Howdy, traders. It’s Bryce here.
I hope everyone’s happy and healthy cause I’ve been feeling under the weather, and it bites. But I’m not here to be a downer. I’m still at my screen, in fact.
I wanna give a shout-out to one of my trading buddies, Jack Kellog, for being the subject of a featured article on Business Insider!
The momentum has been phenomenal lately. This can be very exciting but it can also be overwhelming. We have choices again now!
So when there are multiple stocks running at once, how do you prioritize?
Today, I’m gonna break down what makes one ticker better than another, and what it takes to become my top watch…
How to Choose the Best Stock for You
We’ve gotten back to the point where a watchlist scanner might turn up several possibilities. That’s a great problem to have. And it’s certainly made my Small Cap Recaps meatier. Thanks for getting us to 100,000 subscribers!
Growing A Small Trading Account? Check this Out
When multi-millionaire trader Mark Croock first started trading, he was an overworked and underpaid accountant…
So he knows what it’s like to start small while wanting to massively grow your wealth as quickly as possible.
That’s why he just recorded a step-by-step training that reveals what he believes is the best options trading method for someone trading with a small account.
That said, if you’re not sure what to prioritize, it can also be overwhelming. And when you don’t have a trading plan to start with, you might be tempted to trade willy-nilly and then revenge trade if your first trade goes poorly. Don’t do that!
Look for these things instead…
#1 – Risk to Reward
The rule of thumb is that you want to enter a trade that has a one-to-three risk-to-reward ratio. That means that you know what you stand to lose when you’re entering that trade and what you stand to win. If you stand to gain 3x more at your exit target price than you stand to lose at your stop-out level, by all means, take that trade!
The more you study the markets, the more familiar you become with certain stocks’ movements. At that point, you might find stocks with one-to-five risk-to-reward potential (sweet!) or maybe even feel like a one-to-two play is worth it because the potential is higher that it’ll go up than that it’ll go down. The key is to figure this out in advance!
#2 – Know Your Volume Comfort Zone
Now, we always recommend that you check that a stock has higher than usual volume before you trade it. You want to make sure there’s enough liquidity so that you can enter and exit your trade without a lot of slippage (that’s the difference between your target price and the price your order actually gets filled at).
That being said, high-volume, low-float stocks are not for the faint of heart. If you know that you can’t handle the speed of a stock where the volume is 4x the displayed share count, trade (paper trade or use small size) until you get a feel for the right volume zone for you. Some traders welcome the slower pace of a stock that trades with volume that’s one-fourth or one-half of its share count.
#3 – How Recent and How Good is the Catalyst?
This is a tricky one because the Day 3 Surge pattern thrives on, well, waiting until the third day after an initial breakout to break out again. There could be news on the third day, but there doesn’t have to be. Some people hear the news that caused the first breakout later, get excited that it didn’t sink on the second day, and send it flying on the third. But you want to have an accurate sense of what the buzz is surrounding the ticker on your list.
Want to be alerted to hot trade ideas before anywhere else?
Breaking News Chat is the alert service that traders can’t get enough of. Two former financial analysts scour the Stock Market and news for stocks that could potentially spike and alert the room allowing you the chance to get in on the action.
Check out the alert for DWAC on October 21st:
This is a tool you’ll want in your trading toolbox.
You also want to understand the quality of it. If two or more biotechs break out in one day and one claims to have found the cure for a rare disease, always choose the one with a cure for a well-known disease instead (scarcity can be a good thing, but not when it means there aren’t a lot of people who need the product). That said, if something’s trending in the news (like Monkeypox), it’ll likely be the top ticker to watch. You want to capitalize on fear and/or buzz.
Conclusion
There’s always an opportunity in the markets just around the corner, if you know what to look for in a trade.
The most precious resource we have is time. That’s why it’s so important to kick overtrading to the curb! Know what you want, wait for it, and strike when the right play comes to you.
My fellow trading teacher Matt Monaco figured out how to do exactly that. And he’s excited to show you exactly how he finds $5k setups without spending his whole day glued to his laptop. Catch the hot deets today at 1 p.m. Eastern here.