There Are Very Few Old, Bold Traders

“There are old traders and there are bold traders, but there are very few old, bold traders.”

That quote is often attributed to legendary trader Ed Seykota. Regardless of its origin, there’s a lot of wisdom packed into that one sentence. This one is for the cowboys and gunslingers…

Today Is Money Monday. Are You Ready?

Prepare for Next Monday Starting Today

The Big Picture

Every morning during Pre-Market Prep we watch stocks go straight vertical. Some of these stocks spike +100% (or more) in a few minutes.

For example, on Thursday (August 27), Propanc Biopharma, Inc. (NASDAQ: PPCB) ran from $1.47 to $4.38 (+198%) in about five minutes.

Now, you might think that’s very exciting. Like, this is what you got into trading for, right?

“I’m going to pick the one, the 100% winner, bet my entire account, and ride off into the sunset…”

Some people get a little bored with what I’m about to share, but the gunslingers need reminding…

Never Participate In the First Move

Now, you can if you want. If you’re a gunslinger, there you go. But I NEVER participate in the first move for two reasons:

1. So many of these stocks present second opportunities that I don’t need to be impulsive. I’ve been burned on that, and quit doing it 15-plus years ago. I prefer to let stuff set up, okay?
2. It’s important, as a mentor and a coach, to enforce that behavior and help you avoid getting caught up in emotional trading.

I joined Chaser’s Anonymous years ago. I learned over time that there’s no need to rush and no need to chase.

I can just wait.

If the stock doesn’t initiate an RCT, or hit an Oracle signal, or doesn’t do a dip-and-rip, or afternoon VWAP hold, then just leave it be.

Let’s take another look at PPCB. This time, I’ve added the RCT and the premarket high, which was also the day’s high:

Now, if you’ve read the RCT series, you know that’s either a small win or, more likely, a small loss.

You could’ve taken a little under 1:1 reward-to-risk if you were fast and got the exact top. But most traders who attempted it would’ve stopped out.

So, does that one chart mean the RCT doesn’t work? Or that it would’ve been better to chase?

No to both questions.

The Trade Plan Protects You

As long as you followed the plan, the RCT would have protected you from taking a huge loss. Why? Because the pattern includes a built-in stop loss.

For what it’s worth, PPCB put in the RCT a little late for my liking. I love to trade ‘em between 7:00 a.m and 9:00 a.m. ET, but that was cutting it close. Again, you could’ve taken the small win or small loss and been done with it.

Cowboys and gunslingers? They would chase, buying wherever they could because “this one’s going to the moon.” Then they’d ride it all the way down and off into the sunset, holding the bag all the way.

My Take

My approach is conservative. That is, people consider it boring. They consider it too safe. But guess what?

Who’s here 20-plus years later?

The boring, safe guy.

I’ll still be here years from now. You get to decide, you take your trades.

Watchlist

The day before the SpaceX (NASDAQ: SPCX) IPO, I heard stories about people taking out loans to buy shares. It gave me anxiety. But that’s what happens when the animal spirits get involved. Those who bought the mania were a lot like the cowboys and gunslingers.

Here we are 3 months later and SPCX is starting to base in the $130s and $140s:

I think it’s a smart time to consider buying SPCX because the mania is over.

It has support at $130. If it keeps basing in this range, look for it to hold above $140 and $145. A breakout over $150 could signal a bigger move up.

On My Radar

• A fast, fun read about legendary trader Ed Seykota
• He was featured in the original “Market Wizards” by Jack Schwager
• Look for August Non-Farm Payroll numbers on Friday (September 4)
• Get caught up with last night’s Sunday Market Brief
• Get the Night Tape watchlist from Tim Sykes here