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There’s a saying on Wall Street, “90% of traders fail.”

What you might not know is I was actually part of that 90% before. That’s right, before I made millions in the market…*

I actually lost about $40K, and while that might seem like a death blow, I knew I could turn it all around.

You see, I realized that I could make a career with just one idea…

My trading PnL turned around with just one setup…

Believe it or not, I believe YOU can learn how to do the same thing.

In fact, I want to walk you through the steps to design YOUR OWN SETUP.

While I can teach you my favorite chart patterns, which I find quite effective, designing your own teaches you WHY they work.

Because the truth is blindly following trade alerts only takes you so far.

Sustainable success requires understanding how and why the trades work.

And that all starts with crafting your own chart pattern.

What is a setup

Traders talk about setups, but what exactly do they mean?

A setup occurs when a series of criteria are met creating a potentially profitable trade.

Think about a snowstorm. What do you need for one to happen?

Cold weather, precipitation, and the right season all help.

That’s what I want in a trade setup.

I like to see a series of conditions come together, typically based on experience, that I believe will lead to profits.

For example. I often look to stocks near their all-time highs with high short floats and a strong upward trend.

These increase the odds of a short squeeze, driving explosive moves higher.

One of the easiest ways to find a setup is using a stock chart.

Use historical charts for inspiration

Knowing where to start is difficult. There are thousands of different way to trade, some more effective than others.

I recommend starting with someone else’s idea first and expanding from there. However, that’s not necessary.

After watching Jason Bond and studying momentum stocks, I started designing my own trade setups. Looking through historical charts, I realized that certain patterns tended to repeat themselves over and over.

Historical charts help you test out an idea by finding similar setups in the past and seeing how it played out.

For example. Let’s say I like to look for ‘flag patterns.’

I would search through charts to find times where it worked and where it failed.

What’s great is when you can find it in the same chart as I did here.

CAT Hourly Chart

In this chart of Caterpillar (CAT), you find both.

Now look at the two and see if you can figure out why one failed and the other succeeded.

Maybe it’s because one came in the middle of a downtrend while the other was after a bullish reversal.

Seems to make sense, but remember, sometimes bad trades work out and good trades fail.

So how do you test that?

You look for similar patterns in downtrends and uptrends and see how often it works and when it doesn’t.

This process tends to repeat over and over until you come across something that stands out.

And as I said before, you can always start with an idea from someone like myself and then make it your own.

Log your trades

Once you find a pattern you want to try, you need to test it out.

Start by creating a trade journal where you can log your transactions. You should note the following at a minimum:

  • Setup entry
  • Actual entry
  • Setup target
  • Setup stop loss
  • Actual exit
  • Total shares/contracts/dollars risked
  • Conditions you want to monitor (IE downtrend or uptrend)

You don’t need to do this in a real-money account. Simulated/paper accounts work just fine. They really only fail when you work with wide bid/ask spreads or scalp trades that try to pick off pennies.

Once you compile the data you need to analyze your results and come up with the following:

  • Overall profit/loss
  • Win-rate
  • The average risk to reward ratio

I would also note any outlier trades such as big winners or losers.

With this information, you can see whether your idea is repeatable and reliable. Strategies that only win 50% of the time turn a profit if your average profit exceeds your average loss.

Even in failure, traders often find ideas from these journals. I went through multiple ideas before I found my niche. And that final breakthrough came out of another idea’s failure!

Cut the learning curve

It took me a decade before I consistently turned a profit.

You don’t need to go through the fire.

Use my experience to become a better trader today.

Cut out all the trial and error.

Start with a battle-tested strategy – The Unbreakable Pattern

Click here to learn more.

 

Author:Nathan Bear

Although Nathan Bear has made options trades that resulted in over 1,000% profit, he’s “only made a few” he says wryly! Nathan is one of the best options traders there is. Period. His unique approach incorporating his adaptive 3-step “TPS” trading strategy, has so far brought Nate well over $2 million in realized trading profits.

Nate is a down to earth trader who now imparts his simple trading methods and relaxed approach to his trading subscribers to help give them the keys to trading success.

 

Every so often an entire sector builds a short-squeeze.

If you don’t know what a short squeeze is, it occurs when a stock or sector is so hated (heavily shorted or bet against) and…

One day, there’s a catalyst that sparks a run higher…

Or if the demand picks up and there’s not enough supply out there, which causes a stock to experience a parabolic move.

Right now, there are three sectors with some of the most hated names:

  • Solar
  • Cannabis
  • Home delivery

So, why do I like these more than retail or airlines, two sectors with high short floats?

Quite simply – I stick with what works.

And let me explain why I believe those are the best sectors out there.

