KIDLAT CHRONICLES ​Volume 1

“RUNNER-RUNNERS”

Part 1: Profiting From Upward Momentum

​ DAVIN became a runner-runner for 3 consecutive days after breaking out from it’s previous resistance.
Figure 1: $

Whenever I want to enter a highly volatile stock but wasn’t able to acquire a position before the big
move, there’s one strategy that I always use – momentum trading.

Momentum trading​, in essence, is all about ​riding strong movements – whether up or down​. But since
we don’t have short selling here in our local bourse yet, we usually refer to momentum trading as simply
riding strong ​upward​ moves.

As far as holding period is concerned, momentum trading is often characterized by a “Zero (intraday) to
5 days” timeframe, on average. And the key to successful momentum trading is to get in when
momentum is picking up and get out when it is dying down. It’s profiting from the stock while the
candle’s are green and selling it during (or before) red days. But of course that’s easier said than done.

What’s the difference between momentum and swing trading?

Swing trading has a longer time frame than momentum trading. Usually 2-4 weeks. And includes
corrections and consolidations in between. If you’re the type of trader who doesn’t want to partake
during these price breathers, then you’re a momentum trader.

What is a ​runner-runner?​
A ​runner-runner is simply a stock that makes successive green (or red) candles after breaking out (or
down) from a significant resistance (or support). In short, multiple consecutive green (or red) candles.
This is a clear indication that the stock is under the influence of a strong buying (or selling) pressure.
Trade #1:​ Momentum Continuation on a Runner-runner

March 3 – 4, 2016. $DAVIN, 1 trading day hold. ​34.67% gain​.

Figure 2:

1. Plotted resistance at 3.16.

2. Price breaks out clearly from the plotted resistance and closed strong at 3.47. Price registered a
+19.7% gain for the day.
3. Momentum continued. That’s another +19.6% move. ​Bought ​at the CLOSE at 4.15.

“Wait a second! Isn’t the stock already too high? The breakout candle registered +19.7%. And
today, another +19.6%. Aren’t you scared that it’s gonna go down tomorrow already?”

Here’s the thing, when momentum kicks in especially on runner-runners, it’s hard to stop. Ask
Sir Isaac Newton. Besides, this is just going to be a quick trade right? And to protect us from any
catastrophe, we’re putting tight cut loss points of course.

4. Sold ​intraday at 5.65 with +34.67% profit. Candle closed with wick at 5.36.
Trade #2:​ Momentum Continuation on a Runner-runner

March 4 – 7, 2016. $DAVIN, 1 trading day (weekend) hold. ​17.92% gain.

1. Plotted All-Time High (ATH) resistance.

2. Price breaks out from ATH resistance. ​Bought ​at the CLOSE at 5.36 [+29.2%].
3. Sold ​intraday at 6.39 with 17.92% profit. Candle closed at 6.33 [+18.10%].

My strategy for these two trades were simple:

a. Buy at the CLOSE with significant position size if the candle is green.
Since these were runner-runner plays, I’m buying at the close for possible upward momentum
continuation the next day. If I will exit at 5% gain, that’s okay because I have a significant
position size. If the market decides to give me more than 5%, then much better.

b. Sell intraday the next day if I see weakness in momentum.

Since my entries were already classified as high risk, my core exit strategy was to get out as soon
as I see weakness in momentum. It may be a price or a Moving Average support breakdown. Or
if profit objective (%) was already met.

This strategy works well if you can’t monitor a notorious stock by the minute throughout the day. I was
swamped with mid-day appointments during the two trades above. My objective was to sell in the
morning session before I head to my meetings. And in the afternoon, I just checked the closing candle
and opened a position again if it matches my buying criteria.

Part 2: Profiting From Downward Momentum

When trading downward momentums, the first play that comes to mind is the ​Bounce Play​. The core
premise of this setup is simple: ​There is no such thing as a straight drop. If the stock is falling there will
be rebounds along the way. What we want is to profit from those rebounds.

But take note that it’s far more different from trading upward momentums in a sense that you’re
rooting for a falling stock to recover after hitting a temporary support. In other words, ​you’re trading
against the trend​. This is more risky of course because the bearish bias is strong. But if executed well, it
can give you enough profits in a short period of time.

My key ingredient to trading bounce plays is this: ​Get in and get out early and don’t hope for
skyrocketing profits.​ Don’t be blinded by the ​Illusion of Bagger​. Always align your expectations with the
play at hand. If the bounce is over just accept it, let go of your position, and move on to the next trade.

