
for example here.
You can see this chart on the daily for this
ticker. March 12th is the day I took the overnight
swing play. And i sold
it into the spike on the 13th the next day. So this is the daily chart set up I look for. The idea is to buy the stock that is closing
strong on the daily chart above previous resistance. Meaning there is more buying and we have cleared
all the closest walls of sellers and held above the selling price. I don’t normally look at the wicks on the
daily chart. I look at opening and closing price of a candle. So in this case, the nearest wall of sellers
on KEG is at 3.80’s. On march 12th the stock was closing around
its intraday highs around 3.90’s. So I took that position overnight. And sold it into the morning spike. Now let’s talk about more specific criterias
besides just the daily candle chart set up. But before we do that, i want to give a huge
shout out to one of my loyal subscribers Castor.
He’s the one who suggested that I should
make a more detailed video explaining this buy overnight strategy and showing you the
statistics. So thank you Castor for the comment. So, You need to be very specific about your
stock picks. Because remember, most of these small cap
penny stocks are sketchy companies. And you don’t want to get dumped on. If you look at my spreadsheet here. You can see that I dont take this set up every
day. Sometimes I go months without taking this
set up on penny stocks because nothing meets my criteria. Either that or I’ve missed them, doesnt
matter. I only want to hold these penny stocks overnight
if I see a great set up that meets my criterias. And its only by being selective, that this
strategy gives me a 62% win rate. I know in the last video I said its 70%. That was my mistake, its only 62%. But, very importantly, the profit to loss
ratio with this strategy as you can see here is 7 to 1.
So yes I only win 6.2 out of 10 times, but
the times I win I make 7 dollars and the times I fail I lose only 1. So thats good risk reward. And if you watch this video all the way to
the end. I will tell you my overnight buy stock pick
on a small cap penny stock that meets all my criterias for A+ set up. So, criteria one, on the daily chart I want
to see increasing buying volume. Two, I want the current candle to clear above
previous resistance as i mentioned earlier. Three, I want to see a clear trend up, or
a clear break out. You can see on daily chart on KEG, increasing
volume, bullish candle above resistance on the 12th, and a clear trend upwards. Let’s use another example, HMNY. This was an amazing low float runner from
October 2017. I miss this stock. Now it’s trading at like 0.005 cents.
But it’s done a 250 to 1 reverse split. At the beginning of this run, this was $3.75,
and the highs was $38. Thats 1000% in 2 weeks. Crazy right? This is the type of low float penny stock
play I like. I traded this a lot intraday during this 2
– 3 weeks span. But the one overnight I did was closed on
Oct 11. So i entered previous day near close at $27.44
and sold at $32.35 the next day.
But daily chart on HMNY, again, increasing
volume, clear trend up and breaking above previous resistance. Criteria number four, daily chart needs a
clean chart history showing theres follow through to the upside. So lets look at some charts that I think are
messy and would avoid for overnight hold. Lets look at one of the more recent penny
stock runner PLAG. Ugly daily chart. Lots of inside candles chopping around. Not a lot of volume either. Next BPTH, another recent runner. Sketchy chart. The daily candles dont have any trend. It just looks like a lot of dilution. I trade this one intraday but I wouldnt hold
it overnight. Another one to avoid is GBR. Sure daily candle break out and theres volume
but the daily chart is too sketchy.
So this is another example I would avoid for
overnight buy. Criteria number five, I know, theres lots
of criterias, but Im very picky and specific about what kind of risks Im willing to take
overnight. Criteria five, I prefer to take on the first
or second strong green candle. Usually thats because by third day the stock
has already had its run and its too extended. An example of this one is LFIN. I took the overnight on April 5, the second
green candle and sold on the 6th. I would not have overnighted this
on this third candle. But you can see I still
took that with HMNY. but that was because I knew the short squeeze aint done yet. Everyone in the world was trying to short
this. That being said, when im buying overnight
on candles after 1st or 2nd day, its all with very small size only.
Also, with HMNY, i was very familiar with
the ticker. And that brings us yo my sixth criteria. Criteria 6, I have to have traded the ticker
before. I will always prefer names Im familiar with,
HMNY, SAEX, LFIN, CHFS, CLWT, GLBS, DCIX, TOPS. this goes the same with trading intraday. Which is why a lot of times when I hold stocks
overnight like I did with DCAR and HYRE, I will sell half the position for a profit and
only hold half the position. Because that was my first time trading those
names, and i want to make sure I pay myself a little to minimize any possible overnight
loss. Which did happen, both of those half size
overnight positions dumped on me. I have a video recap on that trade if you
want to check that out after this one.
So those are the six criterias I look for. But there are some bonus criterias that will
add to my conviction. Those are, sector sympathy bubbles, and positive
news or events coming up. So we have had the cryptocurrency blockchain
bubble in Nov and Dec of 2017. During the bubble, if there were penny stocks
matching the six criterias and are also in the blockchain sector, that adds to my conviction for holding the stock overnight.
Same goes with the shippers and marijuana
sector bubble we have had with the penny stocks. Also, if the small cap penny stock comapny
has any upcoming news conference, earnings, data release etc, i’ll also favor those
ones because a lot of times the stocks will run into those events. But you should never hold through it though. Because most of the time people sell the stock
after the news and they crash big time.
So Ive shown you some good overnight buys
that worked out. But let’s look at some failed charts. These are stocks that meet my 6 criterias
but the set up still failed. Because remember this track record for me
the last 2 years was 62%. There is no set up that’s going to guarantee
you 100% probability. I am not some guru selling a get rich quick
DVD that has your golden ticket to make a million dollars in a year. No. I’m transparent about the risks here. If you are not comfortable with overnight
risks at all. Don’t buy penny stocks, they are sketchy,
risky and heavily manipulated. You will lose if you do not follow rules and
criterias you set for yourself.
So let’s talk big overnight losses. My recent overnight on DCAR, and HYRE. Didnt work. I lost sixty cents and eighty cents on those. Not fun. Another huge loss was OPHC from late 2017. This one did an offering. Nasty nasty. I lost $1.72 per share. And that was before i was smart enough to
take half the profit before close and swing only half the position overnight to reduce
exposure. So, good times. So as promised from earlier. I have bought into a small cap runner and
held it over the weekend with the intention to sell next week. That one is VKTX. Gorgeous daily chart. Candle closing above previous resistance,
increasing volume, first strong green day. And I have traded this stock a couple of months
before. Lets look at the intraday here. This was an alert in my chat room Spartan
trading. My initial buy was around 9.40. Bought the flag set up and sold into the 10’s.
Near end of the day I bought again during
the dip here at 9.80 half size to swing over the week. And this stock has met my bonus criteria. They are presenting phase 2 data on April
11. So daily chart meets my criterias and the
presentation should push the stock up into next week. And, another bonus criteria. If you look on finviz. This, right here, is a huge bonus.
The stock is 45% short. If this thing really gets going on Monday. All the shorts are going to have to buy to
cover and that will create a short squeeze. So that explains why I took it long over the
weekend. We’ll see what happens next week. Another nice find by Spartan trading chat
room. So this is the Penny stock Swing overnight
strategy I love and gives me good probability and amazing risk reward.
Hopefully you find bits and pieces in this
video that’ll help wiht your own trading. If you have any questions regarding this strategy
or any comments or ideas for future videos you want me to go over, please leave them
down below. Dont forget to hit the like button and subscribe
if you want to see more day trading strategy videos like these in the future. Thanks again for watching.I’m the humbled
trader, and I’ll see you next time..