Hello everybody, this is the Friendly Bear Podcast where we interview some of the best and brightest traders in the trading community.Listen to inspiring stories and nuggets of insight from current and future game changers in the trading space.
Listen and learn as we explore all types of trading niches with some of the best in the industry from a Friendly Bear point of view.
Make sure to check out the Friendly Bear Podcast new YouTube channel called Friendly Bear Research, which includes all the podcast video content and supplemental screen shares.
If you enjoy the podcast, please consider leaving a five star review on iTunes.With that being said, I'm your host, David, aka ReverseLong, and this is the Friendly Bear Podcast.Let's dive in.
A stock trader with over 90% win ratio, starting with $29,000, amassed a staggering $800,000 in profits.Verified by Business Insider and NASDAQ, and was leading in an expose of a cannabis scam in the stock market.
So who am I?I'm David Capoblanca, the Verified Millionaire Stock Trader.
If you have seen me on this NASDAQ article or Business Insider or this podcast, in this video, you're going to see the reality of what I do as a full-time trader every morning, starting at 5 a.m.
Welcome to my morning pre-market preparation trading routine. Now let me help my fellow beginner traders or anyone that's unfamiliar with my style of trading, help them understand my pre-market trading routine.Step 1.
Finding the right stocks that are suitable for me to trade and what that scanning criteria consists of.Step 2.In-depth fundamental and technical research, which includes deep dives into SEC filings, corporate events, and press releases and headlines.
that I like to call the due diligence.Finally, step three, trade planning, which includes creating a watch list and potential entry and exit strategies.In a little bit of context of when and why I started to follow this pre-market routine.
When I started trading in 2016, I was just like any other trader trying to start in this career.I'm not a genius.I don't have superpowers and try to predict what the market's going to do.
I learned some strategies from some courses, but just kept losing in my trades.At one point I even thought like, is this ever going to work?The key turning point for me was when I stopped following what everyone's talking about on the forum.
I didn't have any original trading ideas or watch lists that I built for my strengths or my personality.Desperate to make things work, I reached out to many great traders and the one thing they kept repeating was trade planning.
On my third year of trading, I decided to approach trading the right way and it changed my life forever. And the right way for me is hard work, dedication and attention to details.And all of this deals with trade planning.
So if you think trading is about opening up some software, clicking some buttons and straight up banking, I'm sorry, but this is a wake up call.The reality is trading is a career that requires a lot of hard work and resilience.
I like to compare trading to the 100m sprint in the Olympics.Usain Bolt, the greatest sprinter of all time, did years of intense trading just to sprint 9 seconds in the Olympics.
Likewise, trading is a career where most of the work is done outside of trading.So most of the work is done in the pre-market, that way when the regular hours start, I'm already prepared and the trades just come to me.
So when I see a play, I know when to cut it and I know when to take profit because all the work was done beforehand in my preparation.And I basically repeat this process day to day. Now it's about time to start the day off.
Grab your favorite morning drink, cup of coffee, and join me in this pre-market trade planning session.Okay, so the first thing I do every morning is scanning for a list of stocks that may potentially give me the opportunities that I'm looking for.
This is my Trade Ideas Scanner, which is this flashy software that you are seeing right now.So I'm actually gonna break it down to a few must-know data points for you to help you learn the most crucial criteria of how I use a scanner.
This way, you can easily try it out for yourself too with any free or beginner-friendly stock scanner that you prefer to use.The first data point that I look for is the trading volume.
If the volume of a stock is above its float during the pre-market, it means that there's a lot of demand for the stock and there's a higher probability that there'll be a squeeze at the open.
If the volume of a stock is below its float during the pre-market, it means that there's less demand for the stock and there's a less chance that it's gonna squeeze at the open.
However, if the float is low, it could still squeeze pretty big, and I'll go over that in a second. Based on my personal experience and my solid trading and generally try to focus on volume between 500,000 and 2 million in the pre-market.
And I'll avoid 10 million because it's potentially too, it's overcrowded.With that said, you can go ahead and put your first filter condition with the tool that you are using.Volume greater than 500,000 and less than 2 million in the pre-market.
The second data point that I look for is very important.It's crucial that you guys know this.It's a little bit more advanced, but it's very, very important that you guys know this.And that is the float of a stock.
And I'll make it easy for you guys to understand.So the float of a stock is basically the supply of a stock.So everything is about supply and demand.So the lower the supply, the less demand that it'll take to move the stock.