Trade #3:​ Intraday Reflexive Bounce Play

March 8, 2016. $DAVIN, Intraday hold. ​+8.24% gain.

1. $DAVIN hits resistance at 6.50.

2. Traders started to sell their positions causing the stock to plummet. Time to look at the minute
chart!

3-minute chart of $DAVIN

1. Plotted major support in confluence with 100-MA.

One very critical part of any bounce play is the ​previous breakdown​. Before excessive selling
pressure comes in, price needs to break down from a support first. Always know where the price
came from – or its ​Point of Origin.

Why is this important?

The point of origin will dictate if the drop is going to have a strong downward momentum or
not. Strong drops call for strong rebounds. If it came from a major support breakdown like the
100-MA or a long sideways action then expect a violent bounce when it finds a temporary
support.

You’ll easily see if the trade is worth the squeeze or not. If the drop lacks strong downward
momentum (or long red candles), it’s not worth catching. If the potential bounce won’t be that
high for you to gain enough profit from it, then why take the risk?

I want to stress again that bounce plays are a ​contrarian setup​. You are fighting against the
prevailing trend - which is downwards. This violates one of the golden rules of trading: ​The trend
is your friend.​ The chance of losing is greater than the chance of winning. So be extra careful.

2. Price breaks down from identified support. Strong downward momentum ensued.
3. Plotted parallel support as potential temporary support for the bounce.
 4. Price rebounds at the identified parallel support at an oversold RSI. Objective was to profit from
the bounce while the stock forms the right shoulder of a ​Head and Shoulders pattern. ​Opened ​a
position intraday with an average entry price of 5.22.
5. 100-MA and RSI-70 resisted the price. ​Sold ​intraday at 5.70 with +8.24% profit.

Trade #4:​ Regular Bounce Play

​ 7.63% gain.
March 9 – 11, 2016. $DAVIN, 2 trading days hold.+ 1

1. Downward momentum from the previous candle continued the next day causing the price to
drop intraday. It recovered as the day progressed. ​Bought ​at the CLOSE at 5.55 [+8.2%] after
successfully creating a bullish reversal candle.

Regular Bounce plays normally have a ​3-day timeframe​: (a) Day 1 - The actual bounce, (b) Day 2
– The Momentum Continuation and, (c) Day 3 – The Resistance Hit. So, if this is only Day 1 of the
bounce, basic strategy dictates to hold my position until Day 3.

2. RSI-70 acted as support for the bounce.

3. Upward momentum continued. HOLD.
4. Sold ​on Day 3 in the morning session at 6.60 with +17.63% profit. Candle closed red again at
5.71 [-7.9%]. It also showed a failed breakout attempt from the recent high. A clear indication
that the bounce play is already over.
 * * * E N D OF VOLUME 1 * * *

KIDLAT CHRONICLES ​Volume 2

“THREE DAYS TO KILL”

Classic Bounce Plays usually have a ​3-day timeframe​. It’s always a “​get in, hold, and get out strategy” for
Days 1, 2 and 3 respectively. Of course there are variations to this as far as time frame is concerned (e.g
2-day, 4-day, 5-day bounce plays, etc), but for this issue, I’ll just focus on the classic 3-day bounce. The
precursors or what happens before the bounce won’t be discussed here. Figure 1 shows a classic 3-day
bounce play on $IMP. I’ll make this stock as my canvass for this discussion.

Figure 1:​ April 27 – 29, 2016: 3-day Bounce of $IMP from 11.60 to 27.90.

DAY 1 - SUPPORT HIT

The “Buy Day”. This is usually the day when price hits a particular support. It’s the ​lowest candle of the
bounce.​ Every falling stock has to reach a temporary support at some point. What we want is to be there
when that happens. The more established the support is, the better. This support could be a previous
Darvas Box, MA, Fibonacci Retracement level or a combination of any of the three.
 Figure 2:​ April 27, 2016. $IMP bounced near 76.4% Fibonacci and 50-MA.

Early set of buyers come in especially the ​bottom fishers.​ The perfect setup for this is when the candle
shows a sign of reversal like a strong green candle, Doji, Morning Star, Hammer, Bullish engulfing, Bullish
Abandoned Baby, etc (ask Google for more bullish reversal candlestick patterns).

Buying on EOD
If you want a defensive approach you can opt to buy on ​EOD (End-of-day)​. Traders live under the
impression that the ONLY buying window in bounce plays is at the lowest price (or near it) of Day 1. And
if they fail to get shares within this window, they’ll just don’t enter the trade at all even if the setup is
still intact thinking that they’re already too late for a picture-perfect entry.

