As I sat down at my desk and reviewed my trades… looking for ways to…
We all know how there are shady players on Wall Street… and it actually helps to learn how they think.
I know, I know… Taylor, why in the world would I want to tap into the mindset of these dirty players?
Well, it’s simple… these guys have to hide their trades somehow, right?
Especially if they have access to non-public information or are committing fraud.
The thing is, if we figure out how they make money moves… it becomes really easy for us to piggyback off their trade ideas — legally.
Today, I have uncovered a story about a shady CEO who was caught red-handed as he made $14M in illicit profits. This insider trading case will make you grind your gears, but there’s a lesson to be learned here.
There’s nothing worse than a company founder and CEO who provides false information to his investors for their personal gain.
It’s not good enough the CEOs get paid hundreds of thousands — sometimes millions — of dollars to run the ship… many are still hungry to make more money.
Take mobile payment company Jumio’s CEO for example.
This crook flat out lied to investors and employees… and acted as if everything was all fine and dandy.
In 2014, CEO and founder of Jumio decided to step away from being real with employees and letting investors know exactly what was going on behind the scenes.
Jumio is a private mobile payment company that verifies customer’s IDs and credit card information. Although we wouldn’t have been able to actually trade the stock… It helps us when it comes to publicly-traded companies.
Back in 2011 and 2013, the company received funding to keep it afloat and help it continue to grow operations.
Too bad they didn’t fund the company to oust its CEO.
Around Spring 2014, Jumio CEO began to sell his shares in a covert operation. He dumped a large portion of his shares to secondary market investors, allowing him to earn revenue from his stake in Jumio.
However, to pull it off he had to throw the actual Jumio investors under the bus. Talk about dirty.
In order to manipulate the stock price and maximize his profits, Jumio CEO Mattes supplied investors with financial statements that he personally doctored. That’s right, investors received false statements that indicated the company was in outstanding financial health.
The CEO overstated his company’s revenue and omit expenses.
Get this… he multiplied the company’s revenue by 10 fold!
To add this false impression of financial wellness, on at least one occasion, he told an investor that he was holding on to his Jumio shares. His exact wording was “there was lots of great stuff coming up” and that “he’d be stupid to sell at this point”.
… completely lying his face off.
Mattes’s theatrical performances were far from over.
He went on to conceal his sales of shares from his company’s board of directors. Going as far as making blatantly false statements to specific Jumio lawyers who had to sign off on all Jumio share sales.
By being a dirty player, Mattes made $14 million in profits from selling his Jumio shares to secondary market investors.
However, karma got to him and the SEC was onto his scheme… the company not only went bankrupt in 2016… but the CEO also had to empty his pockets. He needs to pay over a $16 million disgorgement plus interest and a $640,000 penalty. Hope he held on to that $14 million from screwing over Jumio investors.
Sure, this went down in the private market… and it’s hard for us to find information there… however, what you may not know is there are dirty players on Wall Street, and they’ve figured out ways to covertly trade off non-public information.
In order to figure out what these dirty players are doing… I turn to the dark pools.
Of course, we don’t know the information whatsoever… all we know is someone is buying and they may know something. It may be a corporate insider, investment bank, hedge fund, or Wall Street whale… who knows.
The only thing we do know is these guys don’t lose, and we can legally “steal” their trade ideas.
Let me show you how it all works.
I spotted a dark pool trade in Merck & Co (MRK)… and that was a signal the stock could run up.
MRK – 2m at 88.65 – Jan 17th $89 Calls watching close in the morning for a potential trade
Someone dropped a whopping $177.3M on the trade above… and I don’t know about you, but I don’t think someone is dropping $100M+ on a trade if they’re not confident it’s going to pop.
When I saw a Wall Street whale hammer MRK shares at $88.65, I just knew I had to keep an eye on it, so I let my clients know it was on my watchlist.
The trade went off right at a key support level, and I realized the smart money was looking for the stock to take out recent highs…
So what did I do?
I followed them into the trade.
Dark pools are filled with some of the best trade ideas in the game! Want to start using this information to your advantage? All you have to do is watch this training session and you’ll know why this could be your #1 edge.
However, I didn’t buy the stock because that would’ve eaten up at my buying power. Instead, I turned to the options market.
Shortly after, I was sitting on some hefty profits, and I locked in a 54% winner…
However, I wasn’t the only one who profited from this trade… many of my clients also locked in a monster winner.
jeez MRK ST up 25% ~ Lee S.
first 1/2 of MRK calls sold +30% Thx Taylor ~ Gary T.
MRK st up at 38%, will trail out at 50% ~ Ben E.
first half of MRK out at 50% ~ Ben E.
second 1/2 of MRK sold +45% Thx again Taylor ~ Gary T.
