Intro to Penny Stock Trading Psychology – Day trading for beginners ($ABIO Stock)


The biggest misconception I’ve seen in many
beginner day traders is that they are always on the quest to find the best penny stock
trading strategies, penny stock patterns, and indicators etc. What most fail to realize is that those things
only work, if people use them. In order to profit we must think for the other
buyers and sellers and understand who are the players and who is in pain. The most common players in the penny stock
market are, break out traders, momentum traders, dip buyers, short sellers, and swing traders. I will be breaking down the basics of these
traders’ psychology in the market. So you will be able to analyze and profit
from day trading beyond just memorizing patterns and strategies. I’ve spent a lot of time preparing for this
video all by myself to make sure there is 100% value and 0 hype. So if this sounds like something that can
benefit your trading, make sure to watch till the end, nd drop me a like so others can benefit
from my videos in the future The first one we will go over are the breakout
traders. These are the traders who buy into a penny
stock when it’s at the point of breaking a previous high. Let’s look at the $ABIO intraday chart here
on May 1, 2019. On this day the stock got pumped up by PR
and traded as high as $9 from $5 in the morning session. It sold off a little bit mid day and retested
the previous high at around 1:20pm in the afternoon. At this retest price. Breakout traders see that, hey the stock is
about to make a new high nad think to themselves. i can see the price break $9 and possibly
go up to $10 or even more. I must get on this. Break out traders are the most predictable
traders because it is the most common “strategy” taught in penny stock day trading courses,
dvd’s, and chat rooms. They term this strategy “break out pattern”,
“U shape pattern” etc. This is very important. We’ll come back to talk about this in detail
a little bit later so hold on tight. You can see the increase in volume in the
stock around previous price level of $9 as more break out traders hop on to this stock. In this case, there is more breakout traders
than the sellers. So this break out becomes successful. The stock breaks the previous high in the
morning at $8.95 and run higher to $11.50 and then almost $13 dollars at 2pm. Once all the traders watching $ABIO see that
the stock has just made a new high breaking above the previous resistance of $8.95 for
them, this is where the momentum traders get interested. this is what those players are thinking. “Oh that break out on $ABIO was successful,
and when stocks break previous day highs successfully, it’s really likely that more volume are
going to pile in. so i should hop into strength as well!” So these momentum traders hop on in along
with the breakout traders. And that’s why many times when penny stocks
break a previous resistance with strong volume, the price will squeeze even higher. Remember this, Momentum traders join strength. And when strength weakens, this where momentum
traders sell their position and get out. You can see right here on this 10 min candle. The breakout traders who got in to break the
previous high of 12.69 failed. The stock only went twenty cents higher at
12.88 and quickly slammed back down to $11. This is a sign of weakness and extension. And when the stock no longer has strength,
this is when the momentum traders who got in earlier start selling and there were not
enough fresh break out buyers coming in. so the increase of selling and decrease of
buying causes this sell off for the stock from $12.80 back down to $10 and below. This is where the third kind of players come
in, the short sellers. Short seller love to lurk at the top of each
stock. These are the traders who can spot increase
of selling and decrease of buying in the volume and level 2. Short sellers love overly extended stocks
on the day like $ABIO. So they saw $abio and these shorts thought
“ummm okay, this stock ran from $5 to almost $13 today. This is over extended. I think the buying has slowed down and selling
is going to increase now. I want to short this stock down” So in this case, if the short seller entered
at the top around 12.80. He or she was correct their thesis and they
made profit from the stock selling off all the way down below $10. However, there are always those impatient
short sellers. Those are the shorts who got in too early
from earlier. Some traders love to short everything that’s
up. So they short here at $7, $8 and and remember,
previous high was $9. So i bet you there were many shorts taking
entries around that price at 1:20pm. Well, those short sellers got in too early. There were more breakout traders and momentum
traders buying than the overall selling. And the stock was breaking highs. When that happens, these early short sellers
are thinking to themselves. “Holy ***, I didn’t think this stock could
possibly break $9 and now its breaking above $10. I am down a lot now i thought this breakout
will fail but im wrong. What if it goes to $20 or $30. Oh my god I better get out before i blow up
my account”. So the short sellers who are in pain decide
to get out. And they need to buy to cover to get out. That causes a short squeeze. the shorts buying along with the break out
traders and momentum traders buying, causes this stock $ABIO to squeeze even higher right
here. So let’s get back to the successful short
sellers here. If i was a short seller who shorted at $12.80
and now the stock is back down at $9. I would start to cover a piece around this
level at $9. Why? Because i know that dip buyers are going to
start coming in. Dip buyers are the fourth kind of players
you need to keep in mind of. These are traders who buy into a stock when
they see that a stock has made a high and retraced back to previous support level. Dip buyers love to get into the stock on pull
backs after it shows impressive strength to the upside For example, dip buyers would be looking at
the $9 level here and think “mmm , the stock was just trading around 12 dollars and now
its pulled back. I can buy into this at a cheaper price. Previous resistance level was $9. And previous resistance once broken becomes