You don’t always need to buy at the lowest of the lows. Sometimes, it’s best to wait for a clear sign of
reversal first before entering bounce plays. Besides, remember that this is only Day 1. If the stock will
continue to ascend til Day 3 you still have a lot of room for upside. So technically you’re still buying at
the lows. The only thing that you need to ensure during this day is to get shares!

DAY 2 - MOMENTUM CONTINUATION

This is the “Acceleration Phase”. First day was such a success that momentum continues in Day 2. Price
rallies as new set of buyers join the fun. Buyers out-number the sellers. Those who were able to buy on
Day 1 won’t usually sell on Day 2 to avoid ​selling prematurely.

However, entries in Day 2 are somehow LATE already. So be extra careful. There are bounce plays that
end in Day 2. Just manage your expectations and look closely for possible resistance hits. Monitor your
trade by the minute. Treat it as your consequence for failing to buy on Day 1.
 Figure 2:​ April 28, 2016. $IMP accelerated on Day 2 closing at +49.8%.

Confirmation Day
Day 2 is also critical as it confirms the bounce signal that occured in Day 1. For perfect setups, it should
close above the HIGH and the CLOSE of Day 1. The LOW of this candle should also be higher than the
previous day’s LOW creating a Higher Low. And ideally should close at the top 25% of the candle’s range
(strong close).

DAY 3 - RESISTANCE HIT

Day 3 is usually the “Sell Day”. Buying on Day 3 is a SUPER LATE entry as traders who entered in Days 1
and 2 are already taking profits. This is also the day when price hits an important resistance. It could be a
previous Darvas box, MA, Fibonacci retracement level, or a combination of any of the three.

Figure 3:​ April 29, 2016. $IMP closed at -17.4% after hitting resistance at 38.2% of Reverse Fibo.

TRADING $IMP
Let’s look at how I traded this 3-day bounce on $IMP. Below is a story of three different trades in three
different ports in one major bounce play setup.

Since this is fast moving stock I used the 3-minute chart to properly time my trades. And used basic
Darvas box principles for my entry and exit strategies. This is what $IMP looks like in the 3-minute chart
from Day 1 to Day 3 of the bounce:

Figure 4:​ April 27 - 29, 2016. 3-minute chart of $IMP with plotted Darvas Boxes and 100-MA.

TRADE #1: BOUNCE PLAY

April 27 - 29, 2016. 2 trading days hold with ​+94.32% gain.

 This trade was from Day 1 to Day 3 of the bounce.

1. I needed to see some sign of strength first before I considered trading this notorious stock. This
was the HIGH of the previous day (April 26) valued at 14.02. I made this as my ​trigger​.
2. Price broke out from previous day’s HIGH and reached 15.00 [+22.95%]. My objective was to
catch it on retracement.
3. I used Fibo to find a good support (check Figure 5). Price retraced til 14.00 [+14.75%]. ​BOUGHT
at 14.10 in the next few minutes using ​Port #1​. My objective was to ride the bounce til Day 3 as
much as possible. Tight cut loss point was set below 14.00.
4. SOLD my position in the first few minutes [9:36 AM] of Day 3 (Apr 29) at 27.70 with +94.32%
profit. There were two main reasons why I sold at this price. First, the previous candle was a
ceiling. Ceiling play dictates that massive selldown is expected the next day. So better get out in
the first few minutes of trading. Secondly, it’s the 3​rd day of the bounce and if you look at Figure
3 above, it shows that there is resistance at 25.12 which happens to be the 38.2% level of
Reverse Fibo. Any sell above this price was considered a ​good sell​ for me.
 Figure 5:​ April 27, 2016. Price found support at 38.2% Fibo in the 3-minute chart.

TRADE #2: INTRADAY MOMENTUM PLAY

April 28, 2016. Intraday hold with ​24.74% gain.

This trade was executed intraday of Day 2 of the bounce.

1. Price broke out from previous day’s HIGH indicating that the momentum from previous day is
going to continue.
2. Price retraced shortly after breakout to test old resistance as its new support. Plotted new
Darvas Box. ​BOUGHT ​on breakout at 18.00. Given the fact that this is the Acceleration Day and
that this stock can make wonders, I entered using ​Port #2 to exploit this opportunity. But the
trade objective for this one was to sell ASAP. Momentum might die down any moment turning
the supposedly 3-day bounce to a 2-day.
3. Price peaked early in the day [10:24 AM] reaching as high as 22.80 or +41.09% (less than 10%
from ceiling!). Strong price actions like this in the morning session indicate that it’s bound to
retrace soon. ​SOLD​ in the next few minutes at 22.70 with a +24.74% profit.

