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Background:
When I was getting close to 1000 followers, Dan reached out to me and said he thought that I was ready for a "GOLDEN HOUND" interview. Previously, he had done interviews with other gurus whom I respected and considered my elders. So, obviously I was honored to do this interview and I thought it was a great chance for me to get my philosophy out, grow my network, and build my brand. Now that I have reached 5000 followers, I feel like this is a good opportunity to stop and reflect, and see if my previous "wisdom" has held up to the test of time.
I take my responsibility as an OTC teacher very seriously and try to add value with my feed. Learning is important, and though I still have a lifetime of learning to go - I try to help new traders avoid my old mistakes.
I hope enjoy the interview and welcome any feedback.
-Cheds
*** KEY TO READING THIS INTERVIEW AND THE TIMELINE ***
- Text In Italics is from the Interviewer Dan Golden -
- Text in Bold is my response from Original Interview back in early 2015-
- Text in Underline are my reflections now, November 2016
*Start Original Interview* Taken in early 2015
GH: Although I know a bit more about Cheds than others might, or ever will, anonymity and confidence must be respected. Let’s just say he is very much an uncommon commoner. He’s like everyone else plus 20 on the IQ scale.
This interview goes pretty deep, but I would recommend you read every word, as the devil is in the details. So, I’ll keep my part short. And, I must admit I never knew anyone named Cheds before.
Meet the newest GoldenHound, CHEDS, aka Cheds Trading…
QUESTION 1
GH: According to your brief bio, you are still a bit of a mystery. At least tell us with some detail what led you up to this point.
CT: I consider myself a humble trader at the beginning of a journey, surrounded by great traders and teachers showing me the path ahead.
When I first started using twitter for OTC, the trading season of 2014 was winding down and liquidity was drying up quite a bit (last summer). Day by day I started to realize the potential of Twitter and he power it had over the OTC. I started following some of the people I knew about already, such as @WolfofWeedST and @Beamin1, and then by a friend told me about a guy named “The Honest Penny”, (@pennycheck). I noticed that THP was giving out some really good plays, he had interesting things to say and immediately I decided that I should fasten myself to be like him on Twitter.
Charting is really important, at least for me. Its always nice to be able to look up a ticker and make a DATA DRIVEN decision, or just to get a second opinion. The chart doesn't lie to you, just your pumpers friends.
I concluded that if I could create my own content, and be reasonably savvy at networking, I had a chance to do build a following, and in the process become networked with strong traders who could teach me. I also made a determination early on to do 2 key things to help portray the value of my brand. I tried to keep a 10 to 1 tweet to retweet radio. Many of the so called "players"; in the game I realized early on would just re-tweet other people's content, and contribute nothing of their own. Secondly, I tried to keep at least a 5 to 1 followers to follow ratio. I wanted to prove that I did not just follow random people to build up my count, and all my followers were natural. This I believe is a decent metric to portray value.
This has remained true, as we stand right now I am at a more than 10 to 1 ratio with 43 following and 4823 followers. I believe that shows that I am earn my follows the hart way, by creating content.
In order to build up traffic and get my name circulating, my early strategy was to search IHUB for most active stocks, do a chart on them, and search Twitter and tweet at someone who had a lot of followers and had previously mentioned this ticker.
IHUB actually has a decent scanner, the mobile one I use for IOS
Every night during the trading week, and often all weekend, I would send out these tweets, and once in a while I would get retweeted back by a big player and grab a follower here and there. I started the account in early october and by the end of november still only had about 100 followers.
I would like to take time now to thank two people who were mentors to me and really helped me get things moving, both retweeting me but also giving me good advice: @pennycheck and @teacuppiglets
These guys were HUGELY instrumental at my early success, and to this day I owe them a lot, and consider them close allies.
Interestingly enough I don't run with these guys any more but we are friends. My main guys are FPS, Beard, Jeff, FFT, RSP and others these guys keep me on my toes and show me a lot.
I would also like to take a moment to mention some of my other teachers who have influenced me greatly. Tweed (@johnconway, @bb2stocks, and a guy you have probably never heard of, who initials are HP. These people are amazing to me and I would be nothing without them. I also want to give a shout out to some others who have been really good to me: Mike, Grebs, DR, DL and RR (thanks for the premium membership man!)
