Small Things Pt. 2

It has been a while since my last article and the only explanation for it is that I don’t work hard enough, never have. Based on what I have been told about myself, I wouldn’t know how to be a hard worker if the situation where I needed to do so arose. Some of this may be old news for longer term members, but some of it may surprise you.

Let’s jump into a bunch of topics with frequently asked questions or “FAQs” that could be on your mind.

Share Structure Questions:

Before I jump into these, the general rule is that a company is split into a certain amount of shares and these shares are the “AS” or Authorized Shares. The company then hands shares to people in return for cash or as share awards or compensation, at which point those become “OS” or Outstanding Shares. Those shares are then dumped on to retail traders (you and me) which in turn become the “Float” which are the shares that are currently available to people like you and I. Shares being sold into the float from the OS is dilution.

Sir, I am trying to count out the amount of shares that are left to dilute, I saw that yesterday they traded X, the day before they traded X, how can I find out how much is left to dilute?

• You can’t and you will never be able to know, trying to count daily shares is spinning your wheels. You are trying to look at shares that are traded on a daily basis but you will never know how much of that is the same shares being traded between retail traders and how much is dilution. If you feel that the AS, OS and Float are starting to look similar the ONLY indicator for an end to dilution is price action and we measure price action with our KST (or MACD). If dilution is coming to an end, a zero line cross of the KST (or MACD histogram entry) will be your first hint that supply has dried up and demand has been increasing.
• Sometimes you will see me look back at how many shares have traded over a period of days but the number I come up with is just trying to get a rough benchmark of how many could be diluted and to do that I just assume a worst case scenario that all the volume is dilution and compare that to the OS.

Sir? Can a company raise the AS without a filing? What is the filing?

• An AS raise happens one of two ways. First is a SEC reporting ticker, they will need to file a Pre14C or Pre14A showing their intent and their need to get shareholder approval. You may think that it is up to shareholders but it is not, Preferred Shares represent one share that could be many many shares which will allow the company officers to push it through. Once they raise it, the Def14c or Def14a will show that the deed is done and they have many more AS shares to hand out to people. We have seen one or two cases where the SEC reporting ticker raises AS the next way I will detail below, this really is against the rules and I don’t get anywhere by basing my decisions on low probability outliers.

• The second way is on a Pink-Only ticker. A Pink-Only ticker is a stock that has filed 15–12G with the SEC to avoid having to report audited financials to the SEC and instead chooses to file only with OTCMarkets. These filings receive almost zero scrutiny and there are almost no repercussions for fudging them. These companies raise their AS on the SOS. The SOS raises will show as “Amendment” or “Common Amendment” or some variation of that term depending on the state. Assume that when this hits the SOS it is already complete and they are handing out shares to dump. Even if they have not dumped it yet, retail traders will be selling anyways so it is a lose/lose.

This stock just had an AS raise sir but it still seems thin and they haven’t dumped a lot yet, could be good for a bounce amirite?

• No. Just no. Move on. It is over, it is cooked, finished, finito, donezo. The probability of this being a successful trade is so low that your time is best spent elsewhere. Forget about it because this is a bag. Even if they aren’t dumping it yet nobody else wants it, your peer group will not take the risk. Anyone telling you it is a buy is bagholding it after being caught off by the raise and you should re-consider your circle of friends.

Styles of Trading

I am very busy with my job sir, I am working and I don’t have time to tend to these stocks all day long what can I do?

• This is a very big question that comes up often and it is very rare that anyone enjoys the answer but here goes. OTCMethod is a large community and there are a variety of traders within it, many are full time traders that have the luxury of being at their computer all day, others work a job that allows them to be at their computer all day, and others work jobs where they can only check on these things so often. Because of this I present a variety of ideas and it is the job of the membership to select what ideas work for them and their schedule. My schedule is very different because it is the probably the most extremely busy schedule of any person. Some have described looking at my schedule as a “quagmire” others have called it a “cluster frick”, but it is also less busy.
• If you are someone who can’t be checking on your stocks all the time your only hope is to focus on making trades on the 30. This seems like settling for less but it IS NOT, my most profitable trades to date have come from 30s and they always will.
• How do you do this? You keep a list of recently past runners in the past week or two, trades that have done in excess of 500,000 dollars in volume. The reason you need to set the bar that high is because you need liquidity to walk away and do your job, you need to ensure that people care enough about this stock that it will hold up.
• Once you have made this list you watch them for crosses on the 30 and you take them. The tough part is trusting the 30 and not panicking when you see it is red for a few minutes. There is never a guarantee that every 30 trade is profitable but 30 trades can last days and if it has the liquidity we desire you also have up to 2 hours to get out safely after the cross begins to happen. There are disasters that happen sometimes, but that’s trading.
• Overall you must remember that you are trading hyper volatile securities in an illiquid market. The things I have put in place to ensure your safety are the most effective I have seen to date, but we are here for the volatility which means we must be willing to accept downward volatility if it comes as well. If you want guaranteed safety, open a savings account.