support. Ok $9 is a support price i think it’s reasonable
to buy in here”. And at the same time, short sellers also look
at the previous support levels at $9 and think. “Ok, i need to beware of dip buyers. They may look into getting into this stock
at this level. So i better start covering up.” And its this exact balance between all players
in the market that create these support and resistance levels. Dip buyers buy at $9 and short sellers buy
to cover, that makes the stock price to bounce from $9 again to $11.70. And this bounce pattern only happened because
dip buyers and shorts came in to buy. This is why i’ve stressed in many of my
previous videos, don’t focus on memorizing patterns, focus on understanding the players
involved in the stock and what they are doing to form the pattern and price action you are
seeing right now. Think for the other traders. And there’s more, I’m not done yet. So at the end of the day on this day one run
up $ABIO closed around $9. The next day on day two we can see the stock
gapped up to $19 pre market. This is where the fifth major player comes
in. the swing traders. Swing traders are the people who love to buy
a strong stock holding gains overnight. Which is an important criteria i’ve mentioned
in my penny stock swing overnight video. Swing traders would be thinking here on May
1, “ok this is only day one of this move on $ABIO. This penny stock is holding up it’s gains
really well and not sold off. I think the news release could potentially
drive more buyers to come in overnight. Then i can sell my position at tomorrow’s
gap up or into a morning spike.” So the next morning. Guess what, these swing traders are laughing
to the bank. The stock is trading at $19. And the swing traders are thinking, “wow
this is amazing, i just made $9 a share in less than 12 hours. I better lock in some gains in case this stock
sells off back down to $10.” At the same time, let’s think for the break
out traders who are trading by following chat room alerts. Remember I mentioned earlier that we’ll
come back to those people? The most common day trading chat room strategies
are buying breakouts of previous day highs, premarket highs etc etc. Now let’s put short sellers into consideration
as well. As i mentioned there were shorts piling in
around $12.80 the day prior and probably held overnight because they think the stock could
sell off even more back down to $5. So let’s now put these swing traders, break
out traders, and short seller puzzles together. Swing traders, after profiting $9 a share
overnight. What do you think they are more likely to
do at the market open. They would probably sell and take their 90%
ROI and run. Short sellers who were holding short overnight
from $12.70 woke up to see that they are down $7 a share. They’d probably panic and want to buy to
cover immediately at market open. Break out traders in all these penny stock
chat rooms. They would probably get an alert by their
moderators to buy at the break of premarket high $19.50 and sell at the next whole number
$20. So at the market open, break out traders pile
on to buy at the premarket high of $19, short sellers buy to cover, those two players together
drove the stock shares up from $18.30 to a little bit above $20.45. Swing traders who got in previous day, they
want to cash out on overnight gap up or spike at the open. So they start selling their overnight positions
at the same time and taking home their profit. The amount of selling outweighs the fresh
buyers and short sellers covering. So the price did not go higher. This is when chat room followers and break
out traders panic “oh ***, i thought the stock was going higher to $25 or $30 after
i bought at $19. But now it’s breaking down below premarket
highs at $17 now. I better cut my losses before the stock tanks
back down to $5.” so all these break out traders who are stuck
at $19 or $20 at the open start selling as well. Now the smart short sellers who didn’t get
squeezed from their overnight positions, they would be lurking around this premarket high. They would be thinking “ ok the stock just
gapped up $9 overnight. If i was long and up so much i would totally
sell and take profit. I think this stock might spike a little bit
at the open with people chasing and immature shorts covering, but i think ultimately there
would be more sellers than fresh buyers, i want to take this short”. Basically this is the foundation of the gap
up strategy I mentioned in my prior video. This is the cause and effect relationship
that i think is so crucial to understand. Chart patterns are byproducts of psychological
decisions by buyers and sellers in the stock. This is why no patterns or strategies are
100% guaranteed. If dip buyers didn’t come in today to $ABIO
at $9 here on day 1. Do you think the stock would have bounced? If there weren’t enough break out traders
buying than selling, do you think this break out would have been successful? Most people think to make money in day trading
penny stocks you need to understand the market and analyze the patterns. Sure that could help, certainly. But really it’s not you against the market,
it’s you against the other people in the market. This is why I believe day trading psychology
is so important. You have to think for the other players involved. This is the kind of psychological analysis
that will separate you from the sheep that follow alerts and study just patterns. Don’t trade chart patterns. Understand the traders in the stock. And trade those traders. If you’ve found this video helpful please
do comment below and let me know. I have more trading psychology videos in mind
but i’ll only do them if you guys actually enjoy videos like these. Hopefully you can tell that i put so much
effort into creating these free videos that will help you guys out. All i ask in return is please drop me a like
and leave me comments down below. It really does help a lot. And that will encourage me to make more videos
like these for you guys in the future. And don’t forget to subscribe and ring that
bell icon to get notified first on my future videos. This is the humbled trader. Thank you guys for watching and i will see
you next time

