heading · body

Transcript

If You Only Watch One Trading Strategy Video Make It This

read summary →

TITLE: If You Only Watch One Trading Strategy Video, Make It This CHANNEL: Chart Fanatics DATE: 2026-06-21 ---TRANSCRIPT--- It is the story of $27,000 to now over $50 million. This year alone, he’s had that he shared on X a $7 million trade, close to $10 million trade, and that trade I made in about $1.5 million. Just in that, 15 minutes.

Sure, selling has to be very precise or you are taking huge amount of risk and potentially lose more than 100%. But, if you don’t know why, your first red day will become first losing day. Because he has made $50 million from just $27,000. Introducing Steven Dux. Now, this process is very important because once you have simulated how much money you can make into the year, when you are trading every day, that eliminates your emotion from being FOMO. Because in this episode, Steven breaks down the exact statistics that he has built around three of his trading models. He shares those exact models with us step-by-step so that you can implement them into your own trading. This is where back in the days I was trying [music] to dig how to really precisely capture the top. I had a sectioned initial market cap. So, I you kind of have to look into other people’s mindset, the big larger players because it’s much larger market cap. Ideally, that for hedge funds, you do not want to push [music] more than Steven then shares exact trade examples using this methodology [music] that has made him tens of millions of dollars in 2025 alone. If you want to be [music] consistent profitable, test the strategy by yourself first. Make sure that whenever you are designing a strategy, it’s fundamentally tied to either Welcome everyone back to Chart Fanatics, the go-to channel for all of the very best strategy and concept breakdowns in the world with some of the very best [music] traders in the world as well. Talking of which, we have a phenomenal trader. We had him on Words of Wisdom earlier this year, and uh we were very blessed to do so, and the episode did absolutely incredibly. YouTube even tried to hinder our progress because of how great the results are. It is the story of $27,000 [music] to now over $50 million. This year alone he’s had, that he shared on X anyway, [music] a $7 million trade, close to $10 million trade. You already know who it is cuz there’s not many traders who can do such a performance. It’s the one and only Steven Dux. Hello guys. Thanks for being here Steven. Honestly, it’s a true honor to have you back and I’ve been super excited all year to get you here on Chart Fanatics. And today we’re going to go through some strategies of yours. Okay. Um and yeah, I guess just hand you straight over to you. Where should we begin? Okay. All right. So uh today I would like to cover maybe about two to three because some of the concepts are combined. Uh I will start to approach of uh higher woody build my strategy and why fundamentally it works. And um yeah, then let’s get started. Perfect. All right guys. So the first strategy will be uh gap up short. Second strategy will be bounce short. Third strategy um it’s what people commonly call the first red day. But this strategy is um very strict in terms of criteria. So to be able to increase its winning percentage, you have to really be selective. And uh there’s many situations that it will it won’t work. So I will approach it by statistics, volume, um and also share price matter as well. So uh all those strategies only, first of all, only works on small caps. So uh let’s start with the very first criteria. The initial market cap has to be between 1 to 100 million. This is the market cap. Second criteria will be the float. The float has to be anywhere between um 1 million to 50 million. Now, there are specific sections between it. Um 1 million to 2 million is considered to be very low float. 2 million to 5 million is considered to be mid float. Now, 5 million to 10 million considered to be large float. Now, typically when we run into something around 10 million to 20 million, we don’t run into these type of um play that much. So, uh uh but the strategy also works as well. So, let’s start with the very first gap up short. The reason why we call it gap up short is in the morning, we see a stock typically gaps over 100%, 70%, sometimes even 1,000%. So, the very first thing you want to approach is select by the market cap. If the market cap is over 200 million, then it’s not doable. It has to be under 100 million market cap. Uh the second one, look at the float. If the float is over uh 50 million, majority of the time, 99% of time, it’s not really tradeable. So, make sure you filter that one out as well. The third, it and then we’ll have to take a look at the volume. So, uh whenever there’s Mhm. volume sections, so it’s between 1 to 10 million and 10 to 20 million. Uh 20 million to 40 million still tradeable. When pre-market volume exceeds over 50 million, that’s where you have to pay attention because if in the pre-market trades over 50 million, that means after market open, we’re going to trade in volume, because people are interested. Um then the typical ratio is around 1:5 to 1:10. So, if the pre-market volume trades around 50 million, you’re estimating the entire day volume trades around 500 million. So, if 500 million is going to be really crowded into a market cap is only under 100 million, you know it’s going to be very difficult. There’s going to be a lot of algos playing games, and it’s very difficult to uh for a short strategy to work. Now, majority of the time, volume concentrates between uh 9:30 after market open to 11:30. So, if we see a mass consolidations, maybe there is a way to short um in afternoon because the volume dies out, and most of the volume that people traded are in the morning. Soon as something cracks, um there’s more people are stuck on the top, and it will cause a chain reaction for a stock to drop. So, uh this is something to pay attention. Then, the third thing is we have to pay attention to uh this is when the market before market opens. So, we have to pay attention to its uh sectors. There’s three sectors. There’s about two sectors you cannot trade. First of all, is biotechs. Biotech is very different. I have tracked countless of statistics by using gap up short to trade biotechs. Uh the winning percentage drops by about 20 to 30%. So, that’s um something I tend to avoid. Every time when I see a gap up short on the scanner, I delete that. I don’t want to see it, [laughter] because I have traded Now, I have traded uh biotechs for many, many years. Um have probably traded about three to 500 tickers. Uh the net profit of biotechs probably maybe around 1 to 2 million on 500 tickers. So, it takes a lot of mental energy. It’s just not worth it. So, it’s biotechs it’s it messes with the winning percentage. The The The second one is the energy sector. Okay. Uh make sure to avoid that sector as well. So, those two are very important. It doesn’t work out. Mhm. That pop short, bounce short. And ideally first red day. So, now if it’s really over all three all three of these