Thnx Taylor I’m back over 10k! ~ Mark S.
Out at +50% on MRK…thanks, TC! ~ Chad E.
had a trailing stop on MRK as I had to step away, got 46.2%, thanks Taylor! ~ Kevin S.
That’s the power of following these Wall Street whales… and sometimes, we uncover some seemingly well-timed trades, in which the company actually releases news after!
Dark pools are filled with information that allows us to rake in massive profits, and if you’re not using them now… then you might be leaving profits on the table.
We all know Wall Street “insiders” hold a lockbox of their best ideas and tools… so they could get the upper hand on everyday traders like you and me.
There is a dirty little secret on Wall Street — alternative trading venues known as dark pools. You see, mom and pop traders typically trade on exchanges such as the Nasdaq or New York Stock Exchange (NYSE)…
However, many don’t have a clue about these private exchanges that the elite are privy to.
Sure, we may not be able to trade on them… but the thing is, there is a wealth of information embedded in these trading venues — allowing us to legally follow some of Wall Street’s brightest minds and profit from their massive bets.
So what are dark pools, and how can we use the information to our advantage?
Dark pools are private exchanges — sometimes referred to as private trading venues. These exchanges are generally the ones only the elite have access to. That’s right, if you’re a trader who uses E*Trade, TD Ameritrade, or Robinhood… chances are you won’t be able to trade on the dark pools.
That’s a bummer, especially when nearly 40% of the volume is traded on these alternative exchanges. Not only that, there are dozens of dark pools out there…
How many are there?
Well, according to the SEC, there are more than 40 approved private exchanges. This is where Wall Street banks, hedge funds, and other massive players love to place their bets.
Of course, you’re probably wondering — why do financial institutions prefer trading through dark pools over traditional exchanges?
There are a number of reasons… but I’ve nailed it down to just a few:
Now that we know why financial institutions love to use dark pools… let me show you how the information works in action. These Wall Street fatcats do everything in their power to hide their trades… and dark pools have been one of the “best” places, so they think.
What the well-informed elite probably don’t know is even though their trades are anonymous on dark pools, traders can still figure out their every move. While it’s true we don’t know exactly who’s behind the massive block orders going off in dark pools every single day…
We can still figure out how many shares they want to buy and at what price.
Let me show you exactly how I use dark pool information to my advantage.
Check this out…
Source: Bloomberg
That’s an example of a massive block trade that went off in BBBY. A whopping 500,000 share position worth $6.75M.
Someone was loading the boat with BBBY shares… this trade went off ahead of a catalyst event and the “smart money” probably thought it was going to run up into the expected event… or they may have had access to non-public information.
Who knows?
All I knew was the order flow told me the stock could explode higher.
I actually spotted that block trade in real-time… and piled in. Here’s what I sent out to my clients…
I use the options market to trade off dark pool information because they offer massive profit potential in the shortest time possible.
Just a few hours after I placed the trade… the options exploded and I locked in an 83% return on half of my position.
Now, I wanted to hold onto the rest to try to juice some extra returns because it was pretty much a freeroll for me. Worst case scenario, I would stop out and still lock in a massive winner…
That’s why I love to use dark pool information… and it may have been Wall Street’s best-kept secret for a hot minute… but not anymore.
It’s difficult to title any stock as the “best” day trading stock because not all traders use the same trading style and strategy; however, many traders tend to look for the following in day trading stocks:
A heavy price movement is key because it is much easier to make a quick in and out profit on a stock that has a lot of movement. While it is is important to note that all stocks fluctuate and the market is constantly changing, the following 10 day trade stock picks currently meet the three previously listed traits and are great choices for most day traders.
Twilio Inc. is a technology company geared toward providing cloud services to large companies. When it comes to day trading, Twilio meets all the requirements. For starters, its stocks trade at a volume of more than 4 million, providing a great liquid market. Furthermore, Twilio’s stock has a monthly volatility rating above 4%, meaning it features plenty of price movement. Currently, its stock prices are on the upward trend with a gain of more than 47% since January 2019.
Many investors have heard of Tesla due to its popularity in the headlines lately. It’s a trendy company that provides a great stock choice for both retail investors and day traders. Typically, Tesla’s stock trades at an average greater than 8.5 million shares per session. Although its stock isn’t quite as volatile as others, it keeps an average true range (ATR) of more than 10. The average true range is based on the past 14 sessions, which means Tesla’s volatility has been exceptional lately.