100 thoughts on “Intro to Penny Stock Trading Psychology – Day trading for beginners ($ABIO Stock)

  1. Do you enjoy videos like these on PSYCHOLOGY? Let me know if you want to see more! 🥰🥰

  2. It's not "you vs other people". It's you vs other people + trading bots that do 60% of trades. But still these bots lurk more on big market cap stocks. So you are right if talking about penny stocks

  3. This video about psychology is very useful!!! Thank you so much! I'm looking forward to your next video!

  4. Your the best at what you do——all new traders need to view all your video —every video—is beyond educational

  5. You are brilliant and very educational—-your a must watch for all new traders

  6. To tell you the truth, I expected that this video would be another dry dissertation on pop-psych applied to the stock market. However, actually going through the segments of the price changes and outlining the thought process of the " types " of traders that cause the price movement is illuminating. If more trading psychology videos were presented this way, I'd view more of them. In short, I love the practical nature of this video!

  7. Hi there, this is a fantastic video. This information is actually what i have been searching for. Understanding the psychology of the players in the market. i have been checking out a lot of your video and you provide very informative and straight to the point. You should make more psychology stock videos because that is actually one of the key things to know in this game. By the way, i also love the trading journal and risk management sheet you provide. Great work.

  8. I loved this video!…..I am new to learning about day trading and this was a great explanation!

  9. Holy smoke halfway through the video I got so much wealth of information I'm going to go and watching this several times not because your cute but you actually sum up all the psychology videos normally an hour long entertainment into practical knowledgeable bites that you can actually use and understand Simply Amazing thank you!🙆‍♂️🤗😚😍🙎‍♂️🤑🤑

  10. you are absolutely awesome sister. very glad to get your videos, please keep it up. very open and easily understandable explanation. thank you

  11. why don't you have more subs. ohhh…because you don't talk about lembo and multimillion mansion :p
    But seriously you are good at explaining stock trading and psychology of trading. You got yourself a subscriber.

  12. This video is beyond amazing! Thank you so much. I wish i could like this video 100 times

  13. my love that's not breakout trade, it's already made smaller breakout around the 6.50$ price, before breaking 9.00 $ price. by the way, I don,t trade breakouts, and you seriously need lots of price action understanding. but you are good at analyzing fundamentally.

  14. Right on target, you are very good and the content is excellent.

  15. I was here at 4.2K subscribers! I give you 2 months then you'll be at 50K subs. Thats my position! Great video!

  16. I traded that trade… on the pullback myself I typically look for the first range range bar higher high and alert in… provided it does not break the prior low I will enter the breakout of that range bar high… the dip this particular stock ABIO was deeper than I like and the stock too extended and more likely a double-top at the opening high for me… … Love your entire video series… so much useful information….keep up the GREAT work!

  17. After the opening 60 – 90 minutes of trade I completely forget about these early runners but alert the high…. in the last hour of trade I'll bring them up to see if they have maintained themselves above their VWAP …if so they are of interest … but not unless set-up for cup-breakout continuation

  18. I would love to see more about this! You should make a video explaining more about yourself and your story! I would love to know how you got into day trading and how your journey has been so far. Thanks!

  19. Well done. I'm a beginner trader, and would like to see more vids like this one.

  20. Love your video !!!! Great information ,what a great trader you are thank you so muchXX

  21. Great video!! You are awesome. Thanks for all of the psychology trading info!!

  22. You are so awesome! I subscribed to your channel!Thanks for the awesome content!

  23. I like your approach to the trade.trying to think how all the players in trade are thinking..going to watch this video again.does make alot of sense.great job.