Yep. you would look to avoid. If it’s really overextended, let’s say something goes up to from 1 to 1,000. Now, maybe that’s something to consider, but majority of the time on something around 2 300% maybe even under 500% uh avoid it and uh uh oh, there’s another one I forgot about. Uh the uh Chinese stocks. Okay. Um this one you have to attempt to avoid because whenever on the intraday volume, if you trade less than 30 million, I have seen tickers gets halted and it’s really thin at the volume and the level two seem really thin. And as soon as you get halted, I’ve seen tickers go from 2 to 200 and there’s no way for people to get out and people are taking significant lot of assets on it. I personally took about uh two three I think it’s maybe five in the course of my lifetime and uh uh trading lifetime and it’s uh not pleasant. [laughter] Uh so, um I have managed to avoid from going from 200 2 to 200, but I have taken maybe from 20 to 30 I mean like 100% loss because there’s no way to get out. Trading education is completely broken. For years, the industry has been purged and poisoned by bad actors, fake results, and strategies hidden behind paywalls. But in every industry, every once in a while, there comes a catalyst, a moment in time for change. Now, imagine a world where elite trading education was entirely free. Education with no hidden agenda, verified trading results, and real profitable strategies. All for free. Welcome to Chart Academy. Chart Academy is the world’s first all-in-one platform for trading education. Chart Academy is free. No catch, no upsells, no strings attached. World-class trading education completely free. Hi, my name’s [music] Randy Howell, and welcome to my Chart Academy Masterclass. This is completely [music] revolutionary. The biggest change in trader education in 20 years. My name is Carmine Rosato. I’m a verified seven-figure trader. [music] I’ve been trading for 10 years now. The reason why a lot of traders fail is because they Ultimately, [music] this work is about self-mastery. Trading education will never be the same again. Browse hundreds of hours of content in forex, futures, [music] stock, options, and crypto from the best verified traders on the planet, all in one platform. Experience a completely personalized trading [music] plan tailored to you and your goals. Reach milestones, redeem points, and earn rewards with a massive global community. Whether you trade forex, futures, stock, options, or crypto, Chart Academy has something [music] for you. Join the waitlist now and be part of a movement that is going to change trading education forever. [music] You mentioned in terms of statistics, just in terms of like creating this criteria. How How does that look for you? Is that like an automated process of collecting statistics or are you essentially putting in the criteria of market cap and the float and the volume and then looking at the particular tickers and setups and then seeing how they performed and then creating like the win percentage and seeing what works, what doesn’t. Uh it’s not automated, yeah. I have tracked down by hand pretty much. Around 20 e starting from 2015. So, it’s almost 10 years and um every day when I see something, I’ll put it in the I’ll put it in my spreadsheet and because um for its market cap, float, pushing percentages, volume on the day. Uh and also selecting them by sectors after countless amount of hours, I have figured out um uh a criteria of how to really approach to the best uh gap up short. This is what allows you to It’s so just to be clear then as well, these rules that we’re covering here, is this just for the gap up short or is this across all three? Across all three. Okay, perfect. Um So, first red except for this one. This one can first red day market cap can go above up to 200 million. Got you. Um over the night it’s probably not ideal. Okay, so the second thing um just in terms of statistics, uh the reason why I’m giving you this criteria and how I really approach to the statistics. First of all, I track um the frequency of how many times they happen per year. So, gap up short happens after taking out all those biotech, energy, China play. There’s about uh 50 times a year, 50 to 70 times happens a year. Got you. The winning percentage is about uh 75% or plus and sometimes even higher. Uh then I track down the reward, what’s their average fading percentage. So, if I’m shorting, the average goes down about 26% from the intraday high. Um, so I’m calculating the reward. So, the very first one is I know how many times they happen per year. I know what’s my winning percentage. So, if let’s say average happens around uh, 70, so 70 times a year, I’m winning about close to 50 50 of them on the year. Got you. And each year and each sample I’m winning 26%. Okay. So, I will know that how much money I’m going to make throughout the end of the year. Now, this process is very important because once you have simulated how much money you can make end of the year, when you are trading every day, it eliminates your emotion from being FOMO because you know, okay, well, I’ll just wait for the year. This is how much money I’m like to to make in this. And this is what you were saying in the in the podcast when you were saying what you do is you compare to what your, you know, perfect result should be. Yeah. And as long as you’re trying to get close to that or you’re you’re on track, that’s all that matters. Correct. Yes. So, there of course there’s some human error that some sometimes ticker goes um, not the way you think and you have cut losses and all of a sudden the stock goes back down again. Um, so the you have to try to try to try to adapt to the market by using statistics and using both um, to make sure that you are trying to approach the best uh, statistics possible. So, that’s the reason how I do it and it’s been working out pretty well. This this data here is the gap short, right? Yeah. Okay. So, um, now let’s go into after market open. Once we have filtered out the float, market cap, volume, and sectors, it’s going to after market open. So, first of all, we want to track we want to know that how much volume traded in the pre-market. So, let’s say assume today you traded 10 million shares in the pre-market, and I’m estimating today is going to trade between 50 million shares to 100 million shares throughout the day. Uh now, by statistics, majority of the volume concentrates between 9:30 to 11:30. And almost about 30% to 35% of the volume on the day trades before 11:00. So, volume concentrates in a very short period of time, and after 11:00, volume tends to get slow. Mhm. And we want to have as much as emotional trades in the morning uh for other people. Of course. So, we want to track down the average pushing percentage. So, after market open, uh usually when stock becomes really hot, there’s people wants to chase right at the open. Uh of course, we’re going to cover the the the historical chart, but we’re only focusing on today here. So, ideally we want to look between 20% pushing percentage to 35% pushing percentage. Now, the higher uh the percent, the better the winning percentage is. And now