Even though I make fun of short sellers…they aren’t always wrong.
The next shoe can drop on these junk companies in seconds.
Yet, when stocks like Baudax Bio Inc. (NASDAQ: BXRX) take an unexpected nosedive, many traders find their hard-earned gains wiped out in the blink of an eye.
Today, I want to show you how I cut the risk of encountering a Widow Maker event to the absolute bare minimum.
Follow these suggestions, and you’ll find yourself with fewer and smaller account drawdowns.
Table of Contents
Why I Like the Mornings
Anyone who’s attended one of my LIVE Strategy Sessions knows my favorite setups are Morning Panic Dip Buys.
I find these to be the most consistent plays for my style of trading an penny stocks.
It’s far more rare that I’ll take a trade in the late afternoon.
Here’s why.
First thing in the morning, I EXPECT volatility because that’s when it’s most likely to happen.
I’m not looking to buy a consolidation for a breakout higher.
No, I want to pick off a stock that’s dropped substantially after a monster run.
I’m talking about buying a dip of 30%-50% on a stock that’s up 50%-300% in the premarket.
Here’s a recent example from MSP Recovery Inc. (NASDAQ: LIFW):
The stock was up over 50% in the premarket, running hard into the open.
That dip might not seem like much. But it was almost a 10% pullback.
What’s important is you see all the big moves up and down first thing.
That’s where I want to play.
I don’t need to worry about whether a big move is coming because that’s what I want to happen.
I just want it to happen in the direction I want. And if it doesn’t, I cut my losses quickly.
Let’s compare that to the chart of BXRX from Thursday afternoon:
Look at this narrow trading range of less than 10% on low volume that lasted hours.
It’s almost daring you to take a position just to whip you out of the trade.
In fact, it popped just enough to suck folks in right before crashing out on heavy volume in less than a minute.
That’s the danger you face when coming out of tight consolidations with low volume.
It’s why I want stocks to prove themselves first – show me what you can do and give me something to work with.
I’m not opposed to taking afternoon trades.
But I want to see price action.
Here’s an example from Near Intelligence Inc. (NASDAQ: NIR):
While the ranges are certainly tighter, this wasn’t a stock sitting in one spot all day. It had been trending lower, making some share drops along the way.
I dip bought late in the day, where I saw support and expected a small bounce.
What should be obvious is that this stock was so far off its highs that it was close to the lows.
So, even if I got caught in a Widow Maker, there was strong support for how far it might drop.
Prepare for the Worst
I want to make one point abundantly clear – you cannot avoid all Widow Makers.
Trade long enough, and you’ll eventually get caught in one. That’s just the way things work.
Everything I’ve said up to this point is about reducing their risk.
But I’m trading penny stocks. News can drop at any time. Even a large order can collapse price.
That’s why I don’t like to hang out in trades that aren’t doing what I want when I want them.
The longer I stick with a position, the greater the risk of a big swing against me.
That’s why I often cut trades quickly, even for tiny profits, because I want to keep those Widow Makers to as few times as possible.
And I do that pretty well.
In any given year, out of hundreds of trades, I might get caught in a dozen at worst.
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When they happen, I suck it up, cut the trade, and accept the loss.
🚀 Ready to Conquer Widow Makers in the Market? 🚀
Navigating penny stocks can be exhilarating, yet treacherous. One bad move, and a sudden market shift can decimate your portfolio. Take stocks like Baudax Bio Inc., for example – a seemingly normal trade day suddenly turns into an unexpected freefall. This market is constantly shifting, and if you’re relying on old strategies, you’re dancing on a tightrope.
But, what if you had the tools to side-step these so-called “Widow Makers”? What if you could confidently traverse the penny stock landscape, armed with strategies that minimize risks and maximize gains?
🔥 I’ve dedicated years crafting and refining my strategies, and now, I want to arm YOU with them.
🔥 Discover why Morning Panic Dip Buys are my go-to, and why I avoid late afternoon trades like the plague.
🔥 Gain insights into understanding the market’s cues, ensuring you’re always a step ahead.
🚀 Join me in our exclusive live training sessions.
🚀 Unpack the strategies that have kept me safe from the perilous Widow Maker events.
🚀 Experience real-time market analysis, and understand the nuances that most traders miss.
🚀 Don’t merely survive in this tumultuous market, THRIVE in it.
Are you ready to transform from a regular trader to a market maestro? Prepared to face and conquer the unpredictable whims of penny stocks?
🚀 Your Guide to Mastering the Penny Stock Game is Here! 🚀
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