  24. Absolutely Love It …. Very clear … & you say there's more? GREAT!!! looking forward to it.

  25. love your videos, i've been learning to trade for the last 6 months, and you explain things very differently from who i've been learning from. KEEP IT UP please! If i could give you more than one like I would!

  26. Excellent video – great explanation and nice to see another approach to the market instead of the usual patterns etc. Keep it up!

  27. Thank you for teaching us all of these for free. I couldn't find anywhere else like you. Now one more thing, because it's your video, no one blame you if you say the word "shit". For me, "shit" is still better than the beep sound.

  28. god, you are awesome. keep doing it. You helping so many people vs others who just trying rip them off

  29. I hate to make you invest ten hours to make more videos but yes please do! I took the bulls on wall street bootcamp, which was a great introduction, but your videos are so packed with information, I’m finding things here I did not learn in the boot camp. And it’s free! Thanks again.

  30. Looks like a jungle out there!

    Humbled Trader do u also read minds? 'cuz u just read mine…

  31. You are the most down to earth underrated trading youtuber on this entire website. Thank you!

  32. Your videos are really AWESOME……its like really reallly Awesome and knowledgeable.

  33. I like to learn from you. I would like to start trading to help my family. Please help. Thank you

  34. Good video covering retail trader psychology, but don't forget the real players that make these things move. The company, the financial institution, stock promoters, and the share offering. chart patterns are manipulated and used by these entities in order to sell new shares into the market. That is why bread and butter chart patterns work. I agree about indicators. they are worthless. candlesticks tell you whats up, as well as that huge dilution volume candle on ABIO and also on the following day. if you're scrolling finviz looking at charts and see a sudden bull pattern form its best to look at sec filings for s-1's and s-3's. Sometimes form 4's. you have good content keep up the good work and the sharing of knowledge. also, i downloaded your spreadsheet to track trades. excel isn't my best friend. thanks. (abio was pumping out 424b5's pertaining to s-3 for anyone reading the comment in the future. dbl btm spike)

  35. “ Chart Patterns are only By- Products of Psychological Decisions to buy and Sell by traders.” I took notes and love this video. Will incorporate this into my Trading starting tomorrow morning…Thank you, these videos are a lot of work to make and I wanted you to know we appreciate them immensely…🙏

  36. Thanks so much for your videos, I'm still a newbie and trying to put together the tech stuff with the psychology stuff. Really like your presentation style.

  37. Hi Humbled Trader.
    Could please do more videos of PSYCHOLOGY! And is there a specif book you would recommend about trading and PSYCHOLOGY in general?

  38. Trading Psychology is definitely important to understand as a trader, especially for those who are trading penny stocks. This was an awesome video, I'm. currently studying on this topic myself to become a much better swing trader so thank you!

  39. I have watched a lot of your videos again and again. It is a lot better than most of the paid DVD. Thanks for sharing for free.

  40. That is awesome. I watched it like 3 times. You explained Trading Psychology great. I love “Trade the Traders”👍🏻

  41. This was one of the most helpful stock videos I've ever watched! Thank you! Your content is great and your humor is cute and funny☺️

  42. Great videos, I like your style and your psychology for trading. It confirmed for me what I was thinking was going on. Also your sense of humor is great too.

  43. I like how your videos are short and simple. Do u have any videos on level 2 and time and sales?

  44. Love the video thank you. Psychology is very important and often overlooked when new at this game. Great mindset.

  45. Lol, i've failed at FX because of being an early short trader, and i cant't seem to stop doing the same mistake, any help??? 😛

  46. Your videos are great, I have never seen someone explain the psych process so well. Thanks a lot.

  47. Another brilliant video. When I feel confused in the moment as to what the market is trying to say, I try to imagine the old trading pits where traders are yelling out prices. You are absolutely correct that it’s a struggle between buyers and sellers using different strategies and what their psychology is for buying, selling or holding. Great video. I like your fast pace and no BS approach. Keep up the good work.

  48. AMAZING video! Thank you so much and please make more! You´re great explaining!!! 🙂

  49. HMU Your the mentor ive been searching such good information and psychology breakdown in the market abt to watch every single one of your video Thanks for putting value in your videos for US

  50. I really enjoy your videos. Do you have a video about how to read candle stick charts?

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