here, we have to section separate them by float. So, um typically when we’re running into between 1 million to 2 million, the average percentage the percent of pushing percentage becomes much higher because it’s low float and high demand, of course, pushes the stock much higher. Mhm. So, I have tracked down between 1 to 2 million average pushing percentage is between 30% to 35%. After that, the stock tends to consolidate. Once they consolidate for 1 hour, that’s where I typically start to size in. And between about 10 to 11, the stock shows the first weaknesses on the on the breakdown, that’s where I add a full position risking this consolidation. Okay, so your risk will be your stop loss will be above that high. Correct. So, now if you are running to something between 5 to 10 million and pushed about 20% to 25%, that’s in the average. Mhm. Then of course using the same method, wait until 11, start [snorts] a partial position. And after the momentum shifts, maybe cracks about 5% to 3%, size in full position, risk the consolidation. The average risk on the trade is around 7%. The average fading percentage is around 26%. Of course you are sizing a little bit below, so you’re looking at 25% to 24%. So, your risk reward is between um 1 to 4. 1 to 1 to 3.5. Here we So, you’re looking at entry here for the full size position. Correct. And stop loss above the consolidation. Consolidations, yes. And then in terms of the the criteria, is there a particular percentage on the way up the upside that you want to see? Oh, yes. The gap up should yeah, for I forgot about covering this. It has to be above 100%. Got you. Okay. Yeah. So, above 100% you want to see that spike in the in the market open, see that volume as well, and then you want to see it consolidate. And once you start to see that first initial breakdown after that consolidation is where you can then and to enter your position, stop loss above the high. [snorts] And then you’re looking for a a breakdown of 20 to 35%. Correct. And the volume has to be matched as well. So, let’s say the pre-market volume is 10 million. Mhm. I’m estimating 100 million throughout the day. Got you. And before 11, you traded at 30% of the estimated volume. Okay, got you. have all the criteria has to line up together for me to take an entry. Got you. Perfect. So, that’s the gap up short. That’s gap up short, yes. And then next we have is a bounce short, is it? Yes. Next is bounce short, yes. Futures traders, it’s time to hear about Apex Trader Funding, the largest futures firm in the industry. They have completely changed the game with their new evaluations. So far, they’ve already paid out over $600 million to traders around the world just like me and you. And not only that, Apex actually holds the record for the largest payout to traders, which is of course with Jade Cap, no strangers to Chart Fanatics, with $2.5 million in a single payout. And the person before that was Trader Kane with $2 million in payouts. Now, what sets Apex apart? Apex, you can get up to 20 accounts, which no other firm offers. Now, not only that, they have extremely clear rules. With their revamp, there’s no MAE rule, no 5:1 risk to reward rule, no hidden rules, no gray areas, clearly defined drawdown models, so you have two options now, end of day drawdown and intraday trailing drawdown, which means no payout denials, no payout reviews, no discretionary decisions, and no surprises. What sets them apart as well? Traders receive 100% of approved payout requests, up [music] to 20 accounts, as I mentioned, and one day to pass. Now, the other thing that I love about Apex, not only can you get 20 accounts, but there’s different account sizes. So, they have 20K accounts all the way to 150K accounts. So, you can get 20 of any of the account sizes that you choose. Not only that, you have various trading platforms from Wealth Charts to Trade Evate to Rib Mick. [music] The choice is yours. So, make sure you use the code CF to get up to 90% off on evaluations right now using the link in the description below. Trade at Apex today. Let’s get back to the episode. It’s amazing to see in terms of not just you know, just the the layout of the trade and his entry his it’s actually statistics and specifics in terms of why we need each of these criteria to then create a higher probable trade. Correct. Um and you see that would you say a lot of traders miss that element of actually working out okay, how if this criteria is adjusted, let’s say the float or the market cap instead of it being, you know, 1 to 5, it’s it’s 10 to 20 and how that then changes the result of the trade or the probability of a trade. Do you think a lot of traders just kind of skip a lot of that? they they really miss that specific because it’s all about trading is all about supply and demand. Now, if there’s a lower float, higher volume, of course, the stock’s going to push much higher. Now, if you’re shorting at the average 25%, you are missing that extra 10%. Of course, you’re going to get shaken out and potentially take a loss. So, it’s very you have to be really strict on the criteria and to prevent from from you to make uh mistakes like that. Got you. It really um screw up the performance. Yeah. So, then bounce short, where does that uh how does that differ into the gap short? Okay, so the bounce short uh the first of all, I want to explain the psychology behind bounce short. Um behind uh to be able to trade bounce short, we typically have to look at um the long-term chart. So, uh first of all, we want to go back in 1 year. Uh the chart ideally that we want to see is individual uh candles that creates massive amount of resistance. So, ideally something like flat. Then we had one spike. Uh and the volume bar probably trades uh let’s say 30 million. Price $5. Uh oh yeah, I forgot to cover the price. Uh all of those tickers um the price has to be over $3. If it’s not over $3, it becomes very difficult. It also messes with the statistics as well. Okay, so $3 price for all three. Yeah? Now, the reason why the bounce should works is uh Okay, so after this day, after the the big spike into five from maybe $1, it drops all the way down and stay flat for 2 months. Ideally, then all of the sudden we see a gap up short Okay. that gapped over 100%. Let’s say gap from two to 4.5. Got you. When we run into this type of situation, it’s first of all, we know that we traded 30 million volume on this one candle and we dumped after the day after. So, majority of the volume are stuck around $5. And it’s been 2 months, everybody’s stuck. They don’t They want to get out. Soon as they see a gap up short that gapped up, they want to exit as soon as the market open. So, it will create that massive selling pressure just based on uh human psychology because they want to break it even. They’re down 70% all of a sudden, they’re up now close to even. Then majority people are Your first reaction by human psychology is to sell. Yeah. So, once you sell, you create a selling pressure. And then I’m I’m I’m opening up a short position at open. So, I’m riding your selling pressure all the way down. Uh and that’s the pattern based on you know, human