With High Risk Comes High Reward

Risk and reward are bound together.

You can try and try to separate them. You never will, okay? Everyone wants some trade that has almost no risk and the reward is through the roof. Good luck finding it.

Wall Street tried to buy my market-crushing secret.

But I’m NEVER selling. Here’s why…

The Big Picture

If you think you’ll find a trade with no risk and high reward, I wish you luck. You’re going to need it. You’ll be Ponce de León looking for the Fountain of Youth ‘til the day you die.

Now, if risk and reward are directly connected then…

High Reward Comes With High Risk

The higher the risk, the higher the potential reward and vice versa.

Maybe that style of trading does not work for you. But if you want a +1,000% or +2,000% runner? It’s probably going to be pump-and-dump. And right now, it’s probably going to be a Chinese pump-and-dump. That’s all there is to it, okay?

But be aware that there will be another Inno Holdings Inc. (NASDAQ: INHD):

The empty candles on the June 8 INHD chart above was an intraday volatility halt. What you can’t see is that it halted again in after-hours. It hasn’t traded since.

What Happened With INHD?

Now, if you’ve been paying attention, you know that there are no volatility halts in premarket or after-hours. But there are other types of halts.

On that day, INHD got hit with a T12 halt. What does that mean?

It means the Nasdaq Stock Market halted trading and asked for additional information from the company. There will be no more INHD trading until the company satisfies the request for information.

So, if you were trading INHD that day you could’ve made a killing if you were lucky enough to get out.

But if you got caught in that T12 halt? You’re holding a stock that may never trade again.

There’s a temporary restraining order against the company. It’s been six weeks and it could go on for months. Inno Holdings could get delisted and end up on the OTC markets. Or go bankrupt.

Now, I don’t say any of this to be a doom-and-gloomer. We trade penny stocks because they are volatile and high reward. But we always keep in mind that risk and reward go hand in hand.

So, what happens when the next INHD comes, especially if it’s another Chinese pump-and-dump? Then it will come to a grinding halt, okay? This happens. These pump-and-dumps go wild for a while, then there’s an INHD and it grinds to a halt.

My Take

To be honest, I was surprised that INHD didn’t stop it. When it got halted, I thought the Chinese pump-and-dumps would just disappear.

But here we are. This week alone:

• Zhengye Biotechnology Holding Ltd (NASDAQ: ZYBT) spiked from $0.65 to $11.35
• Zhongchao Inc (NASDAQ: ZCMD) ran from $1.48 to $11.96
• China Pharma Holdings Inc (NYSEAMERICAN: CPHI) went from $0.88 to $19.19

All three came crashing back down. Both CPHI and ZCMD punched believers in the gut with offerings.

There will be another INHD. The reaper is coming, okay? At that point, everyone will get freaked out and the Chinese stocks will die. At least for a while. Until then, trade them. Or don’t. And as always, trade the chart, not the stock.

Watchlist

Sky Quarry Inc. (NASDAQ: SKYQ) is one of those stocks that just keeps trying to break through resistance but can’t seem to get there. When they do, they react violently.

SKYQ tried to break the $4.75 resistance four days in a row. Yesterday (July 23) it was a clean breakout and $4.75 held on the pullback. As I write, major resistance (MR) is at $6.20.

On My Radar

Let me tell you a quick story. There’s a trading lesson here if you read between the lines.

Last year, when Ella Langley’s song “Never Met Anyone Like You” came out, I sent it to all the girls in the family group chat.

“Hey, this is a great song. Check it out.”

My daughter came back with “Do you want to go to the concert?”

I’m like “Heck yeah!”

So, my daughter is squared away, an amazing organizer. She organized the whole thing. I financed it but didn’t pay any attention.

“Get the tickets, the hotel, whatever. I don’t care.”

So, we pull up to the concert. It’s six girls and me in the family. We pull up to the concert and…

“HARDY? I thought we were going to see Ella Langley.”

Now, I love HARDY and it was a good concert, but not what I expected.

I got catfished by my own family.