My TPS Setups use short-floats in such a way that I don’t need to watch every tick to turn a profit.

Heck, just the other day, I found my Double Down trade in Aurora Cannabis (ACB) BEFORE the market opened (a cannabis stock if you couldn’t tell from the name).

Not only was there a high short float, I saw a clear TPS setup.

Using the obvious uptrend, I grabbed call options myself that exploded in value.

 

*All these gains came in a matter of days

*See disclaimer below

 

Now, let’s get to the good stuff and go through the hot sectors set to warm up wallets this winter… and why they may offer the most money-making opportunities.

 

Solar stocks

 

Despite their recent surge, I prefer solar stocks over oil and gas companies. This doesn’t come from some altruistic urge, but rather my analysis of the marketplace.

In 2014, oil production reached a tipping point. Fracking technology revolutionized the oil and gas industry. And with irony Alanis Morsette envies, this technology precipitated a cascade of events that led to demand shifting forever away from fossil fuels.

FYI: Nothing in this situation nor in Alanis Morsette’s song ‘Ironic’ is, in fact, ironic. They’re just really crappy coincidences.

Mass production in green technology along with higher efficiencies drove down the price of solar systems. Coupled with government action, a set of stocks that rose and fell during the Great Recession, investors found themselves unable to buy enough shares of JinkoSolar (JKS) or Candian Solar (CSIQ).

My current favorite is SolarPower (SWPR).

Based in the U.S., the company doesn’t face the tariff restrictions and legal hurdles competitors do from China.

But more importantly, the stock carries a nearly 50% short-float, rather incredible considering it’s near multi-year highs.

Here’s what I see in the chart.

 

SPWR Daily Chart

 

What I want to see a squeeze (red dots at the bottom) before entering. Since the stock already bounced off support, I’d give it a week or two of sideways action to build energy for the next leg higher.

Once I see it here, that will be my cue for a swing trade setup into the early part of next year.

Chances are, I will use this stock as a Double Down play in the near future.

 

Cannabis stocks

 

Marijuana stocks trade a little differently than solar.

Cannabis companies aren’t exactly legal in all states. So, there is a major impediment to their business.

Nonetheless, they surge forward on expectations that a new presidency and bipartisan push will loosen restrictions if not permit the plant outright.

Most traders gravitate towards three companies in this sector: Tilray (TLRY), Canopy Growth (CGC), and Aurora Cannabis (ACB).

From personal experience, I don’t trade TLRY well. There’s nothing technically wrong. But when something isn’t working, I end to steer clear.

Between the other two companies, I like the risk/reward behind Aurora Cannabis at the moment (ACB).

 

ACB Daily Chart

 

Carrying a 33% short-float, the stock is cheaper than CGC, and recent price action showed renewed interest in the company. That also led to more volume which in turn narrowed the spreads on their options.

With such a wide range, I like looking at the daily moving averages such as the 200-period simple moving average or the 8 or 21-period exponential moving averages as support.

Once I see shares hold (as they did here), then I look for TPS setups on lower timeframes.

In fact, when you take a step back, ignoring the fact that the huge range, all we’re really looking at here is the start of a large consolidation pattern.

 

Home delivery

 

Last up on the docket are the ‘home delivery’ companies. These grew in popularity during the pandemic.

Companies like Chewy (CHWY), Stitch Fix (SFIX), Etsy (ETSY), and Carvana (CVNA) all fit the bill.

Traders bid shares up during the pandemic as demand soared from people stuck in their homes.

And while shares rose, short floats remained stubbornly high, even as stocks kept hitting new all-time highs.

Recently, bears thought they found their footing when many of the ‘stay-at-home’ stocks sold off on vaccine news.

And yet, my favorite, Stitch Fix (SFIX), consistently has one of the highest short floats out there, rarely dropping far below 40%.

 

SFIX 78-Minute Chart

 

With a strong uptrend and short selloffs, I can’t wait for the next TPS Setup to form here to jump in.

For now, I want to see it pull back into the support zone I noted on the chart. Then, it needs to take some time to gather energy.

Ideally, I’d come back to this stock in mid to late December for a run into the new year.

 

The trade stock at the right time

 

Trading comes down to one key element – timing.

The right trade at the wrong time is no different than the wrong trade.

Double Down gets you a chance to not just following along with mammoth trades like Aurora Cannabis, but learn how to find them on your own.

Become the trader you deserve today.

Click here to sign up for Double Down.

 

Author:Nathan Bear

Although Nathan Bear has made options trades that resulted in over 1,000% profit, he’s “only made a few” he says wryly! Nathan is one of the best options traders there is. Period. His unique approach incorporating his adaptive 3-step “TPS” trading strategy, has so far brought Nate well over $2 million in realized trading profits.