psychology. So, um first of all, there’s still criteria in there. Uh the very first one is your in terms of dollar amount. So, basically we use the bottom 30 million uh times the uh price. The most consolidated price. So, let’s go after we look at the one-year chart, we find this candle, we’re going to the intraday chart. Mhm. We want to see something like um it gapped up, it consolidated for a while, and dropped. So, now the average consolidation price is at $5. Okay. Then, we want to uh you want if you want to go into the very precise way is you basically calculate all of the volume not combined together because some of the volume traded at under five. So, you want to uh go into maybe a one-hour chart or 30-minute chart to combine all those volume at the bottom. So, you know maybe at the $5 area you traded 25 million shares. Okay. Now, once you know there’s about 25 28 million share traded around $5. Uh now you use the 25 million times five. And so, you’re looking at maybe 120 million, 110 million dollar block. So, it it’s how much dollar is being blocked at $5. Okay. Got you. Um now if you after that, you go into intraday. Um first of all, you take a look at the volume estimate. So, uh look at take a look at the pre-market volume. Let’s say if it traded around 3 million. Mhm. You’re estimating that not by regular standard, you’re estimating times 10 throughout the entire day. So, 30 million throughout the day. But, uh, something you have to keep in mind is you know that there’s going to be selling pressure at open and you short. So, typically stock opens up and plummets 15 to 20%. So, somebody are looking to long at open. When they see stock plummets, uh, 15 20%, they’re not likely to buy. Yeah. So, the volume estimate will significantly reduce. It reduce uh, sometimes up to 50 to 80%. So, you’re looking at 30 million and it reduces to 10 15 million. Mhm. And 10 to 15 million amount of, uh, shares. So, 10 million to 15 million cannot compete with the 25 million. Yeah. Um, uh, 25 million volume that’s stuck at five. So, the ratio becomes two to one. The in terms of volume, uh, ability, rough estimate two to one. And that significantly increases the bound short winning percentage. So, uh, this is typical way I take a look at the, how much volume and is driven and on intraday and to calculate, uh, winning percentage. The ratio has is very important. Uh, the higher the ratio is, the more I will size in. So, Okay, I understand. If it’s one to one, I will reduce size, two to one increase size up to I have seen 10 to one. So, 10 to one? Yeah, I’ve seen, uh, there’s one example at GME. The volume estimate is almost 10 to one. And that open, as soon as it opens, instant crashes 50%. Uh, and that trade I made that was very early in the days. Uh, so I made about 1.5 million. So, just in that 15 minutes. Wow. That’s crazy. But, it’s all based off the fact that as you cuz you said it in the podcast as well that you really center a lot of your strategies yes statistics and data, but human psychology. Correct. So, in this case it’s really it’s kind of a combination of how the statistics reflect the human psychology. You have to combine to increase your winning rate. So, when you see this ratio increase it’s essentially that that emotional element is increasing with it. Correct. Yes. So, then therefore you have more conviction cuz you know there’s going to be max pain if you will. Which then creates a a lot of the time max pain is reflected by a very fast volatile move. Correct. Yes. So, um, uh, one thing to keep in mind is the dollar block has to be 150 million plus to be ideal. Now, sometimes you get to 130, 140. I mean, it’s doable, but uh, ideally you want to Okay. You want to get in 50 million. And then in terms of the criteria to enter here. So, then this has taken place is it is the entry looking around here? Mhm. Now, the entry um, it really depends on the open price. The closer you’re getting to getting into the consolidations the more size you can get in. Okay. Because there’s less risk. Yeah. Um, So, this is almost similar to a gap short, but it has to have this criteria prior to it. Correct. Yeah. Yes. 36 seconds. That’s Hola Prime’s fastest payout on record. Not 36 hours, not 36 minutes, 36 seconds. The average payout time across the entire firm was 34 minutes. [music] And 98% of their payouts clear in under an hour, which has been verified by Deloitte. That’s exactly [music] why they just won fastest payout prop firm at the UF Awards. Most firms make you wait weeks and you still have to pray and see if you’ll get it. Hola Prime CFDs pays you before your coffee gets cold. And that’s why you should trade with Hola Prime for your CFD accounts today. You can get a massive 30% off using the code CF at checkout. So, make sure you go check them out with the link in the description below and let’s get back to the episode. Uh ideally, uh there’s about a couple different variations on bounce short. There is if it gapped in close to five without much volume being traded in the pre-market, this is 3 million, maybe 5 million. Uh it increases the winning percentage in my statistics. Now, if it’s spiking from the very bottom, so after market open, Yeah. uh the stock did not move in the pre-market. So, it slowly goes up for about to five and comes back down. Uh uh this is type Let’s say this is uh type one. Okay. This is type two. Type two winning percentage is much higher than uh type one winning percentage is much higher than type two. Okay. So, it’s just little little bit uh So, in this one it might could take the high and then still collapse? Uh you will approach to the high and collapse. Got you. Um So, uh now the variation on the fading is a little bit different as well. Some when you run into a gap into five, majority of the time you see straight down. Okay. Uh if you run into something that volume builds building from the bottom goes up, you’re likely to see a bounce then fade back down. Okay. And the and the uh the fading percentage is also different. This one fades uh Let’s say the total gain is from here to here, you fade about 75%. This is the 75%. from the very top. Okay. This one ideally only fades about 50% from the top. So, if you count the range, Yeah. cut in half, that’s in the 50%. That’s the max reward. This is the max reward. So, in terms of a bounce short, uh how often or how what’s the frequency like per year? it’s the winning percentage is much higher than gap up short. It’s about 80 to 85%. Uh it happens around uh 30 30 times a year. Yeah. Um So, 30 times a year and then 80 to 85. Correct. Win rate. Uh also, there is a specific sizing uh rules. Okay. Mhm. Ideally, do not want to exceed 10% of the float. Mhm. Also, 1% of the volume. I mean, make sure that you keep that in mind. Um if you sizing too much, especially on low flow 10% of the float. You are likely to break the supply and demand uh chain. And uh it it becomes very difficult. So, Yeah. because I have grown my account to much significant size and I have run into this type of problem that if I sizing too much, I’m I’m breaking the pattern. So, the problem uh is you want to size it into a specific