Textbook Trading – Notes and Review of Chapter 8 – OTC Trading by @investorslive

Table of contents:

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I’ll admit this is my least favorite chapter so far and I’m assuming it will be overall. That being said it is not bad by any stretch of the imagination it’s just OTC stuff, especially going long promo’s and washouts is just not anything I have ever done nor am I interested in.


Nate does a great job of explaining the in’s and outs of the sketchy OTC markets for sure though. I think a lot of new traders like to get their feet wet trading OTC and true penny stocks. If you are that type of trader this chapter would be very useful.

The one section I feel could assist my trading is the gap plays. I have tried this from time to time but usually I’m just following other traders out of boredom or lack of plays in the late afternoon. While I’m not sure if I’m ready to try these sorts of plays out yet, I feel I do understand them more and have a better idea of what to look for.


Some of the longer and more interesting discussions revolve around the history of pumpers. I think when this DVD came out and slightly before, these types of setups were working and it was useful to know the pumpers and their ability to move stocks. Not sure if it’s really very relevant right now. Of course it will come back, it always does. I just had trouble focusing a little during some of these since I knew it wasn’t really tradeable info right now.


If you are new to trading though, it is a very informative discussion of how the shady side of trading works. And of course keep in mind this DVD is two years old, so its no fault of the creator that some of the info is dated.


OTC Textbook setups
-Look for levels on intraday but match up with daily
-Breakouts and consolidation
-good risk on breakdown of consolidation
Anticipating Gap Plays
-Bullish chart breaking out
-HISTORY of gapping
-watch at 3:00-3:30 then out first 5-10 minutes next day
-dont’ chase, wait for a pull back
-can get crowded so need to be quick
-need to follow trend
-can often be influence by newsletters pumpers etc
Gearing and perking – risk vs reward
-10X rule instead of $10-$12 – $1.00-$1.20
-old names, but the setups remain
-need to focus on the pumpers with hot hands
-can be hot and cold, even if the last one worked does not mean the next one will
-D rated pumpers
-good to short crappy pumpers vs trying to go long
-good explanation of how pumping works and the psychology behind it
-check history
-good explanation of “splitting lists”
-History and explanation of tickers
-tough to play big on promo’s now
Nice Price is Right video 🙂

OTC Shorts
-Get bought in a lot T+3
-know the shitty pumper
Panic Morning washout

Bounce plays
-Need to recognize blocks
-Need true panic
-big volume

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