If the flow is very low, the supply is very low.It won't take much demand to make it move.
And if there's a lot of demand, if the flow keeps rotating, there's a lot of demand because the volume keeps rotating that float, then it's going to, it has a potential to squeeze exponentially.
And that's what causes a lot of times these outliers squeezes.And, you know, because of the spreads are wider, there's just a lot of demand.It's just, it moves very erratically.And these are very dangerous.You guys need to stay away from that.
Okay, so the general guideline that I'm gonna give you guys is that if it's if the stock has a flow below 2 million It's untradable.It's basically not tradable if it's below 1 millions Absolutely under no circumstances is to be traded.
This is what we call a nano float.You stay away from nano floats A golden trading tip for all traders is to avoid trading anything with float below 2 million.Trust me, this will save you from many unnecessary losses in your career.
If you know why I'm saying that as a trader, you avoid nano float stocks, comment down below and share your insight with us.Now the third and fourth data points that I must set up for my scanner are the market cap and institutional ownership.
Market cap tells us the size of a company.
A simple way to understand this data is to know that when the institutional ownership is high, there would be higher chances of bigger players pumping the stock price and later on dumping it to cause a price drop.Also, institutions have algorithms.
Do you want to compete with algorithms?Think about it.
This is also something that I will go more in depth later, but for our scanning criteria, I would set a market cap that is below 250 million because I want to focus on a list of small cap stocks to fit my trading strategy.
Also, I want to focus on the bad companies that have bad cash flows.They love to dilute their shares, creating a downward pressure on the stock price.More suitable for short selling traders like myself.
As for institutional ownership, I want to look for anything below 20% or as low as possible.Based on my trade samples and backtesting statistics, it's best to avoid anything with institutional ownership above 60%.
So feel free to copy my scanning criteria for volume, float, institutional ownership, and market cap on your preferred scanner.And if you want a discount code for my trade ideas scanner or trade ideas in general, there's a discount code below.
Now that you have learned the basic scanning criteria, let's go into more in depth of how I trade.I'm a fundamental and statistical trader.I put heavy emphasis on the fundamental research of a stock and look in depth into the statistics.
For example, I look at the history of reverse splits of a company.Let's look at MULN for example. They have a history of changing their ticker, which is usually a bad sign.So MULN used to be NETE.
When I was first starting out trading, NETE was involved in a lot of like pump and dumps and stuff and that kind of price action.So, you know, the history of a stock doesn't matter.
And MULN has a history, you know, as you see here with these purple marks on Thinkorswim, these are all reverse splits that they've done after diluting their shareholders tremendously.
So they're constantly doing these reverse splits where the float is low.As you can see right here, I make notes.Float is 4 million at this point, for example, and later on 11.4, 24.So just the flow keeps going higher and higher.
And then eventually they do a reverse split.It's low again, 1.6 million, and they're able to pump it and dump it.And then there's the shareholders concept.So it's just like this, like this cycle of reverse split float float is low.Supply is low.
They pump the stock, raise cash. dilute the shareholders and then do it all over again.Reverse split.It's just a cycle, constant, never ending cycle.And also the CEO has a lot of, has been involved in a lot of shady activities in the past.
And there was one news interview that he did in particular where the news anchor actually asked him about this reverse splits and he just hung up on the call.He didn't even address it.He just hung up.
So this is the kind of stocks that I like to trade.It's very predictable and we understand the whole agenda.My bread and butter strategies are based on the process of researching and investigating the unexplainable behind these stock pumps.
Every day in the stock market, there are many different tickers that randomly pop.And if you care to look into the news, most of the time there are actually no real news behind it.The headline is either fluff or something recycled from previous news.
okay so in dilution tracker you have the industry i like to look at the industry for example biotechs i treat differently than most other stocks i want to always be aware and the float is very important because dilution tracker keeps the float updated to the latest filing so this is the most updated float on the for small caps out there
anything under 2 million flow on dilution tracker that's what I go by that it's not a trade or if it's under 1 million flow or nano flow it's an absolutely major red flag to avoid avoid avoid at all costs and then on top of that institutional ownership dilution tracker has the most uh the most updated institutional ownership out there they actually keep it updated to the filings
And I love dilution tracker too, because in this chat support, you can actually ask them if it's updated.You can double check if you want.They do usually do a really good job on their own, but you can ask them directly and say, hey, is that updated?
