For sure the best lesson in this chapter is how to get and set risk. This was HUGE for me, so often I get into trades and say “I’ll risk X” and X could be 10 cents or 20 cents or a dollar, but often its just a number I pull out of my fucking ass.
This chapter gives real time examples on how to set risk like a fucking professional instead of a piker. Its difficult for me to recount them one by one because there is so much detail (2 hour chapter). But you can see in the notes below what tickers are discussed. Nate walks you through winners as well as a loser. And the entire time talks you through his thinking.
I’m only halfway through, so I may say this more than once, but for sure this is a chapter I will rewatch. If you get and set risk properly with a detailed plan, shorting can be “easy” and stress free. If you jump in and out at random times it can be hard and EXTREMELY stressful (even with winners not just losers). I learned a lot today!
Notes from Chapter 4:
Chapter 4 – Parabolic short
Best lesson, how to set risk on shorts.
Short 1/4 into para move
Add into what “looks like” top
Cover into ANY pullback.
Then start to use HOD as resistance
Lower high with set risk against HOD
Looking for wash through LOD
Short pops as long as previous LOD is upper resistance
Cover into dips
Parabolic, speed up relative to previous price action.
Lots of detailed discussion on how to cover into washout and size back in if it peaks.
Thinly traded, “skips up” pre market on light volume
How to create “guide” numbers for risk
Discussion on just closing out vs, holding core and letting it grind back.
Add into whole dollar crack. Good risk to reward on that type of price point.
Look for emotion in gapups/peaks.
How to pick prices for guides.
Good insight into thinking.
Don’t get greedy, take washouts.
Good lesson on minimizing profits and holding to long after washout.
use prior day’s highs as para entry.
good discussion of emotions when getting to big
discussion of sizing on thin stocks
Solid explanation of front side of move, and how to scalp there.
Higher priced volatile stocks, move the decimal place, instead of thinking of GWPH as $70-80, think about $7-8
divide price by 10 rule
Grinding in pre market
Good lesson on adding to a loser
How to watch for ABCD when short, GTFO if it is grinding or adjust size
Pump and dump example