threshold. And whenever Now, back in the days, uh the stock let’s say the stock goes to 4.5 touching the resistance at five, it goes straight down to two. Uh majority of the time, I just wait until the close to cover at two. But, uh if you are using significant size, let’s say you are shorting 500k shares, 300k shares, you want to cover cover along the way. You want to give the supply back. Okay. For people to react. So, it’s different, man. to start playing a different game at the at the higher levels, yeah. That’s incredible. And uh yeah, again, seeing these statistics and you know, it’s really great to see cuz this is the amazing thing I love about this channel in particular is that we get to have the conversation on uh on Words of Wisdom, the podcast. But then, you know, now to see the actual visualization of you know, when you were talking about statistics and also the human psychology, Now we can see that bridge and that connection in real time and then we’re going to see the actual trade examples as well. But just before we do that, we have the first red day set up. So would you say your first red day set up in terms of rules, is it slightly different to what you’ve seen out there already? And correct. Yes. First red day uh basically you are running into much bigger competitions. Um especially this year for example just happened um a very natural developed first red day was the B line and D chart. The B on me, yeah. Um that one is very is a very standard first red day to talk about. Mhm. So first red day um there’s a lot criterias. So first of all uh it’s not just first red day that there’s there’s a lot of preconditions and there’s a lot of uh criterias you have to avoid. If you don’t avoid it, the first red day will become first losing day. [laughter] So um I have traded many first red day. Um there’s about three things you pay attention to. First of all is estimated volume. This estimated volume is very different than gap up short and bounce short. I’ll cover that. Okay. Uh later and it will there there’s also dollar block. There’s also um uh intraday uh fluctu range. Okay. So let’s go into the very first of how you really spot first red day, how you really consider something that’s a first red day, and um because if you don’t qualify a first red day, the reward, the entry and exit becomes really messy, and uh um it’s hard to make a profit from. So, the very first thing is your initial market cap can range over than 100 million. Um typically, we want something that’s under 200 million. So, before you if you see something that’s going from 1 to 10, and the market cap went from it’s already 600 billion, but you want to uh divide by 10 because it went from 1 to

  1. So, so so the initial market cap is say 500 million then the right now then divide by 10. The initial market cap is 50 million.

Got you. Okay. So, ideally, initial market cap has to be under 200 million. The first uh criteria I want to go into is consecutive green candles with higher volume at either identical or higher volume. Okay. You have there cannot be a red day or a flat day in the middle. It has to you see emotional chasing Mhm. going up day by day, volume higher by uh previous day. At very least, three consecutive candles with volume increasing, consistently increasing. You need that volume for those three consecutive days to increase back to back. Also, you need the range as well. So, uh typically, uh if you only see two days, there’s exceptions for two days. This is where I made the D-WAC trade. You only went up for two days, but the range has to be much higher. So, uh the range creates for three days minimum has to be 300% uh for two days has to be 1,000%. Wow. can see it’s Significant, yeah. Yeah, very different. Would you still even with this one, you want to see obviously the volume increase on the second day? Correct, yes. Um Which would naturally happen if it’s doing a thousand, right? Yeah, yes. So um uh if you see like let’s say a red day stuck in between Mhm. and uh the three day resets. So Okay. the resets starting from here. Okay. One, two, three the other three days yet? With that volume again? Yeah, it has to be volume. If it gets another mid uh red day it resets again. Okay, got you. So you can see um sometimes you run into multi-day runners and you say why it doesn’t work because you know it’s been it’s up for so long and uh uh and the stock went from two to 28 and still got room to go up to maybe in the hundreds because you have those red day in between resets. It’s emotional um for people emotional That rebalancing, yeah. Yes. So um Now assume that you don’t have uh the red day in between. Uh first of all, when you run into something like let’s say I said the minimum is 300% but how do I really try to capture the top? Because once it goes to 2 300% it might go to 500%, 600%. If you don’t time it right, of course you’re going to get uh squeezed and to take um you know, short selling has to be very precise or you’re taking a huge amount of risk. Yeah, huge amount of risk and potential to lose more than 100%. So um This is where I was back in the days I was trying to take how to really um precisely capture the top. I have sectioned for uh initial market cap. So uh you kind of have to look into other people’s mindset uh for the big uh larger players because it’s much larger market cap. Uh ideally that for hedge funds you do not want to push more than 30% of the entire market cap. Yeah. Or in the entire float. Uh if you push more than that, you’re basically playing with yourself. You’re pumping and dumping by yourself. You’re not going to make money. So, you want the retail to participate into the trade to basically transfer their money to your wallet. Mhm. This is very simple uh explanation. So, now if you can only size in maybe less than 30%, there’s a problem. Is there’s only how much uh dollar retail can pour in and there’s no more money being poured into the sticker. Yeah. Soon as that exhausts, then stock crashes 50 to even 75%. Um typically the first green day it was initiated either by a very beaten down uh uh chart that’s squeezing the shorts and retail start chasing back in. Or something that uh a big hedge fund starting um buying huge chunk of of the float starting there as well. Uh in terms of the chart, uh there’s a little bit difference as well. So, if you’re looking at a long-term chart, uh if the chart is keep trending down, trending down, trending down, and all all of the sudden you have one, two, three, those uh multi-day runners become then qualifies the first red day. These type of chart tends to go up a lot more compared to the average uh long-term chart that is flat than one, two, three uh as multi-day runner. So, keep that in mind. Um then what it’s going to um how to really capture the top. The first of all is uh pay attention to as I said the initial market cap. Okay. If the initial market cap is on it let’s say section is under 50 million, Yeah. Um now you want to let’s say you don’t know how to trade first red day. You want to get to know that. Um how do you really uh you want to section all of the multi-day runners and calculate at what type of volume