Dear sir I would like you to post a list every night of every stock you mentioned in the video and also a list of every possible 30 for me.

No. The reason I don’t do this is because we need to ensure our watch lists are exclusive to the membership, not an image that can be copied and pasted into various chat rooms. In addition to that, the videos are a demonstration of the skill set necessary to find these viable trades on your own.

Scanner/Scanning and DD On The Fly

I want to set up a scanner how do I scan properly? Then if I see something on there what do I do? I would like you to detail the entire process here, and this is totally a real question someone asked.

Right off the bat, I don’t know how your software works, I have never heard of your software and I don’t know how to adjust your settings. I don’t know your software. I have never used it before and new software comes out every day so if you need help programming it you should speak to the person that made it, and I guarantee I don’t know that person. My efforts are high level principles.

Everyone scans wrong, they scan for the wrong thing. We have been taught to scan for volume since the dawn of scanning but what is volume? How important is it? Why are you scanning for it?

Here is a slice of the list of the stocks on the OTC with the highest volume for April 9, 2020:

Bags

The only thing you are achieving by scanning for volume is scanning for things people already know about or hardcore dilutive bags. What you need to scan for is Price Action or New Highs/Lows.

Why price action instead? I choose price action because I want to know what is happening now, what is moving not what is getting dumped on. I am trading because I want movement, I want to make money and the only way to make money is by seeing price action. So show me price action!

If something really special happens to a stock people need to buy it higher and higher to get a piece and those with shares already are pulling away and making them take it at higher prices. The way I scan is very simple, here are the settings:

Price Action is Key

The issue now is one of liquidity, and one of setup quality. I need to be able to roughly calculate how much money is into something by looking at it. I can see FDEI for example there only has $100 in it, does that make it a bag? Not necessarily, maybe that is the first buy coming in on a massively exciting catalyst and I am seeing the beginning of something very special. This is the moment you put your steps to work!

I immediately work the flow chart, I check the OTCmarkets.com profile, I check if there have been filings, if no filings is there news? If no news is it SOS active? If not SOS active it is 9.9999/10 times a bag. There are outliers but in this case you have TONS of time to do DD.

If SOS active I check the website on the OTCMarkets profile for something new, if I can’t tell it is new I use the WaybackMachine at https://archive.org/web/ to see if it is new or old. If it is old or the website is dead then it is done, I never think about it again. If it is new or the WaybackMachine can’t find a record of it before I will look at the daily chart, see if anyone has bought this before, if so I will run a cashtag search on Twitter to see if someone pumped this before. If it is a bare chart, and never pumped before you could be on the cusp of something very interesting. Then you have to learn to discern how interesting? Is it weed stuff? Does it just say “Coming Soon”? If there are no filings, no news pieces, no activities of any sort outside of a website what is your realistic expectation of liquidity? How does your average trader who doesn’t run these steps find it? They don’t, and you can never expect they will. This is a very niche market and it can’t be treated as anything other than a lotto.

If all steps fail and I can’t confirm with WaybackMachine that the website is new or old I will pass, it is too risky and I could get trapped. Last ditch hail mary pass would be to run a Google news search and see if they won a lawsuit against Apple or something and I would take a lotto size because the ticker is dark.

The entire time I am running these steps I am thinking about everyone else but me, and what will yield real dollar volume. Here is my hierarchy of what brings volume and what does not from top bringer of volume to the bottom:

The bottom two are on my “No Touch” list, not because of a moral issue just that nobody else will touch them and my ability to get money in and out of them is almost impossible. Also the SEC will halt SEC delinquent tickers at will, so it is pretty terrifying.

Sir, I would like a ranking of catalyst quality from highest to lowest.

This is a moving target because tastes change and people change, every video I make is about catalyst quality and how I rank it but that ranking changes as the years go by. You often see once successful traders crash and burn trying to trade the market in a way that worked for them once. You need to be agile, and the only way to be agile is to be on top of price action and dollar volume trends over time.

There are so many other questions to work on, and I will try to be on top of these articles more but I hope this has helped with some of it.