how to find and trade stocks that Gap up 100 or th% the US Stock Market has been hitting new alltime highs in the past couple of weeks the S&P 500 is a multiple months of bullish Trend and we've been seeing many small cap stocks that surged hundreds or even thousands of percent in a single day such as BMR Hollow and dtss in this video I'm going to share with you how to find and trade short squeezes before they go to the Moon it really is a great time to be trading and even better time for
new traders to get started however I'm sure a lot of you are wondering how exactly do you find these profitable trading opportunities in this market this year so far we've been very very blessed with multiple crazy runners in a single week providing us so much opportunities but in order to be profitable as a Trader you need to know how to choose the right kind of stocks to trade and most important of all how to recognize a repeatable pattern I'm sure many of you eventually want to master entries and exits for your strategies so you can
rinse and repeat to do so you must be able to recognize charts patterns and setups there no other way around it hm maybe the only other way is to smash the like button and Make It Rain Lamborghinis in this video I'll use my own trade examples to explain a repeatable process that you can learn to find and trade the hottest stocks in the market you are going to learn the short squeeze chart pattern and how you can find the pattern early on the premarket criteria I use to find the right kind of stocks to trade
while Trader psychology news Catalyst and technical analysis are closely related and how I determine whether to go long or short a stock based on my criteria and the best part is that I have both winning and losing examples to show you later in the video so you can learn from the ideal and the losing scenarios as you know no strategy out there works 100% of the time but if you have one though let me know let's begin with everyone's favorite the short sque chart pattern every other day in the stock market there's news or press
release that drives a company's stock price to Gap up significantly during pre-market hours and sometimes these Runners can Gap up a lot even without news short sellers tend to pay attention to the stocks with highest percentage increase also known as the top gainers and most of the time these top gainers are low float small cap stocks from smaller companies with very weak fundamentals not only do they not have good financial statements to show the news catalysts are probably ambiguous or sometimes recycled from the past these kind of stocks can easily get overcrowded with short sellers
especially when the shares Too Short are easy to borrow or cheap to borrow as Short Selling has become so popular nowadays you probably notice a lot more sh squeezes on these kind of small cap low float socks especially the ones with poor fundamentals and in terms of price action you can identify the price levels which short sellers are most likely trapped by looking at where the stocks consolidating usually multiple times that starts with looking at this really fun stock Hollow you can see this huge parabolic daily charts here uh the stock came from about like
$4 came all the way to 20s broke above the 42s 50s and close to $100 you can see it's been through multiple days of massive short squeezes recently with no actual news whenever you see a small cap stock that's a top Gainer on the day with no actual news it's very tempting for short sellers now I want to show you how you can identify a potential short squeeze chart pattern before it happens so let's take a look at the first day this thing gapped up uh by the way with no news Okay on this particular
day when the stock went from over $4 to close to $15 at the end of the day you can see just looking at the intraday charts here you can see pre-market this started gaining some Traction in terms of volume into the open now premarket high is this 390 Mark okay on the stock a lot of times that pre-market highs is going to be the first sign of a bullish strength if the stock is able to break above it and hold and continue trending up now you can see the stock did exactly that broke above that
390s pre-market at around U 950s and never looks back created higher lows and higher highs um so besides the uptrend another key you can identify here is that it never actually created any d plastic sell off it just kept on holding that um steady five minute Trend this is a five minute chart you can see it keeps on making steady slow new highs pulled back but you're holding this really really distinct um uptrend the entire day if you line up this line all the lows from this lower day all the way to the in the
middle to the afternoon it's a very clear uptrend I think what's even more dangerous of course now we reviewing this in hindsight but you can learn all of these bits and pieces for next time is that the stock was relatively easy to borrow there was a lot of locates available for short Sellers and they were extremely cheap as well some for less than 1 cent per share so a lot of times you can see this is how they get you um the stocks just steadily uptrend all day no drastic pullback so that means none of
the short sellers were kind of let out they just kept on adding adding adding as a stock broke through multiple daily resistance levels you can see stock broke through that 770s 10 and $12 and never had a huge pullback so you know this thing is piled on with short sellers so we just talked about the pre-market highs key level that's going to be the first important key level for you to identify potential short squeezes now the next level to remember is the previous day's highs for smoke cap stocks have identified this pattern again and again
whenever it breaks through the previous day's higher day whether it's a spike or a clear breakout you usually get a huge volume coming in you know a lot of short sellers getting squeezed out new buyers breakout buyers coming into to buy a lot of times that's where you get a huge Spike after the break of the previous day's higher day so you can see the exact same thing here after this thing kind of pull back a couple of days on daily charts you can see it Formed that huge Spike on The Daily charts here um
40 90s just call it 41 now this huge breakout day where the stock broke through $41 and went close to $100 that happened when that $41 level this day's higher day and this day's higher day lines up with this particular day's premarket highs you can see right here premarket highs is trading near that $41 level and at the open pretty much once this thing clears through that $41 then you have a huge VAP hug you can see stock Consolidated around this vwap area and then you get huge squeeze to $95 recognizing this chart pattern is