they trade on consolidations and start and then starting to drop on the that on that very tip. So you can calculate what’s the dollar amount being traded at the top very top. Yeah. And uh have uh track them all together I have hundreds of samples. I have found that pretty much the same market cap initial market cap rounds up all the way up and they all even though they’re uh well their market cap and float has to be under the same section and but the price is different. So but pretty much all of those um multi-day runners now qualify first red day if they’re within the same initial market cap they all stop at the same dollar amount. Really? So very similar. So uh either uh if it’s initial market uh cap they stop at one um once they trade let’s say 200 million dollars at five 200 million shares at five dollar it trades one billion stock starts to go down. Uh if the initial market cap is 100 million you trade three billion stock tends to go down. Uh starting at 200 million it trades at uh maybe five billion to 10 billion stock tends to go down. Mhm. And you have you want to section them by their initial market cap. So uh if uh ticker starts at let’s say IPO at three 500 million it’s an IPO is a little bit different. Yeah. And uh their dollar box starts around 30 billion. So then starts to go down. Uh this one applied to uh CRCL that happened this year. Um uh so that’s something that you want to look at. And now how to really predict when it’s coming, and also um to prepare yourself because I’ve run into a situation that I keep taking losses on the way up. Yeah. And I’m making profit on the way down. Basically, I’m neutralizing my losses and wins. So, you want to avoid how to take a lot not to take losses on the way up. Um this is where that you want to track down the average volume increasing. So, ideally, let’s say it starts at 50 million shares at the very bottom sit uh for this long candle. Uh then the next day it goes up to 70 million because the volume has to keep continuing to increase. The next day goes up to maybe uh 100 million to 120 million. So, uh now, on the fourth day there’s there’s a possible chance that can go up to 150 million to 200 million. Mhm. I’ve got to tell you something. Hundreds of thousands of traders have already made the switch to TradeZella. And the biggest reason? The AI. TradeZella is the all-in-one platform built to turn you into a profitable trader. And at the center of it is an AI co-pilot that does the heavy lifting for you. It watches every session. It learns exactly how you trade and your strengths and your weaknesses, the patterns you keep repeating without even knowing it. And it tells you in plain language what’s working and [music] what needs to change. The moment you close a trade, your AI captures it automatically. Fully synced to your broker or prop firm, zero manual entry, you can replay any trade tick by tick, pip by pip to see the full picture. Backtest your strategy on years of real data before you ever put up real money behind it. Your AI co-pilot ties all of it together, surfacing insights you’d never find on your own and guiding every decision you make going forward. Hundreds of thousands of traders, one AI-powered platform, real, [music] lasting results. Now, if you want that AI co-pilot and see your trading excel, the link for TradeZella is in the description below. Use the code CF20 for 20% off your yearly subscription or CF10 for 10% off your monthly subscription. Now, let’s get back to the episode. Once I figure out the initial market cap and then know uh the dollar block, I can calculate. So, basically um uh the first one, let’s say it started at at $5. Now, if I’m trading something that’s a mar- a lot lar- Sorry. Much larger [snorts] market caps, I know that in the average on the day daily um volatility is around 30% to 50%. So, I kind of know that in the next day, maybe trades around eight to 12, the next day trades around 12 to 18. And um next day trades about 25 to 30. Um so, on the on the second day, I’m already looking at the charts. Okay, what day is likely to reach its mar- uh lar- well, maximum dollar amount before it drops. Yeah. So, I’m calculating maybe one on the pre-market, I’m looking at it. Okay, the today’s one estimate, it’s pre-market times 10. It’s going to reach about 100 million uh at uh 12. Now, the dollar block is 3 billion, so okay, well, today’s not likely to reach that. So, I’m just going to don’t touch it. Okay. And the turn off the computer and uh going to the next step next day. Now, if it is 3 billion, trading around 150 million at 20 to 30% at 20 to 30, that’s this is the day it’s likely to reach Okay. the dollar amount. allows you to be one step away. You don’t have to like just focus and just watch it for no reason. Avoid losses most of all cuz again with the first red day that that’s the biggest thing you’re trying to almost predict when this is going to turn to get that Irish reward trade. Correct. But in doing so loads of people just end up as you say just take losses take losses. people take losses. I mean I’m the one I’m also the one Yeah, so So uh they have to really dig deep into like how to really avoid it on the way up because the first red day you’re shorting. You’re let me Of course stock can run up 2,000% 2,000% but you’re shorting you the maximum you can only make is 50% you know on a massive crash. So being very very precise is very important. Mhm. Uh this this will prevents you from uh taking losses on the way up and um So did like uh Beyond Meat did that fit this criteria or was that slightly different or did it fit the first red day with these rules? It fit the No. Uh Beyond almost fitted the range. Okay. So all of those things has to combine together. It’s not just one and it varies. Market doesn’t give you like a textbook. Of course yeah. This is like I always highlight like this whiteboard thing is like textbook. This is what we’re showing as a textbook and then we go on to the actual you know reality from the trade examples and stuff. Um so cuz it’s easy to see this and be like oh this is easy you know we can it’s going to be perfect like this but yeah no it’s a good to highlight. It’s it’s not as simple because there’s also you need the experience of control size. Yeah. Um control size and control your risk because the as a way I talked about the gap up short and bounce short I also said that based on the winning percentage you sizing more based on the winning percentage you know if it’s lower you sizing less. And also the volume ratios you have to pay attention. Um let’s say the volume ratio is significant but the price is barely $3. Now how how you going to size? You’re going to size in smaller because it doesn’t really um meet the $3 plus criteria. Now, if it’s like 2.8, 2.9, barely touches the criteria, you know, it’s you have to kind of size down as well. So, there’s a lot of experience by controlling size. Yeah. Like, pay attention to the little criteria. So, in terms of this then, frequency-wise, you know, what was the the frequency of the first red day? The frequency of first red day happens between 5 to 10 times a year. But, this one doesn’t have a