The people who influenced me then and who influence me now very different. I have come to learn there are some amazing traders who are years ahead of me in the game - and I am blessed to be able to network and learn from them.
Lastly, I would like to recommend two top-notch OTC twitter traders that any new or seasoned player needs to follow: @i_like_bb_stock and @Street_trader; these guys are amazing to follow during the day and probably my #1 and #2 most recommended intra-day follows. My top chart and momo follow is a guy named @FunnyPennyStock, who has a private feed as well: “@FPSpremium” which I recently signed up for and am learning a lot. This guy knows what he is doing and his entry calls are flat out amazing: I recommend you check him out
There are several other outstanding people I have left out of this list, and please do not hold that against me, you guys know who you are (NFD Team)
NFD team has some great traders and they work hard and I value them a lot to this day.
Brand Perception: Now that I have become a little more well known, I believe that I carry a burden of responsibility:
Brand is very important. I believe I have build up a strong brand built on helping people and spreading knowledge.
I would like to make this very clear, that I myself do not nor should anyone else classify me as a pumper, that would be a mistake. Rather, I consider myself to be a scholar of charts, of the OTC, and of those who play the OTC. (the last part is too often ignored btw) My goal is to operate as an unbiased oberver, and I venture to walk that fine line between someone who is trying to build up twitter volume for particular plays, and someone who is neutrally observing interesting phenomena and reporting it. As with anything, you get back with you put in, so I try to put out value and be as honest as possible. I also make a concerted effort to be friends with anyone who is a good networker, and make it my rule to never burn a bridge.
Bashers and Pumpers both hate me because I call it clean and call them out. I call balls and strikes, and think of myself as an OTC Referee/Teacher.
When I was asked and gladly accepted to do this interview I was on the cusp of breaking 1000 followers. I have grown a lot as a trader since then and have put in a lot of work building my brand and networking with other traders and visionaries.
GH: So with your burden of responsibility, what’s your advice for new traders?
CT: 1) Never risk more than you can afford to lose – this is standard advice in any form of gambling
The more I have learned how to become an OTC day-trader #grind is realize how similar it is to Poker, Texas NLHE. Everything. Its so similar.
2) Manage your buy-in correctly. If your total bankroll is 10G, you should never have more than 10% of your bankroll in any one play. Always stay hedged.
Almost went tilt a couple times early this year not following this advice.
3) Cut your losses as soon as you realize you have made a mistake or a bad trade. Avoid the trap of averaging down on a stock in a long term downtrend. Just cut your losses , and then move on to the next play. From my own personal experience, 90% of my losses come in a stock I try to average down, and end up losing even more.
Cutting your losses feels good. As I have become an experienced trader I am teaching myself to enjoy taking a small loss, to savor it and consider that I have saved myself from greater losses.
4) Never buy a stock without looking at the chart, make sure the chart looks healthy and there are signs that accumulation is rising and there is enough volume for you to play. You should learn to get a gut feeling when looking at a chart, is it healthy or not.
I still make this mistake occasionally.
5) Learn who the MM’s are on the L2 and what their function is. Some of the ones you need to look out for are VFIN, VNDM, BMAK, and BKRT, MAXM, AYME and others. You should also learn who the good MM's are (think MBAY right now with the MJ stock) This is very important.
This is more important than ever, but I would also emphasize learn how to size your bid and ask as well ask try to recognize prop bids and ask walls.
6) Take profit. Do not get caught holding a stock because you are greedy, anytime you can take a 15-20% gain… do it. Turn your money over and have it fresh in 3 days for the next play. Always be thinking about the next play. The next play, or a new play is always better than some crappy play you are trying to get un-stuck from.
Taking profit is awesome. Scale your profit at each level and vary the size of your lots, mix it up.
7) Learn who is who as far as other traders and promoters. If it’s IHUB, click on someone’s post history to see their agenda, likewise on twitter to see what they have said in the past. Once you get to know what certain people are all about, you can use that information to make a better judgement in choosing your next play.
Certain people on twitter will only mention when “.xxx is up and ask getting hit”, but when you look at the ticker it was only a paint. This person is just BS'ing you and you should know they are a pumper.
However, they can lead you to action. So rather than buy the stock on the spot, put it on your radar and look for enough volume to enter on a dip.