almost an essential skill that most day Traders need to have especially if you're trading price action if you're a long bias Trader you want to spot the short trap consolidation and size in to maximize the potential return of your winning trades so again two key levels to keep in mind pre-market highs and the previous day higher day so my own trade on Hollow that I do want to go over actually happens on the second day of this huge gap up you can see the stock actually gapped up after that $12 broke out went all the
way to that $41 key level we talked about pull back and start a consolidating premarket this is where I got long premarket thinking that we're going to test that shirt that $41 High a day and continue to new highs this kind of chart pattern is actually one of my favorite to go long sometimes pre-market after seeing a lot of shorts have been trapped either previously or the day before so that's the reason I got in at $30 on premarket on day two of the move because I saw that day one a lot of short are
still trapped sure a lot of people got let out after hours causing a huge squeeze but I think premarket it looked like it was consolidating for another squeeze move and you can see I was only about half correct on the thesis you can see pre market we did consolidate around a lot of higher lows pre market holding at 260s and especially if you can you can see that $30 channel here um once this level keeps on holding for a couple of times I did get in around $30 thinking we're going to test at 41s again
which yes we did uh but right after we spiked to that $41 level we immediately sold off and it was actually holded down multiple times so as you can see from my execution chart I did sell some into that $41 Spike but I was really trying to hold at Le half of it for um a much bigger move to the upside so just keep in in mind whether you are trading this short squeeze chart pattern on the first day or the second day like I did or premarket the key is to identify whether there's enough
shorts that's trapped inside the stock that can help you squeeze a stock even higher and that's the reason I didn't go short on the second day uh I've noticed that a lot of these low floats Runners they going up for three four five days straight before the eventual unwind so it's actually a very dangerous time to go Short Selling too early on remember you got to adapt right if it's too early to short not ideal to short then go long until it's suitable for short selling so here on the screen I have a few more
chart examples for you if you want to practice and familiarize yourself with this specific short squeeze chart pattern and my recommendation is to use the one minute or twom minute intraday chart did you know you can get up to $6,000 worth of Premium trading tools all for free as part of the new promo from Centerpoint Securities you can now open a new trading account and access trade idea scanner which is my favorite scanner by the way benzinga Pro trans spider and dilution tracker they're also offering you free commissions for 60 days and 3 months free
of Dash Trader Pro trading platform I've been using Centerpoint Securities for active day trading and short selling for many years now so I'm very excited to share this amazing promotion with you guys they are now available in Canada as well so feel free to check out the promotions down below now let's get back to the video besides technical analysis and chart pattern a key component of a good trading strategy is a stock selection criteria this is especially true for small cap stocks you must learn how to choose the right kind of stocks to trade with
your strategy do you remember these video interviews have done with millionaire day Traders many of them talked about tracking and analyzing stock statistics such as volume float initial market cap range percentages and so much more you may not like numbers and that's okay because I definitely don't but you should at least have a general idea of what kind of stocks you should be trading with with your setup don't worry I'm going to give you a cheat sheet to help you find stocks that could potentially squeeze and run hundreds of percent and I'm not going to
charge you $10 for the secret stock criteria recipe all I'm asking for is a gentle tap on the like button fundamentally we're looking for lowf float small cap stocks with fresh news catalist ideally one that's gone on with the current theme for example a I artificial intelligence has been very hot lately so a lot of smoke cap stocks that's related to that category are likely going to run so you're going to want to scan for stocks with a market cap that's below 1 billion remember you're looking for small cap stocks so if you look at
my configuration you can see that I'm looking for stocks below one billion market cap with no minimum filter and for volume you want to see at least one 1 million shares traded premarket it's okay to scam for a little bit lower like I did only 20,000 but again where I'm actually choosing a stock to trade I want to trade these ones that have over a million shares traded and as for float I want to make sure ideally I have something lower than 10 million to ensure that it has the range to go and can create
a lot of volatility so besides market cap volume and Float the next important thing is the look for Gap up percentage now this really depends on the cycle of small cap stocks that we're in currently we're seeing a lot of stocks gapping up above 80% 90% And even hundreds of percent so you can see on the scanner right now you're seeing some stocks gapping up above 90% yesterday we had 200% gainers now that's the current hot cycle were in so as long as you set a filter for a minimum of 20% you should be pretty
good for small cap stocks next I do have a golden tip for you guys and take note you should also have a way to check whether the stock is easy to borrow or hard to borrow remember earlier we talked about the reason a lot of these small cap stocks can trap a lot and then squeeze up higher is because there's a lot of shorts available to borrow for the short sellers so that means if a stock is easy to borrow or cheap to borrow and it's trading a lot of volume and has really low float
