Episode 008: Dominic Mastromatteo – Let’s OTSwizzle

April 27, 2019 beyondthepdt

Dominic is another OTC trader that we have had the pleasure to interview who shares his simple, yet effective strategies and mindset that he uses to excel in the OTC market. Like many of the other OTC traders we have heard from and have talked to, he mentions that he believes it is much easier to trade the OTC market than it is to trade the NASDAQ. The reason for this is because it appears to be much more reliant on technicals than on fundamentals, which makes it much easier to gauge as to whether or not it is a good idea to be in a trade. In this week’s episode, Dom walks us through some of his setups, how he got started, and where he is at today.

How Did Dom Get Started?

Dom mentioned to us that he had a lot of time, as he was doing school online as opposed to going to a physical university. This allowed him to take a lot of time to focus it on something that he wanted to excel in himself as opposed to a different career path. While his friends and even family at points judged him for wanting to pursue trading – something he lost money at when first starting – as opposed to making a steady income at a full-time job. He also mentions that his dad played a big role in helping him get started with the Tim Sykes DVD course, as well as fully supporting the idea of him trading full-time. He saw the upside potential that trading had and believed that Dom had what it took to do this full-time.

After purchasing Tim Sykes’s DVD course, Dom tells us that he would spend upwards of 17 hours a day studying during some points, be it through watching the market, tracking data, and studying the DVD’s and other content. He mentions to us that he largely attributes this hard work in the beginning to his success now.

When Did Dom Start Finding Success?

Like many, Dom was not profitable right off the bat. He was trading anything and everything and did not have much of a strategy to back up his trades. He was trading OTC stocks and listed when he first started, up until the first half of 2018. It was not until he went through and started tracking his trades that he realized he was losing money on NASDAQ stocks, while making money trading OTC stocks. Furthermore, NASDAQ stocks made up 40% of his trades, so he knew he had to cut this out.

From there, he began focusing primarily on OTC stocks, and while he can make money on OTC during a given point in the week if the setup presents itself, he makes the bulk of his money with sector momentum in the OTC world. From here, Dom has found consistency in his trading and has done quite well for himself. While he does tell us that he struggles to adapt to changing markets at times, especially when a sector is starting to die down, he mentions that this is what he is working on in order to continue to improve his trading style.

What is Dom’s Style?

Dom is primarily a long-biased trader in the OTC markets, primarily buying the breakouts of OTC runners. Using this style, he buys the breakout of a stock after it consolidates knowing that it would likely gap up again the following day. This happens a lot during a sector momentum in the OTC market. He then mentions to us that he was able to keep his risk relatively small buy only risking a green-to-red move, and that the majority of these stocks that he would play would be a first green day play off of a runner.

Going back to a point that he made, though, about the style he uses, it is imperative for this style to work that one has patience. Many people are consumed with buying the breakout as it breaks, but Dom realized that when an OTC breaks out, that almost every time it is going to pull back and consolidate throughout the mid-day. Towards the end of the day (2:30-3:30 as mentioned by Dom in the episode) the stock will likely begin to pick up some momentum, and as it begins to heat up again, Dom begins to buy in this area. By the end of the day, if it closes strong, Dom swings overnight and sells into the gap-up the next day. He calls this strategy the OTSwizzle, a very creative name that Matt and me absolutely loved.

Why OTC?

In terms of what Dom suggests that beginners start with, for one reason in particular – he finds it much easier to trade. The reason for this is because, as aforementioned, technical analysis is the main reason for these moves. He also talks to us about how this is simply not the case on listed stocks and says that if you were to have a strategy solely based on technical analysis in the NASDAQ market over a six-month time frame, that it likely would not work out too well. In the case of the OTC market, technical analysis is far more important in terms of predicting the next move of the stock.

Closing Thoughts

It is clear to us that through Jack’s episode and Dom’s episode that OTC stocks trade much simpler than many NASDAQ stocks. Because of this, Dom and Jack have both recommended that beginning traders start off learning the OTC market, and if they want to later go onto listed stocks then at the very least, this serves as a great way to learn technical analysis. Of course, Dom mentions as always that risk management is important, but because of the way these stock trade, risk levels are usually much more defined.

Overall, we had a great time chatting with Dom, and we hope you guys had a good time listening. Stay tuned for next week’s episode and thank you for all the support thus far!

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