Other people on twitter will mention “XYZ is going to the moon” in all caps, check out what other plays they have done, and then do a little historical data research to see what their performance has been.
Very very important. For example, there some very legit traders out there who are giving amazing free advice, certainly worthy of a premium feed, for example #flexbros
Heres s another hint, anyone on the boards or twitter talking about “weak hands exiting” or “MMs playing games” is full of sh*t.
Another thing I find amusing is pumpers complaining about 1-2 tick flippers selling for “beer money”. What they are not telling you is that in the OTC, 1-2 ticks can be 20-30% which is sick profit if you think about. The flippers and shorts are the smart ones, and the longs are clowns, the bag holders and the another one born a minute suckers.
I ended up writing an article on this for #chedsblog "Scalping, swinging and channel trading for beer money" This is one of those dumb things that gets repeated over and over.
The sooner you learn this the better off you will be. There is a LOT of free information out there, and you should not only spend time studying the company and chart, but you should study your opponents, and the field at large.
Learn to monitor facebook, skype, twitter and IHUB(or preferred message board) - Get a sense of which groups are on each play and keep track of who gives good plays and bad plays.
GH: What's the biggest trading mistake you would go back and change, if you could?
CT: Going long on an OTC stock. I made an absolute killing during the MJ rush, banking on plays like PHOT FITX EXMT SKTO PRPM APRU and VPOR, then during the middle of the year I fell in love with a motorbike company called MTVX (FROZ), and over the course of the next 6 months lost most of it trying to average down, and watched it go from 3 cents down to no bid. Frozen weed ice-cream delivered on a motorbike? Count me in …..
How funny is it that I am now long on $RVUE -- Breaking all my rules. However, the logic side of my brain can rationalize that it is okay since there is no toxic debt here, and thus the natural rule does not apply.
GH: What's your morning ritual before the opening bell?
Once I am all caught up on news and have checked in with all the various chat rooms and trading groups, I set up IHUB to watch for for interesting premarket activity. Lastly, I load up stockcharts and then make sure twitter is up and ready to go.
Most of the hard work has been done the night or weekend before, and I have boiled it down to about 15-20 plays on my radar for that week, and am mostly just waiting for those plays to open.
Be ready, check all message boards and say Hi to everyone. Generally I have a plan and all my sell orders have been set the night before, I am not normally setting any buy orders yet.
When the market opens, I watch twitter to see what tickers pop up in the first few minutes. There are a few people I watch very very closely on twitter and as soon as they mention a play I will pull it up and see what’s going on.
So, if I just have my IPAD I mostly focus on L2 and then tweet when I see something interesting. If I have my laptop, then I can check twitter with that and study L2 via IHUB Mobile on my IPAD.
GH: It looks like your specialty is in the technical analysis… what do you think the true value is of Company DD in the OTC?
CT: The most important DD you can do on an OTC company is to learn about their convertible debt structure. Too often, eager retail traders will buy a stock without seeing what kind of notes need to be paid off or when the hit they market. And perhaps just as dangerous they buy without looking at L2 to see if any dangerous Mms are sitting there waiting to convert. Two thins that any trader must have is a good L2 and trading platform.
I am now, slightly more than before a believer in doing DD on the major persons involved(CEO, Board of Directors), but this is really only necessary if you are swinging (playing for more than one day) vs scalping (one day trade). It can be of value to know the past history of a CEO and how they have run their previous scams.
Another big mistakes new traders make is not being able to separate the actual company operations from the price action of the stock. For example: in the short and medium term there is absolutely no connection between how many stores a company has their product in, and the price action of a stock on a daily/weekly basis. It is extremely important to separate these two and only look at a stock in terms of its value in respect to VWAP, moving averages, momo and its position in the trading channel.
Still a big problem I see. People getting excited about big future "possible" revenues and forward looking statements about where a company is going. For example, recently I heard about some TRIPS POS play at 1/2, and the pumpers were talking about how this "company" is entering into a deal with Wal-Mart. That pretty much means nothing and would take years if ever to translate into shareholder value.
DITTO.
