OTC Psychology, Frontloading, and why I quit Tweeting entries
Dude can you tweet the ticker please? It needs a boost!
Nah.
The OTC is a particularly dangerous place for a variety of reasons but the opportunities are massive for the exact same reasons, the biggest one is ignorance.
The majority of the new OTC traders I meet on social media are usually already in a tough spot financially and looking for a way out. Sadly many of them don’t understand balance sheets, corporate actions and all the things we hold in such high regard at OTCMethod. They go with what they know and that is social media which is where they usually end up digging an even deeper financial hole.
When I got started in the OTC I had already been trading illiquid securities on the TSX-V for years, which was like the OTC with less volume and no social media component (iHub etc.). I was also in the habit of scanning for volume instead of price action because I was coming from a place of no volume. I eventually found myself networking with well known traders on social media that were intent on showing me how it all works in the OTC. One trader I met was running a group that “allowed” me to get in on the ground floor of the hottest .000 runners and I was interested to see how it all worked. On the day of the big alerts (which seemed to be the same day that I bought it) I might see a one or two tick gain and then on to the next one. I reached out to the “leader” and said I felt the alerts were poor quality at which point I was upgraded to another group that had actually received the alert earlier than the group I was in. He explained that this is how the OTC works, you need to prove your loyalty and work your way up to be part of the top group. The leader enjoyed my ability to create top class DD out of long defunct securities and invited me to the A team if I could supply a ticker that I thought could run. I said I had one and was let into the Twitter chat. When I joined I was found a group of four people bidding on long defunct .000 securities, picking away at the bid and ask of different tickers so as not to set off any alarms on any scanners. I got to work on my DD and created a plethora of information about what might happen if the company came back to life, the bid/ask was .0002x.0003.
The time finally came for the A team to pick a ticker to run and they passed on my suggestion. Instead they chose one that had a 4x fatter share structure. When I asked why they wouldn’t use my pick they said it was because they couldn’t get a large enough amount up front, and the more bloated trip would be better to create a larger gain out of via frontloading. I insisted that their pick was poor and they could not create a big run out of it to which the group leader responded “I don’t care, all I need is a tick”. I never purchased the team pick and watched how it worked, the group leader successfully managed to get 3 subordinate chatrooms to buy tens of millions of his .0001s off the ask at .0002.
If you know anything about me, you probably know I am not much for respecting authority or accepting the status quo so the next day I decided to unleash my DD on every single subordinate room all at the same time with no frontload on my part or anyone else’s. This led to a 2 week run of 950%, .0002 to .0021. It also led to my getting kicked out of A team, and blocked by many of the people in the subordinate rooms at the request of the group leader. I was stunned by the fact that these people would block me after a run of that magnitude, why couldn’t they see I was the best at finding the heat? This gets me to the herd mentality of people trading the OTC and cults. These people were true believers of their group leader and what I did was disruptive to the peace of their chat room.
Maybe a year later I was finally confronted by my first ticker cult, I won’t say the ticker but they had set up a pump and dump so intricate that it spanned multiple chat rooms and social media outlets. It included a charismatic group leader in every social media outlet, people competing to show how many shares they could accumulate, ticker themed merchandise and supporters that would go out of their way to discredit anyone that dare speak ill of their ticker. Being the fun person I am, I set out to prove it was a bag and spent months trying to show true believers that they were buying a pump and dump and that they would lose everything. 2 years later it has had 2 reverse splits and left a wake of bagholders that will never return to the OTC.
As much as you may have read that as being triumphant, it was not. It was an exceptional waste of my time, and led to me creating enemies out there that remain hateful toward me to this day. I cost myself valuable time on earth trying to speak to people that didn’t want to hear it. They liked being in that community, they liked identifying with others that believed in the same cause they did. You can’t help people that do not want to be helped which is why I no longer set out to prove I am right, only to make money the right way and hope enough people notice.
So why don’t I tweet entries anymore? The answer is buy-in. Most of the people you see tweeting entries are either pre-loaded on it or baggy on it and your average Twitter trader knows it deep down. So would generating volume from people that did not do any DD and will dump at the drop of a hat for the next shiny thing they find be a worthwhile enterprise? Nah. Would tweeting an entry to people that instantly skeptical of my motive do anything to help my cause? Nah.
My goal is to find tickers with catalysts that people find and buy on their own, these run the hardest. As I continue to grow and evolve as a trader I am able to see right through the motives of traders on social media which is why I don’t know them. This isn’t to say my motive is pure either because I am motivated to sell subscriptions to OTCMethod, but I am a true believer because I feel I am selling something positive.