TRADE #3: CEILING PLAY

April 28 – 29, 2016. 1 trading day hold with ​+35.64% gain.

 This trade was from Day 2 to Day 3 of the bounce as a Ceiling Play.

1. Consolidation at the Highs setup formed in the minute chart. ​BOUGHT ​inside the box with an
AEP of 20.29 using ​Port #3​. My objective was to ride the momentum as this was already a ceiling
candidate at this point.
2. Price peaked at +41.09% early in the morning [10:24 AM]. As soon as I saw this, I knew it’s going
to retrace soon. That’s why I quickly -
3. Set a trail stop at 19.02. The bottom of this box.
4. Momentum in Day 2 of the bounce was sustained and closed at 24.20 [+49.75%], its ceiling
price.
5. SOLD position in the first few minutes [9:33 AM] of the next trading day (April 29) at 27.75 with
+35.64% profit. For the same reason why I sold Trade #1.

* * * E N D OF VOLUME 2 * * *
KIDLAT CHRONICLES ​Volume 3

“REVENGE IS A DISH BEST SERVED COLD”

​ .70% gain.
Trade 1: January 27 – 29, 2016. 2 trading days hold with +7

Trade 2: Febuary 12 – March 7, 2016. 15 trading days hold with ​+40.32% gain.

Feb 12 – Mar 4, 2016. Bought $NIKL at 4.29 and sold at 6.08 with +​ 40.32% profit.

This is a story of REVENGE TRADING…done right.

For me, revenge trading isn’t really that bad as long as I’m still sane to make objective and sound
decisions. It’s so hard to trade on tilt. I’ve experienced it so many times in the past and I don’t like the
feeling. That’s why I created this rule: “Buy ONLY when I see a buy signal. Sell ONLY when I see a sell
signal.”

What you’re gonna see in this issue is how I traded $NIKL twice, consecutively. One was a momentum
trade and the other one was a swing trade.
 JUST AN ORDINARY TRADE

​ .70% gain.
January 27 – 29, 2016. 2 trading days hold with +7

1. It was just an ordinary day for a breakout trader like me. I plotted the mini-darvas at the wicks
with Box Top at 3.82 and Box Bottom at 3.30.
2. Price broke out from Box Top as RSI crossed above the 30 resistance. ​BOUGHT the breakout
candle at the CLOSE at 3.94 [+15.9%].
3. I plotted previous lower low as my parallel darvas resistance at 4.29 – 4.30.
4. SOLD at the OPEN at 4.29 with +7.70% profit. Price struggled as 20-MA, Parallel darvas in #3,
and RSI-parallel darvas resisted. Not a bad profit for a two-day hold. I’m expecting the price to
go down as it hit the resistances that I previously plotted.

Just like the classic bounce that I previously discussed in ​“Volume 2: Three Days to Kill”​, a classic
breakout trade also comes in three. Day 1 - The breakout day, Day 2 - The acceleration day or
sometimes called a ‘follow thru’, and Day 3 – The resistance hit.

I dunno who invented the ​Rule of Threes but it surely is applicable not just in trading but in real life as
well. Maybe Jesus started it when he rose on the third day. Anyway, I usually apply this in my
momentum and swing trades especially when there’s lots of resistances ahead. But take note that it
works differently when trading All Time Highs (ATH).
 THEN LIFE HAPPENED…

I sold my shares at 4.29 with a profit of +7.70%. After that, price continued to rally as it breaks out from
the 20-MA resistance. It reached as high as 5.30 in 5 trading days and closed at 5.05. If I held on to my
original position my net profit for the entire trade would have been 26.78% (computed from 3.94 to
5.05). That’s a ​+19.08% missed opportunity ​(26.78% - 7.70%).

What a whipsaw. This is where ‘​trading tilt’​ usually occurs.

Tilt ​is a poker term for a state of mental or emotional

confusion or frustration in which a player adopts a less than
optimal strategy1​ ​.

It is a poker phenomenon of playing poorly due to emotional

distress, usually anger, caused by a combination of any
number of events: bad beats, bluffs gone awry, long stretches
of being card dead, losing a series of coin flips, losing to a
perceived lesser player, or just reacting badly to something
said by another player2​ .​

Trading Tilt usually occurs after a series of unfortunate events. Like losing streaks, cutting losses,
multiple whipsaws, missed opportunites, etc. I’ve experienced trading tilt so many times in the past. To

1
​https://www.seeitmarket.com/recognizing-trading-tilt-13767/
2
​https://www.cardschat.com/tilt.php
counter it, I’ve created this simple rule: “Buy ONLY when I see a buy signal. Sell ONLY when I see a sell
signal.” With emphasis on the word ‘only.’