Tesla’s stock is currently seeing a large amount of interest from day traders. Presently, more than 20% of its available shares are being shorted. Although a high short ratio typically points to a bearish market, it can also mean the coming of a market rebound leading to a short squeeze. These short squeezes have the potential to be quite profitable for day traders that are positioned in the stock prior to the squeeze.
Etsy is a popular e-commerce retailer that provides smaller vendors with a platform to sell their unique, custom products. Consumers shop Etsy for the distinct products it offers that can’t be found at larger companies such as Wal-Mart. Etsy meets all the criteria needed to qualify as one of the best day trading stocks. It trades roughly 3 million shares per session, and its monthly volatility is near 4.6%. As far as price movement goes, Etsy is doing great, with share prices trending upward both monthly and yearly at over 14% and 42%, respectively.
Advanced Micro Devices has had a fantastic year, with its stock being greater than 100% compared to last year. This upward growth is not common for an established company such as Advanced Micro. Many day traders have been flocking to this stock throughout the year despite its significant gains.
Advanced Micro’s stock is extremely liquid and has a daily volume that exceeds 85.4 million shares. Its monthly volatility is roughly 4.6%, meaning it has plenty of movement for a promising day trade. Many investors are keeping their eye on Advanced Micro due to its recent agreement with Google regarding the creation of hardware for Google’s new gaming platform, Stadia. Advanced Micro’s stock is sure to move when the new platform releases, so day traders should keep a close eye on the headlines.
Roku is a company that creates streaming technology for both smart TV makers and everyday consumers. This stock has also taken off this past year with an upward trend of more than 100%. Roku has a very high volume, totaling over 14 million, making it a favorite of many day traders. Roku’s short share float is over 15%, which is often viewed as a bad quality; however, as previously mentioned, if traders are already positioned in the stock, a higher short float has the potential to earn traders a nice profit.
Facebook is a solid stock for new day traders, especially for those who prefer to trade trend lines. When trading, the trader studies the stock chart, marking the low points. The low points in the zigzag pattern line up, making it easy to draw a rough line across them, thus creating the lower trend line. Whenever the stock drops to that line, the trader knows it’s going to jump back up.
Facebook is a great starting stock because the lower trend line is provided for you; however, it’s important to make sure the stock chart is providing you with a 50-day moving average so you’re looking at the current trend line.
Traders also like to create trend lines over the stock’s highs. This allows them to see when Facebook’s stock hits that top trend line, indicating a drop is likely. While trend lines can be helpful for new traders, it’s important to study the market and learn when the stock’s price is about to change and not just rely on the drawn trend lines.
Facebook has a volume of roughly 13 million shares, meaning it’s quite liquid, and new traders will most likely be able to easily exit a position.
ZIOPHARM Oncology Inc. has a volume of about 3.9 million shares per day over 100 days. Its range over the past 100 days is 6.9%, and it has seen a daily price movement of more than 4% between May and July. Day traders looking for shortable stock might struggle to borrow ZIOPHARM’s stock on some days, but it is possible if you time it well.
Synergy Pharmaceuticals Inc. is another one of the top day trading stocks; however, it points out an issue traders have with relying on average statistics. The stock saw a large amount of volume and movement on a couple of days in June, making it appear more liquid and volatile than it is.
When looking at the average volume over 30 days, the stock has a daily volume of 9.2 million shares; however, the 100-day daily average is only 4.3 million shares. A usual trading session for Synergy sees an exchange of roughly 2 to 3 million shares, with an average percentage movement ranging from 3% on lower volatility days to 10% during higher volatility days.
Bill Barrett Corp. is one of several good day trading stocks. Its volume and volatility has remained stable and consistent since 2014. Bill Barrett has a daily average volume of 2.5 million shares for both the short- and long-term analyses. Its volatility ranges from a low of 4% to a high of 10% with an average of 7.29% over a 100-day period.
Another one of the best stocks to trade is Basic Energy Services. Its averages fall just under 3 million shares per day with a 30-day average of 7.28%. Its lower volatility days fall around 4%; however, it is more common for the stock to have a price movement of 5% or more.
The concepts and guidelines followed to determine the best day trading stocks above are by no means universal. Every trader has his or her own opinion on investing and strategies. The more you trade, the more you can develop your own trading strategy and determine what principles you prefer to follow.
If you’re looking to earn a profit through day trading, you need to be ready to invest time and energy toward research and analytics. You can make this process easier by seeking help and guidance from experienced investors. The team at Raging Bull is ready and eager to provide you with the tools and training you need to excel at day trading.
Raging Bull has a multitude of free resources, including a seven-day bootcamp focused on teaching you how to become a better trader. With the help of Raging Bull’s top trainers, you’re sure to start earning that day trading profit in no time.