And they are very nice people.They will always answer and tell you when it was last updated.
and then i like to look at the filings i like to know a lot of times who is who owns the stock or like when the latest dates were of the latest filings sometimes other forms of filings come out that are not reported in the headlines so you want to stay updated with that
So it's very easy to get used to, very well organized.And then I like to also look at, for example, I like the hot link to Yahoo, where it goes directly.I like to check the profile section of Yahoo, see who's in charge here.
And of course, I mentioned the CEO of MULN.This is the guy.And of course, he's making good money.And he's also the one who shares a lot.So he's making even more money.
So December 6th and 7th, 2024, I'm going to be hosting a live trading workshop in Los Angeles at the City Club, 51st floor.It's a very limited event, so tickets, very limited tickets are available.And yeah, it's going to be a live setting.
I'm going to be trading live in front of everyone and, you know, going through my exact process of how I enter and exit trades. And then afterwards, we're having a trade review from 3 p.m.to 6 p.m.right across the street at the U.S.
Bank Tower, where the Friendly Bear has the headquarters, trading office, and studios.
And then Saturday, we're going to go to the Athletic Club and have a mastermind session at the Blue Room, another Q&A, trade review, everything super intensive, and I'll have a couple of topics to speak about in depth.
It's gonna be a great event and following everything, we're gonna have a social event with networking involved.So, looking forward to it.I'll see you guys there.Tickets are available at www.conscioustradingacademy.com. So anyway, dilution.
I like to look at the dilution here.It's very organized.You see the warrants.I like to see where it's pending effect or if it's registered, like these are registered where there's no more left to zero.
They have the notes of like some clauses that are very important to know, like this is a difficult language to read.So you can like it points it out so you can pause and like and soak it in and analyze it.And of course,
Um, yeah, you can keep like all those warrants that they use as a mule and they love to use all their warrants.Sound astronomical to you?Don't worry.I got you.
I'm planning to make a series of videos for free covering the fundamental research techniques and trade examples for free.So comment below if you guys are interested in learning these type of concepts.
I want to make sure that my videos are going to be useful for you.So please comment below.Now that we've been through the most intensive part of my pre-market process, now comes the fun part, creating a watch list.
So I usually write down 2-3 stocks that I've selected from previous steps of scanning and fundamental researching.
Sometimes this watchlist can be done much longer during a hot market, and sometimes I just gotta take a step back and accept that nothing fits my criteria to trade.Allow me to give my broker a quick shoutout.
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Specifically for my trading style as a small cap short seller, Kobra offers a vast list of locates, which means I can easily borrow shares to plan for my short selling ideas.
Having shares to borrow is crucial for my success as a short seller, especially for stocks that move quickly on fake news or quick pump and dump agendas from influencers online.
Kobra trading also has great routing options for my limit orders that allow me to get filled at ideal prices and reduce the risk of slippage.
If you sign up with the link in the description, you'll have access to Cobra prime and all of my trading tools, which includes dilution tracker, trade ideas, and ask Edgar.So I recommend Cobra trading.
If you are looking for a trusted broker for all your day trading needs, check them out by using the special discount code in the description below. Okay, so this is gonna be my watch list.This is an example of how I go about my day every day.
So GMPX, for example, is on my watch list.I'm getting two examples right here of like stocks on my watch list.So we're gonna go over GMPX and KSCP.So with GMPX, the thesis, so I like to have these bullet points here to make things very clear.
And the thesis is no news, biotech, negative 2.3 months of cash, which I get from dilution tracker.
um they have they have a dilution from on a from atm 2.3 million and 1.5 million warrants at 4.09 now that's important to me because right now the stock is trading
On the second day squeeze, it's trading, actually, you know, the second day squeeze, it went all the way to 397, which is almost at 409.
And there's a high level concept strategies of like understanding how warrant holders execute their warrants or decide to not execute their warrants. and maybe even short their own stock.So that's a high level concept which I go over in other videos.
But I like to know where all their dilution is and how much cash they need because they're going to have to get behind on their bills almost three months.So negative three months of cash they're in a desperate position.However,
you know so like when uh it's not a it's not like a a slam dunk short short on the pop-up on the first day because for example yesterday it went up 400 and they have negative 2.3 months of cash so like it was you know it's just overly shorted that's why you got to keep in mind the volume in the morning and it's like you know
having your certain indicators up because you don't want to be part of that squeeze.So when everyone sees the same thing, it's going to be overcrowded on the short side.Anyway, but they do have the end game.We know the end game.