Nate is a down to earth trader who now imparts his simple trading methods and relaxed approach to his trading subscribers to help give them the keys to trading success.

Electric vehicle stocks have been all the rage, but after the recent sell off… some are thinking they’re in bubble territory.

As we all know, what goes up must come down at some point.

A lot of traders have been trying to short these names because they believe the sector lost its spark.

To be quite honest with you, no one is really right when it comes to being bullish or bearish on EVs.

It all really depends on which stocks you’re looking at.

I wouldn’t touch NKLA with a 10-foot pole.

But I really like PLUG right here for my next Double Down trade.

You can’t blindly pick up any of these just because they fit the ‘EV’ category.

Those days are over.

We need to separate these stocks by the one time-tested method – chart analysis.

And I’m going to help you do that.

By the end, you’ll understand what separates TSLA from NIO and why I really like PLUG.

Separating the stocks

First things first – we need to get a handle on what everyone does.

I like to think of the companies in the following categories:

  • Sold anything
  • Sold nothing or barely sold anything
  • Other EV support companies

Within these, I separate them between domestic and foreign-run, specifically China.

Chinese companies have a history of management issues that puts them in a higher risk category.

Tesla takes the prize as the company that’s not only sold products but done so at a profit.

Companies like Workhorse (WKHS), based out of Lordstown, Ohio, have yet to really make a sale.

Even NIO, the Chinese car manufacturer, puts up revenue numbers each quarter.

The point is that when your entire stock’s price is based on what might happen, any dent in the story can send shares cratering.

That’s what happened with Nikola (NKLA). After Hindenburg Research dropped a bomb on the company’s financials and questionable claims, CEO Trever Milton resigned. This came AFTER they entered a partnership with General Motors.

And just this week, that partnership looked like it was on thin ice.

That’s why the chart looks something like this:

NKLA Daily Chart

You probably noticed the shaded blue area.

That highlights an area I like to refer to as consolidation.

See, stocks like these rise extremely quickly. When they hold in an upper range, that provides a base of buyers to launch prices higher.

Compare it to the chart of WKHS and you’ll see what I mean.

WKHS Daily Chart

Pretty interesting right?

Now, I won’t profess to know which of these will survive. However, we can use chart patterns to dictate our moves.

And what’s more, this was a TPS setup.

WKHS Daily Chart

At the time, I took positions in both stocks. Yet, one of them failed miserably.

So, how did I manage to make money overall?

Risk management.

That starts with using options.

You see, with options, I pay a premium to gain leverage over more shares using less capital.

That’s why option prices decline over time – that right to control those shares costs money.

Risk management also means adhering to my stop loss rules.

With many of my TPS setups, when the stock breaks through the lower Bollinger Band or the squeeze fires, I exit the trade.

My favorites right now…

With the extreme moves in these stocks, I want to start taking the premium trades. That means waiting for several conditions to align.

One of critical importance is short float.

Stocks with high short floats create conditions for short-squeezes – powerful moves that rip the face off short-sellers.

Most of these EV companies carry high short-floats, with the exception of Tesla who is a more established player.

From these companies, Iike to find ones with TPS setups based out of the U.S. when possible.

Currently, there aren’t any squeezes in WKHS.

But Plug Power has a nice one that formed on the 78-minute chart.

PLUG 78-Minute Chart

With an 18% short float and a TPS setup, I can create a trade using call options or a put credit spread.

Given this is the 78-minute chart and the stock is relatively inexpensive, I’d likely go with call options that expire in a few weeks.

That gives the trade enough time to work its magic.

While I missed the quick dip it took the other day, if another one comes along, I’ll be ready.

Why I prefer options

Do you ever worry that one bad piece of news could decimate your account?

That’s what holding a stock overnight can do.

Options trading gives me a chance to control hundreds of shares for a fraction of the cost.

The downside – time works against me.

That’s why I teach traders how I use my TPS setups to time these trades and cut down on those costs.

Instead of spending $2400 to control 100 shares of PLUG I can spend as little as $200.

Let me show you how I do this for a living.

That all starts with my Double Down trades.

Click here to learn more.

 

Author:Nathan Bear

Although Nathan Bear has made options trades that resulted in over 1,000% profit, he’s “only made a few” he says wryly! Nathan is one of the best options traders there is. Period. His unique approach incorporating his adaptive 3-step “TPS” trading strategy, has so far brought Nate well over $2 million in realized trading profits.

Nate is a down to earth trader who now imparts his simple trading methods and relaxed approach to his trading subscribers to help give them the keys to trading success.