Lessons from My Sphere 3D Weekend Trade

Key takeaways from my ANY weekend strategy trade…

This strategy works more often than not, but details make a huge difference.
Meticulous risk management can be the difference between a win and a loss.
It’s not about gambling — focus on risk vs. reward in every trade….

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One reason I like weekend trades is because once the stock market closes I can’t second guess myself. But I can manage my position into the close. And as you’ll see in this trade review, if it’s a listed stock I can manage my position in after-hours trading, too.

Let’s look at the trade…

Sphere 3D Corp. (NASDAQ: ANY)

Everyone wants trading to be simple. Buy once … sell once. And a lot of my trades are just that. It helps new traders learn the process when I keep it simple.

But some trades have more moving parts. Especially with choppy stocks. It’s good to understand how a veteran trader manages those types of trades.

Let’s start with the news catalyst

NuMiner Press Release (Source: Sphere 3D Corp. as published on MarketWatch.com)

Sphere 3D wasn’t even on my radar until the news came out on Thursday evening. As you can see, the company is getting into bitcoin in a big way

The company agreed to buy 60,000 bitcoin miners for $1.7 billion.
It’s going to use renewable energy for mining.
The company expects to process roughly 15% of the global network hash rate.

So they’re taking on one of the biggest criticisms of bitcoin and crypto — it uses a ton of energy. The deal kicks off in the next few months. And 15% of the global network hash rate is a giant deal.

So I liked the news. But the background narrative made it even better. Crypto got hit hard the past few months. But last week and into the weekend, it started to bounce. So part of the reason the stock spiked was because bitcoin was jumping, too.

Still, it takes more than just a news catalyst for me to take a trade. Always remember that…

Former Runners Can Run Again

Here’s the ANY two-year chart…

ANY 2-year chart (Source: StocksToTrade.com)

As you can see, the stock has proven it can run. But it’s also way off the highs. I’m comfortable being more aggressive with former runners off their highs. It’s not that I think it can get back to the $11s. But former runners can bounce. Plus, it was the highest trading volume since September.

This is where it gets a little tricky. News is important, but I also…

Look for Price Action and Breakouts

The chart below shows the initial after-hours spike on Thursday, February 3 to my final exit on Monday.

ANY chart: Feb. 3-7, 2022, key resistance, entries, and exits. Weekend Trader strategy (Source: StocksToTrade.com)

The key was whether it could break out over resistance at $3 per share. It tested that level four times before the decisive breakout. A lot of people think trading is about buying before the spike. NO! Don’t try to predict. I didn’t know it would finally break through.

Instead of trying to predict

Trade Setups Where the Odds Are in Your Favor

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Until ANY broke $3, the odds weren’t right. The combination of news, price action, and a clean breakout flipped the odds in my favor.

You can lose on any trade. But if you take trades where the odds are in your favor, over time, you should win more than you lose.

But you still need to learn to…

Manage Risk Meticulously

Yes, I had to manage the trade to come out ahead.

On the first entry, I waited for the confirmed breakout and then bought the dip. My thesis was that it could spike another 5%-15%. When it spiked 10%, I shoulda, coulda, woulda sold. Instead, I waited…

When it dipped below $3, I averaged down. I wasn’t too worried about the after-hours dip because volume is so much lower.

Again, my original thesis was that the news had legs. I thought it could keep running on Monday. Since my position was small, I used the after-hours dip to build a bigger position at a better average price.

That’s the beauty of taking a small position on a speculative trade. It allows you to manage risk through position sizing.

And once you’ve built a position, it’s much easier to…

Take Profits Along the Way

So many of you want to hit home runs. I don’t like that. Learn to take singles and lock in profits.

When ANY started to spike into the after-hours close, I had to make a decision. Should I hold my whole position over the weekend? Or should I lock in the profits I missed on the smaller position when it went to $3.40 during regular hours?

I have to be honest — I felt a little guilty not taking profits. So, I sold a little over half my position and locked in roughly $1,000. That gave me more confidence to hold the rest over the weekend. And it meant I didn’t have to worry about something out of my control, like a potential bitcoin drop over the weekend.

I closed the rest of my position on Monday at the open for a $1,950 win. This is trading for me…

The Beauty of Trading

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There are so many nuances to this trade. I could have made different decisions. And you don’t have to make the same decisions as me. Maybe you would have taken the 10% on Friday afternoon before the close. 10% on a speculative position is solid.

You get to customize trading to suit your personality and risk tolerance. That’s how I look at this trade. It had so many lessons…

How to optimize entries and exits.
Basic technical analysis.
How news — and the bigger narrative — impacts the setup.
And … how a veteran trader manages risk with a moving target.

Successful trading is NOT hot picks. And it’s most definitely NOT about following loser promoters. It’s about learning all these lessons and then refining your process over time.

It might seem overwhelming in the beginning, but it’s not rocket science. You CAN learn to see this setup in real time.

If you’re interested, I’m giving a presentation about this very setup on Wednesday night.

This Could Be Your Last Chance…

Join Me Wednesday, February 9 at 8 PM Eastern for

And I’ll show you how I make money in my sleep. What could be better?

I’ve been trading this setup for 20+ years. And while $1,950 might not seem like much, it’s exactly how I’ve made millions…

Thousands of trades … one trade at a time. The lessons stack up and the profits stack up. It’s not about luck or gambling. It’s about risk vs. reward on every decision, in every trade.

What do you think of this strategy and this trade? Comment below, I love to hear from all my readers!