They need to use all this dilution to make, to come up with that cash.So anyways, that is a short when it's time.And I like to use, you know, the dilution to guide me and yeah, understanding all that. Okay.Now key levels.
So after the day one, which was when it had that big run, 400% from 50 cents or so all the way to $2 in the after hours, it went all the way to 288.The key levels now are $2.I would say a $2 is a support level.And, uh, yeah, $2 is a support level.
And we're looking now I'm looking at the chart year, the yearly chart, which is back
in may it hit 388 there's some resistance there um yeah exactly four four point one so three no so two three and four dollar levels and um yeah this is uh this is what i'm looking at so key levels whole dollars two two three four
levels and and within that there come smaller levels in the 50 cent ranges right so those are also to be watched out for and actually yesterday in the after hours it went from two well not in the after hours that in power hour 3 p.m eastern it went from $2.70 to $4.00 I had to squeeze so three and four are
the real tight levels I'm looking at and the target here is there's a possibility for a first red day but this could also be setting up to be a liquidity trap which is another concept that I've mentioned in videos in the past and now I'm going to be doing more videos explaining that in the future but yeah those key levels possible liquidity trap liquidity trap for more squeeze
Oh yeah, so we can put that in the thesis also.So first read day. or liquidity trap squeeze.I mean, it could go either way.So it's like 50-50.It's his first red day, or it could go further for a liquidity trap.And yeah, so locates.
So for locates, I'm looking for, you know, anything under eight cents, let's say.Yeah, eight cents is doable.Preferably under five cents.Okay.
sizing strategy half size want to assess the first 30 minutes in an A setup so like yeah so I'm going to go I'm going to be looking for the signals and indicators for our first red day but also I got to be on guard it's like it could quickly slip and be a liquidity trap squeeze because that first day there is a lot of short sellers that got in and they need they need liquidity to get out and if they start all getting out at once or being forced out
it's gonna cause a big squeeze.So I gotta reassess that in the first 30 minutes to 45 minutes.
And once it's a first red day confirmed, when it's just like a convincingly first red day in the morning, like it's just red and it's like everything, there's a lot of selling pressure, level two lines up, the candles lined up, the price action, then it's a first red day, I'm gonna approach it differently.
I'm gonna size into that.
because the stock is up let's see it's from 25 cents to $3.94 yeah so that's up a lot and also to consider this was on a tight halt band situation so like when a stock trades under 75 cents and opens up over a dollar or like trades over a dollar it starts to have tight halt bands and then which causes a lot of erratic price action and
there it's it's uh highly likely a lot of manipulations involved so that's why this this stock is up so much you know i don't use so like that is so when when it's about to end when the party ends this thing is is uh it should give a nice first red day so that's what i'm going to be looking for okay and i'll be first i'll be assessing that in the first 30 minutes
So let me know if my explanation has been helpful to you and easy to follow, because I want to improve for next time.I really appreciate your feedback and support if you've been following this video up to now.
Okay, so my second trade idea is KSCP on my watch list.KSCP. Okay, so for those that don't know, KSCP is Nightscope.So Nightscope, what they do is they do security robots, and the robots look like R2-D2 from Star Wars.
And I've seen them personally here in Los Angeles, in one of the malls in downtown LA.And as we know, downtown LA is kind of like a rowdy place.So to have
R2D2 robots roaming around in the, by the way, it's an outdoor mall, and the outdoor malls in downtown LA is kind of, doesn't make any sense because nobody really respects these robots.
Like, I've seen them interact with people, no one cares, and they cost an enormous amount of money, I don't know, somewhere in the tens of thousands of dollars for each robot. So it doesn't work.
The only thing it works for, I've seen little kids play with it, that's it.So how are you going to have a robot for security and in the police force that no one respects and it just plays with kids like a toy.
So with Nightscope, the major controversy recently was that Mayor Eric Adams in New York is getting investigated, he's getting indicted I believe.
The reason this ties to Nightscope is because Eric Adams had photos with the Nightscope robots because he was part of introducing Nightscope and making Nightscope robots part of the NYPD. So the New York Police Department has Nightscope, robots.