there's a good chance that the stock could keep on squeezing up higher again it's not guaranteed but it's a very good indicator to look for now in terms of how to check whether a stock is easy to borrow or hard to borrow and the cost is that's the reason a lot of pro Traders have multiple brokerage accounts that's number one number two is being a trading Community it's it's very easy to check hey how much is ABC costing at brokerage a b c you can compare and contrast very easily a simple way to check is
also on actual trading platform so you can see this is Dash Trader that's the one I use with Centerpoint Securities if you look at the Montage window if you have htb that means the stock is hard to borrow then you have to actually go in to locate window and look at how much the cost is per share now if you look at this stock Nvidia s over here that means it's easy to borrow means it's free to borrow essentially so those are the few simple ways you can use to check whether a stock is easy
to borrow or hard to borrow and what are the likelihood of these lowf flow stocks squeezing up higher and the premium scanner I used earlier is trade ideas if you're interested in copying these tools you can use my link in the description below for Discount and you can download My Settings as well for newer Traders there's also a lot of free scanners and new research tools I put together all of these best free trading Tools in this video over here now that you've learned how to recognize a highly repeatable short squeeze pattern and how to
find this kind of stocks yourself it is now up to you to internalize what you learned and create an entry and exit strategy that works for you that's why the next topic I want to talk about is knowing the best entry timing and Market environments for your strategies I'm going to use my own trading style for your reference I have a few sets of trading strategies and some Traders will call them different playbooks when it comes to trading small cap gappers I also have a strategy that focuses on Short Selling the stock on the day
it gaps up now you might be wondering wondering why didn't I short sell Hollow so the key differentiator for me to decide whether to go long or short or avoid the smoke cap gapper it's no longer about the Catalyst that used to be the case prior to 2023 but nowadays as you can see we have Runners with no news flying to the moon now the main differentiator I look for when decided to go long or to go short is number one with there's a lot of shorts already trapped in the stock and number two does
the daily time frame show a bag holder daily chart again we're talking about pattern recognition and Trader psychology behind the technical patterns so let me explain this bag holder daily chart pattern to you using this particular stock dtss so this is the daily chart of dtss the stocking question here and the day I traded it is this particular day over here February 14th I spent it with my favorite Valentine the stock market anyways um you can see the reason I'm more short buyers on the stock is the longterm downtrend it it's had you can see
this is actually the stock I've traded many many times in the past it's always a pump and dump uh it's very apparent for the daily chart you can see stock gaps up sell SS off over here as well this is back in like 2021 gaps up sells off um a lot of times um you can see this here in particular here Spike and sold off over here as well and here so this is what we call a longterm downtrending daily chart the stock I forgot to mention the stock Al also did multiple reverse splits um
in order to prop the share prices up um and whenever you have something like this long-term downtrending multiple reverse splits and uh that's why you have a lot of bag holders holding the stock bag holders are basically people who have bought the stock high and refusing to cut losses so I'm sure there's a lot of people are holding the stock at $40 $51 and above and again once again the pattern recognition theme comes back again and again whether you're long buyers or short buyers like this one the stock I've seen this break out and sell
off the entire gains many times in the last eight nine years of my trading career so that creates a natural bias for the stock now that doesn't mean I'm guaranteed to make money on the stock despite knowing the bag holder Short Selling strategy yeah because long story short I actually lost money on the stock um what happened is I was actually way too early you see dtss despite the long-term term back hold the chart despite all the failed breakouts there's one thing it does really well when it squeezes because everyone so short biased because the
float is so low it's only 1 million shares float and despite the fact that there's no Catalyst for the run it can still squeeze from you know $6 as you can see on the intraday chart all the way to $20 so I definitely got squeezed I want to use my losing trade on dtss to show you the importance of choosing the right kind of stocks to trade for your particular setup and more importantly knowing the right timing and Ideal Market environment for your particular strategy when I was shorting dtss last week that was when all
the lowlow stocks whether this news or not was flying to the Moon everything was going 200 300 400% so that was a market favoring the longs I definitely jumped the gun way too soon on the short side again there's always a lesson to be learned this loss I think about $3,000 $4,000 loss is relatively small percentage of my trading account but without proper risk management this could have gone really really badly so as promised we went over both my winning trades and the losing trade on this topic of short squeeze chart pattern recognition and stock
selection once again the only way to achieve consistency in trading is to find a pattern that's repeatable and to choose the right market for your particular strategy I have made so many videos teaching different trading strategies but it's truly your job to go through the process of learning and finding what works best for you and remember practice makes perfect you need to be looking for these chart patterns every single day saving the charts and reviewing them don't forget to comment down below if you have any questions about trading or recognizing short squeeze chart patterns in
general and let me know if you want to see more videos on this particular topic it's definitely very interesting as we see more and more small cap Runners you can watch more technical analysis and trading strategy tutorials on this playlist also I recommend watching The Humble Traders podcast where you can learn from the experience of other successful Traders thank you guys so much for watching as always I'll see you in the next video
