In a perfect world you want to have zero risk in your trades, but we all know that doesn’t exist. Sometimes, you have to find a trade that is a bit of a long shot. By managing your position size appropriately, you can make sure that the long shot doesn’t wipe you out if it tanks but still bi in it to win it if it takes off.
There has been some buzz about another short squeeze trade that is a classic longshot. MMTLP is an OTC stock that looks like it is creating pressure on the skeptics to fill their positions. This could set up a huge move in the next few days. It could also drop like a rock, but lets look at the chart.
This is the thing with these types of set ups. They have big risk. The key to a trade like this is to use a small amount of capital that you can afford to completely lose. While it seems illogical, we all accept some level of drawdown when we make a trade. Having a $20 stock go to $10 is the same as having a $5 stock go to $0. The only difference is that the $10 stock may come back at some point, but the $0 is dead.
I never assume to know everyone’s risk tolerance but I do give as much fair warning as I can. A safe trader would stay away from this trade and look for something with less of a chance of hitting bottom. You have to make up your own mind on whether this risk is worth it. Don’t bet the farm on this one but it is something worth keeping an eye on.
I can tell you that there is a fine line between a meme stock/short squeeze and a stock caught up in some type of social media hype. We will be keeping an eye on this to see how it plays out. Even if you just watch from the sidelines, it will be interesting to see what this move tells us about looking for other big moves in the market.
Keep learning and trade wisely,
Market Wealth Daily