I've seen how they work in LA.Los Angeles is kind of similar to New York in that regard.They're both major metropolitan cities.And what comes with that is the similar culture as far as respecting the laws in a big city.So Nightscope, it doesn't work.
That company, recently they've done a reverse split
and that's why their price is up so recently their price is up in the in the tens of dollars it's like a 13 14 dollars range and um this thing was trading at at under a dollar at like under 50 cents i believe i i don't see it on the charts anymore because that's why it's a reverse split but um but this thing was trading at pennies and they just you know um it just it just what they do is the same same dilutive agenda
They dilute their stock all the way down to pennies on the dollar, do a reverse split, raise some cash, do more dilution, dump the dilution, stock goes down under a dollar, fades all the way probably to 10 cents, and then they do another reverse split, rinse, repeat.
and Nightscope sticks out to me because back when it IPO'd I had a you know I watched a lot of really big traders trade it and around me and when I was in Puerto Rico at the time and they explained to me what a joke it was and so that'll always stick with me of like the big traders analysis on this.
And there's some old podcasts I did on it, covering it, and what a joke it is.But at the same time, as short sellers, we don't want to just go with a biased thesis of it's a joke, and it's all negative, and this is trash, et cetera.
Because then you can get squeezed.And that's exactly what's happening right now.Nightscope is on a run for like a week or so, on a big squeeze run.So my thesis is, which I'm going to type here,
Eric Adams, mayor of NYC, indicted and big short sellers, short sellers got involved and getting squeezed. Because as we know, when too many short sellers short it, the reverse happens.Squeeze.
Just like in math, negative and a negative equals a positive.We're trading short sellers, short sellers equals a big squeeze.So we want to avoid that.And I know, I've seen on social media,
some big short report firms uh posting oh uh nightscope eric adams and i'm sure they shorted big and when they shorted big and too many people shorted big the reverse happens so um yeah so that's exactly what's going on now so i'm watching the levels uh of 10 well right now let's see so right now yesterday it halted up all the way to 20
and then halted down, went all the way down to $10, from 20 to 10.So now the key levels, $10 support levels.$10 support level, $15 resistance level.No cash.Oh, let's put that in the thesis.0.3 cash.
position They're gonna have to do something about that.
However, yeah, so 10 support 15 resistance level on and I'm looking for first red day another first red day Day potential Yeah, so and then we 15 resistance level and then we have to also keep in mind another Is a possibility it can go to 20
just like it did.It hit 20.It hit 20 on the halt up and then just came straight back down.It looks like one short seller likely just got, you know, forced out of it.You know, these days we have T plus one instead of T plus three.
So it could have been forced out of it and caused a big major halt up big erratic price action.So you got to support it.You got to, you got to respect it.Okay.Locates for this one.Um, yeah, anything under five cents.
I don't think this one's that hard to locate.Preferred, okay.Sizing strategy, small size because it's a high price stock. So small size also, you gotta respect that this thing can squeeze.It could have something outlier.
It's already broken the resistance from the reverse split at 13.So now there is a possibility this can have something outlier.So like I want to stay small with this.
also it's a higher price stock so it's like small amount of shares is uh that's the way he trades uh high price stocks that's why i trade them anyway but um i'm going for it i'm looking for the first red date you know so this is overextended for one two three four five six seven eight nine ten ten days ten day uptrend
Okay, and yeah, that's my watch list for KSCP and GNPX.So that was the reality of what I do every morning as a full-time day trader.Nothing too fancy, no sports cars, no trading by the swimming pools.
It's just me showing up every day, going to work, doing research, and putting work in, and that's what we do to get results.I hope that you have enjoyed this special video.Please give me a free like on this video.
Hopefully I gave you some valuable insights and some inspirations. All of my trading tools are in the link in the descriptions.Feel free to check them out and use the discounts if they are helpful for you.
If you guys want me to get into more advanced strategies and techniques, please leave a comment in the video and let me know what you guys want to see.And I'll see you guys in the next video.Cheers. That concludes today's episode.
Make sure to like and subscribe to the channel on the platform you use.The Friendly Bear Podcast is hosted by me, David, where you can find me on Twitter, at reverse underscore long.
You can find The Friendly Bear Podcast at www.thefriendlybearpodcast.com, as well as on Apple Podcasts, Spotify, Audible, Amazon Music, and now on YouTube at Friendly Bear Research.
Until next time, thank you for listening to the Friendly Bear Podcast.
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