size limit. So, you can If your account is big, you can really grow your account by only focus on those first red day. For gap up short and bounce short, typically, now there’s exceptions and on other than like GME, AMC, those hyped up tickers, that only happens maybe two to three times a year. Average gap up short and bounce short, uh the maximum size I personally have touched is around 1 million to 1.2 million. Wow. So, your average weighing on each of those tickers probably 200k to 300k max. Yeah. On first red day, then you can make up to billions, even billions. So, So, uh With that first red day for you, you had on the Beyond Meat, that was a $7 trade. Yeah, I I Yes, that I think I could really push it to maybe 13 13 to 12 12 to 13 million, but you know, it’s the size is become so much so big that it’s really affecting the ticker. If If the trade doesn’t really work out, I have to cover my size, I have to take extra maybe 5% loss or 6% loss because of my size. Yeah. And that’s why Do you feel like that’s almost pushed you to really look into the statistics and data a lot more so that you can really minimize those losses cuz if you get trapped in at that sort of size, it’s going to be Yeah, it’s it’s a it’s a disaster, yes. So, the the The the size is, the more difficult the game becomes. Perfect. Uh and in terms of just the entry then, um before we move on to the chart examples, what would that look like for first red day? How do you look to actually site, you know, when’s the right time or how do you go about the entry on the first red day? All right, so let’s go into the intraday of the very last day of multi-day runner. So, once we have uh the pre-market, then we consolidate and we have reached the dollar amount right here, 3 billion. Um. Then, the first thing I’m looking at is don’t rush shorting on the current day because it can do something like that. I’ve ran into that type of situation before, so you get You think it’s going to break its dollar mark and you suddenly it does a fake out and crashes down. So, uh on the very first day, once it reaches uh only sizing maybe 1/4 of your positions. The reason why is momentum doesn’t likely to shift uh when the volume is extremely uh extremely high. So, you’re waiting for the second day because second day tells you the stock is going to drop. Now, the reason why is apply into the bounce short concept because during the bounce short concept is on the intraday volume, you are not going to compete with the resistance volume. There’s more people selling apples than current day buying apples. Mhm. Um. Now, it’s the same concept after we go into the the second day is and in during in the pre-market, the volume trades significantly less. Maybe even uh So, let’s say on this day traded it uh 200 million volume. In the pre-market, only traded it a 7 million or maybe even 5 million. So, by volume estimate, you are not going to compete with the 200 million on the previous day. The volume ratio becomes significantly different, becomes 4:1 or maybe 3:1. And this is where we’re entering the first red day? This is This is the prior day. Yeah, this is where we’re entering the first red day. Got you. Uh ideally, majority of time, you sure not going to see bounce. So, um so, you kind of have to calculate the reason why we sizing 1/4 is to bring up your average by sizing in at most most at the open because ideally, you want to size at the bounce because you really minimize your risk, but uh on average criteria samples, I don’t even see and uh the bounce that happens in at the open. So, uh pay attention to this gap because this is where your risk is by risking the consolidations and you just ride it the way down. Um I took typically the the this range is pretty wide, maybe between like 10 to 15%. Mhm. But, winning percentage on this first red day can get up to up to 90%. So, Wow. uh you can really push size and uh that um I have seen some tickers that push into the resistance but still fell. So, the winning percentage is extremely high. It’s worth the risk. Yeah. So, So, you put a stop loss above the consolidation. If it’s at a spike, would you put it above the spike or just still above the consolidation? around the consolidation. Got you. So, yeah, and then entry-wise, you got 1/4 of a position here and then on the bounce, you’d look to size in the remaining of the position, which in essence could be around a similar area or just just short of that. Correct, yes. Got you. So, for all the new traders out there, um uh I mean, I I have grown from a a new traders from trading for almost 10 10 years plus now. Um make sure that whenever you are designing a strategy, it’s fundamentally tied to either human psychology has to be logically make sense. Uh if it doesn’t If somebody give you, let’s say, follows the criteria of uh this one has to meet uh uh a certain criteria that doesn’t make logically or psychology in sense and then the strategy is not not going likely to work. And also, if you want to be consistent profitable, test the strategy by yourself first. Uh yeah, that’s very important. So, uh in this video, I’m going to cover three specific patterns for gap up short, bounce short, and first red day. So, uh I’m going to give example for each uh to show you guys um what to look for on first red day, gap up short, and and bounce short. So, let’s go over on the first one, uh first red day. Uh so, specifically, you can go in in the first of all, you want to look for some parabolic action. So, that the price trend is speeding up and it’s trading more volume on the previous day. And on the third one, which is very important, is you need a consecutive green days. Uh at least three days. So, 1 2 3 4 5, but you can see on this day is red day, so it makes it really difficult to predict um the following red day. So, for the first red day, uh it is that you spot the first red day and you short on the second day. So, let’s say you spot the first red day, you had a 1 2 3, so it closed red, but on the day it was green. So, now it still fits the three day consecutive green day candle. Uh then going to the following day, if it’s green, then you do not want to short it, you want to stay away. But if it is red, yes, you can. So, for this case, it has one, and then if it had a red day in between, uh then it does not count for a first red day. It needs to reset for another three consecutive green days. So, one and two and three, so this one closed red, but it was green during the day. So, it closed red and after open it gap down, so it’s for sure that during the day it’s going to trade in red. And for on the following day for silver, this is a very good trade on for potential first red day pattern. Um as long as the first red day doesn’t crash over 50% of the entire gain. So, in this case uh the entire gain started starting from $50. If you do a range, this is the whole run up and it gap down to here. So, the 50% is actually here. So, it’s still there’s still about a bunch of reward after the open, so you shorting around 92 93 issues still doable. Um personally, uh I think I got scarred but attempting to short one here. I probably one here that I wasn’t really