- SwingTrades CEO Paul Scolardi’s personal trading account gained more than $5.3 million last year.
- He breaks down his swing trading strategy that has made $3.2 million in realized gains this year.
- He also shares three small-cap stocks that he’s watching for the rest of the year.
After 23 years of honing his skills in the stock market, Paul Scolardi is a full-time trader, self-made millionaire, and entrepreneur free from the shackles of his former corporate life.
But it hasn’t always been easy for Scolardi. Early on in his trading journey, he suffered a catastrophic episode of making and losing his first million dollars all in the span of a few weeks.
“I can’t describe how devastated I was and I don’t wish it upon anybody,” Scolardi said in an interview. “It was the most expensive and painful but necessary tuition because that is what caused me to really develop my strategy.”
Scolardi’s swing trading strategy, which is a form of short-term investing strategy that combines technical and fundamental analysis, has since paid off handsomely.
His personal trading account, which began last year with over $1.3 million in assets, generated more than $5.3 million in total realized and unrealized gains for a 296% return in 2020, according to an audit letter from law firm ClydeSnow that Insider reviewed. Insider also independently reached out to the law firm and was able to verify Scolardi’s trading results.
The S&P 500 returned just 18% last year, while its top two gainers — Tesla and Etsy — returned 743% and 301% respectively.
Breaking down his swing trading strategy
With memories of his million-dollar loss etched on his mind, Scolardi has set up a rigorous trade execution and risk management process to ensure that never happens again.
He decides to enter a trade based on his thesis on why a stock should go higher, and adds a stop loss to minimize his downside if it doesn’t work out. He also implements a profit-taking plan to maximize his gains if the trade works out. As long as his thesis does not change and the stop loss is not breached, he holds on to his trades.
Before implementing the process, a large part of his strategy is about stock picking. Scolardi said he has developed a knack over the years for finding emerging themes and identifying mispriced small- and micro-cap stocks.
For example, one of the key themes on his radar is the rise of electric vehicles and green technology as major world economies transition to clean energy. He bought shares of the special-purpose acquisition vehicle Churchill Capital IV (CCIV) in mid-January at around $11 apiece when news leaked that the
Lucid Motors (LCID), a California-based EV manufacturer. He sold the shares at between $27 and $30 on February 2 before CCIV and Lucid officially confirmed the merger, according to screenshots of his brokerage statements.was in talks to merge with
Shares of the SPAC had soared to as high as $65 on speculation before falling sharply. The stock was trading near $28 a share on Wednesday.
3 small-cap stocks on his radar
Scolardi acknowledges that the pandemic-induced
last year was conducive to many traders, but this year his trading account has also netted over $3.2 million in realized gains so far, according to redacted PDFs of his Interactive Brokers account statements.
“It’s much more difficult this year, particularly for small- and mid-caps,” he said. “It’s definitely a stock pickers’ market in 2021, you have to find the right businesses that are executing now or building promising technology for the future.”
One of the key trades he’s made is The Glimpse Group (VRAR), which is comprised of multiple virtual- and augmented-reality software companies. Scolardi views the early-stage company as a diversified play on the rise of the metaverse.
He believes that metaverse has transformed from the tech industry’s latest buzzword into an emerging trend. For example, Facebook is pouring a vast amount of resources into its Reality Labs project and said it will hire 10,000 people in the European Union to develop the virtual realm. The Glimpse Group, which has filed 13 patent applications across nine of its subsidiary companies, is already partnering with companies like Snap on AR.
His personal price target range for the stock, which was trading at $9.70 as of Wednesday afternoon, is between $20 and $50-plus, by the end of the year. If the stock hits the low end of his target range (low $20s), he will start taking anywhere from 20% to 50% off, move up his stop loss, and then let it run. However, if the stock falls significantly below its IPO price of $7 a share, he will consider exiting.
“As long as it stays above the $6.50 to $6.75 range. I was going to stay in it because I know it’s been a bad overall market for small caps,” he said, “but I believe it is a very attractive company given the focus on the metaverse.”
Despite a bearish market for SPACs so far this year, Scolardi has got into two SPACs — Trident Acquisitions (TDAC) and Far Peak Acquisitions (FPAC), which have announced business combinations with Lottery.com and Peter Thiel-backed crypto exchange Bullish, respectively.
He is especially positive on Trident’s potential merger with Lottery.com, which he said has “a huge addressable market, killer domain, and strong revenue growth.”
Meanwhile, Far Peak is the SPAC of former New York Stock Exchange president Tom Farley, who is also going to lead Bullish post-merger. Scolardi thinks that a lot of the momentum around the newly public digital asset platform Bakkt (BKKT), which soared 234% on Monday before sharply correcting, could coalesce around Bullish.
“I think traders are looking for the next one and this company has some big-name backers,” he said.