All these CEOs have to do is grab a ticker with a low O/S, reverse into it and take on a huge about of toxic debt. Once this is done, they can start releasing PR's telling everyone how awesome their company is and how explosive the revenue growth is, to build up enough volume to let note holders convert. This is where Magna and Ironridge(for example) come in, and the death spiral begins, down to no bid. Once this happens, the CEO will RS, and this will bring the flippers, promo players and noobs right back in for another run.
PLEASE KEEP IN MIND, a PR from a company is 9 out of 10 times meant to build up volume for conversion. A PR is not for shareholders, or their value, hence the phrase “buy the hype, sell the news”.
One of my favorite phrases I use to remind people about what the OTC is all about: ""You know who else is hoping news hits on your ticker today? VFIN CDEL BMAK CFGN VNDM BKRT etc. Be careful what you ask for...."
There is another very important type of DD that is often-overlooked., doing DD on your competition. It is very important to find out who is behind a ticker, what groups are trading it and who is promoting it.
Without this knowledge you are essentially trading blind.
Cant emphasize this enough. It is important to know who ALL the gurus are, who follows them and how they operate. This can not be over-looked.
GH: Tell me one thing about yourself that none of your followers know about you?
CT: I enjoy painting abstract acryllic landscapes, and find it does wonders to help me relax. I also love bass-fishing, playing hoops, videos games and Texas NLHE poker. My favorite music is classical, baroque era. Albinoni, Vivaldi, Devienne, Handel, Telemann and Bach.
I have not done much painting at all in the last few years, that is something I am hoping to remedy. I have however been doing a lot of fishing and enjoying nature.
GH: What's your top alert/watchlist ticker this year?
CT: $VPOR will always been one of my top plays, up or down. I have followed the company for a long time, and made a killing off it last year, and lost some of that on the way down. I love the company, but the stock itself is a little more dicey. I am waiting to see the debt paid off and proof the company can fund itself without convertible notes. I am also waiting to see how the company will deal with the preferred class B shares that are going to hit the market this summer. They have great revenues, a great story, and I enjoy using their products.
For me this year its $RVUE -- In a tough spot now but I am a big time believer. I no longer go long on any stocks, but my expection when they have no toxic debt and majority ownership by a NYSE CEO
GH: What makes you furious in trading?
CT: Not following my own rules, exhibiting a lack of discipline and making unforced errors. This bothers me more than anything, not following my own rules. I can do all sorts of wonderful analysis, but when it comes time to play, if I trade impatiently and break my rules, that is the ultimate punishment and self-loathing.
I think for me now the fact that I still make obvious mistakes, just like any other trader. I have not been patient enough with my entry points as of late, and that makes me mad. There is always room to grow and become a better trader.
GH: How do you think Social Media has affected trading? Are you enjoying Twitter so far?
CT: It is amazing to me that I was trading for so long without being on twitter. The power of Twitter is unbelievable. As a new trader, there are some amazing people you can follow who will teach you for free.
The chat rooms are also quite powerful, and I have seen how fast a ticker can move if even a small group decides to jump on it. More and more I am noticing the power of the “alert” and the power of the group mentality in its ability to create and move volume. By the way, the best way to play an alert is the bounce, not the alert itself.
Twitter has been an amazing platform for me to learn OTC and to network with other great traders and improve my craft. Most of my focus has been on building my brand via twitter and I think that has turned out to be a worthwhile effort. Twitter is the quickest place to get new, get new OTC plays, and to find the best penny stock traders.
GH: Big question....describe the perfect chart to buy a stock?
CT: Oversold conditions, base of support and bullish divergence. Certain indicators like the Chaiken Oscillator are reasonably effective in anticipating an upcoming trend change. I think it everyone has a different type of “perfect chart” they like, based on their own risk threshold, and style of play. I like to see a chart with volume and strong accumulation that is bullishly diverging from the PPS.
I would only add that now I am looking for sub 30 RSI as well at williams %R at/near -100
GH: Youve got 5 minutes to live....the whole world will hear what you are about to say..... What do you say?
CT: Strip me away, take me with you divine.
Im just sitting here watching the wheels go round and round...
Welcome to Chedsblog!
-Helping new traders avoid my old mistakes-
OTCBB Pennystock trading article topics include:
Reading financials and filings
Market makers
L2 and chart analysis
Understanding the competition
Using social media to trade
Price and volume study
Bankroll management
Game theory
Sub .01 low float setups
Interviews with influence makers