really focused on first red day pattern. So, I made two mistakes on those two, so got scarred. You want to take more losses on silver that I did not catch this first red day. But this is a classic first red day pattern. Um so, three conditions. First of all, look for a parabolic action. Second, look for uh a three consecutive green day that volume has to pass each on the previous day. Now, uh if you want to go into detail, then you want to um you can see the volume is actually decreasing from the previous day but it’s trading a higher price. So, the actual dollar traded volume is bigger than the previous day. So, the the standard is the dollar amount. Uh so, the average dollar traded on the day times the volume has to be greater than the uh volume times the average price traded on previous day. And so, that’s the three conditions for first red day, and also make sure that the range is suitable for shorting on after the first red day. Um there’s not a specific market cap range because it works on pretty much all market caps. So, for and ideally, it’s much better to predict uh on small caps. So, uh small caps can three consec- consec- sorry, consecutive green day uh with at least 300% range from the initial breakout, then it is doable, and also qualifies for the first red day pattern. So, that’s the example for first red day. Then, let’s talk about a gap up short. Uh specific gap up short um there’s all different variations of the gap up short. So, let’s talk about bird first. Um Now, one of the reason why gap up short it doesn’t have a high winning percentage is a lot of people tends to short on a ticker that’s very crowded. So, uh on bird specifically, this one traded about I think it’s around 70 million shares in the pre-market. Uh there’s one condition that if a ticker trades more than 50 million volume before the market open, it is ideally not tradeable using gap up short. So, majority of the gap up short if it has strength at open, it will spike up and goes into a consolidation. That’s right here. Um then you can see it squeezed all the way up. So, if the ticker is really crowded, and it traded like 50 million shares before market open, and it’s ideally going to trade a couple hundred million shares throughout the day. So, before 10:30, if you are trading uh 150 million shares, there’s going to be another 150 million shares going to trade after after this consolidations. So, the majority of the time it tends to not work on the breakouts. So, on the shorting the breakdown, sorry. Um once the crowded day is over, going to the following day, if it gaps down, the volume will dry up. That’s where your shorting opportunity opportunity tends to appear. But, this is one of the examples you do not want to use gap up short on. This is one of the gap up short pattern. The initial spiking point is um $3. So, it got all the way to nine, and when it spiked up, it pushed through the pre-market consolidations, and it topped out around 12, and fade all the way back down, of course, in the following day, if it back down again. The only reason why this one didn’t fade all the way back to four is the float is too low. So, if the volume trades very crowded, if it trades over it’s relative. So, it’s a it trades it’s 30 million volume, it’s already very high for a float that’s around 700k float. Um ideally, if float rotates more than 15 times, it is not very ideal. So, um this is generally crowded, so the reward will get reduced on gap up short. But, this is the one of the variations on gap up short is EEIQ. If the float is really low, you want to wait for a clear um signal for it to short. Specifically, on something that it drops 50 50% from the the top the imbalances that’s where you short. So, in this case um there’s two method you want to go with this. So, first of all you want to spot the float. Let’s say if it if it’s under 2 million it’s considered to be a very low float on nano float if it’s trading on very uh dense volume um over 15 times of the float rotation. After the clear signal of 50% pull on the bounce this is where you enter. But, if the float is around 5 million or 10 million you can try to short against the pre-market high and that’s where it tends to top. So, this is there’s about two ways I go for a lower float to a higher float. The gap up short there’s a bunch of details that involved based on the float amount. Uh if the float is a about if between 3 to 5 million then you want to you want to size in but not in full size. If the float is much higher let’s say 7 to 8 million then you can size against the pre-market high by using maybe 50% 60% of your initial position. So, it’s all based on statistics um how low is the float and how much the volume trades throughout the day. And also the lower the float the more dangerous it will be and the lower the float that if it passes a 1 million threshold or one two under 2 million threshold you want to wait for a clear signal that momentum is shifting then shorting into a bounce. So, that’s for gap up short. Uh let’s say bounce short. Bounce short is relatively easy. Um Here is one of the um examples for bounce short. So, this one went from two to six. Trading around 100 million volume going then it test the previous day high trading with much less volume, it faded all the way down. So, first of all, for bounce short, there’s a market cap limitations that ideally works under 200 million market caps, under 50 million float. Um you want to you want to spot that single day candle has ideally more than 100 million volume. And also trading into a consolidations. So, let’s take a look at all of March 30th. So, you can see the consolidation majority of them landed around 5.6. So, going to a bounce short, like if the ticker spikes up, you want to aim for this consolidations as your risk to build your positions and also make sure that sizing proportionally to not let your risk go off the charts. Um then going to the two day later, you had a bounce. You can see it tested it was consolidating around six into resistance, so shorting at the open is not too bad. Uh this is one of the bounce short that happened. It was trading with much less volume. And also you want to do a volume comparison that current day volume estimated has to trade much lower compared to the concentrated volume that traded on the first green day. So, uh specifically for gap up short, you can use gap up short as first green day. If it’s crowded, then you don’t need to not to use gap up short. You can use that consolidation as your risk to short as a bounce short. So, um the patterns tends to work out with each other and helps you to uh some conditions helps you to avoid big losses on the first swing day. Don’t trade the crowded tickers on the first swing day without resistance. Um ideally, if the float rate is more than 15 times, you want to reduce your size significantly. Um Other than that, that’ll be all the examples. Uh gap up short, bounce short, and first red day that happened in 2026. So, that’ll be all. Thank you. I love that. Thank you, Steven. I appreciate that. And no better words to say than after Steven there. So, this has been Chart Phenix. Take care.