It keeps me sane.

Needless to say, this rule saved my port from multiple disasters. It allows me to make an objective and
sound decision every trade. It also prohibits me from chasing prices. Ultimately, it allows me to stay in
the game.

I don’t care about missed opportunities anymore. I realized that plays will just come and go. There’s lots
of them. Like a sea of tulips in a flower field. Everybody knows that they bloom each year. Without miss
for the past one thousand centuries or so.

On the other hand, if I lose my ​sanity​, I won’t be able to pick the future flowers anymore. I won’t allow
any short-term cuts, whips and losses define my long-term survival in this game. There are traders who
quit because of trading tilt. Traders who already reached their boiling points and said, ​“I’ve had enough!
This is too much! I can’t take this anymore!”

I’ve missed hundreds of good plays in the past. Some of these plays eventually turned into
multi-baggers. But guess what…I’m still here.

In hindsight, I should’ve re-entered during this breakout.

 TAKE A DEEP BREATH. IT’S TIME TO MOVE ON.

Basic stock market cycle principle says, for every rally there’s a correction afterwards. I plotted the
possible resistances of $NIKL. There’s the 50-MA that is untouched yet. And there’s the 50% reverse Fibo
which is currently resisting.
Price fell in the next few days confirming that these resistances are valid. Now, it’s time to catch this
motherf*cker for a retracement play.
COMPUTING FOR UPSIDE

Here are some of the things I considered before dipping my hands on $NIKL which helped me craft my
trading plan:

The current anatomy of $NIKL tells me that it respects 100-MA and RSI-70 as valid resistances. This
happened in multiple occasions. If this stock will reach the 100-MA at 6.28 that’s a 44.46% net upside in
relation to the current price. RSI is now at 42.22. A 27.78 upside til RSI-70 resistance.
 BUYING STRATEGY

1. Price is currently sitting on 20-MA valued at 4.23. LOW of $NIKL for the day is 4.23.
2. It’s also sitting on 50.0% Fibo valued at 4.30. Current close is also 4.30.
3. RSI found parallel darvas support at 42 levels. I readily ​OPENED ​a position during the ​closing
period​ (3:00 PM to 3:30 PM) with an AEP of 4.29.
 SELLING STRATEGY

SOLD intraday at 6.08 with a ​+40.32% profit. I had to respect the 100-MA as a strong resistance. If price
will drop in the coming days, I can’t afford to wait for another consolidation. Besides, I can easily
re-enter if it breaks out from 100-MA (ZS) with a stronger position because if that happens, I know that
THE tide has already turned from bearish to bullish.

FINDING CLOSURE

Febuary 12 – March 7, 2016. 15 trading days hold with ​+40.32% gain.

I was only asking for a +19.08% profit to offset the gains I missed from my previous $NIKL trade. But Ms.
Market rewarded me with +40.32% profit instead. It’s because I waited patiently for the next setup to
come.
 AFTER THE FACT

Price fell in the coming day after respecting 100-MA as a strong resistance.

As the old saying goes, ​“revenge is a dish best served cold”.​ ​It means that revenge that is delayed, and
executed well after the heat of anger has dissipated, is more satisfying than revenge taken as an
immediate act of rage. This is what I meant when I said before that this is a story of revenge trading
done right.

So, I guess this wasn’t a revenge trade after all. ​This is just ​“trading the stock again” or in other words, a
RE-ENTRY strategy​. The problem with some traders is that they would hate a stock as a result of a bad
trade. And won’t re-enter even if an opportunity arises. Because it already left a bitter taste in their
mouths.

We have to look at a trade setup as it is. Focus on the setup not on the name of the stock. Try to look at
the charts as if it has no stock codes. It’s not the stock that you did not trade well. It’s the setup. Look at
the chart as a canvass that only contains buy and sell signals. If you see a buy signal, you buy. If you see a
sell signal, you sell.

TRADER DECLARATION:
Put your right hand in your heart and say…

“I WILL ONLY BUY WHEN I SEE A BUY SIGNAL.”

“I WILL ONLY SELL WHEN I SEE A SELL SIGNAL.”

* * * E N D OF VOLUME 3 * * *