Howdy traders, it’s Bryce here.
It’s only Tuesday and we’ve already seen some solid runners.
There were at least 2 trade opportunities yesterday.
Straight up, gimmes!
Both were on Avinger Inc. (NASDAQ: AVGR). The stock …
- Is a biotech
- Started below $5
- Has a float of 10 million shares
- Dropped news Monday morning
- Spiked 100% intraday
If you don’t know why those factors are important … You NEED TO READ today’s article.
There are daily opportunities in the market. Your next opportunity is TODAY. But first you need to understand …
- Key factors behind this spike
- Key patterns to trade
The answers are below …
#1: The Key Factors
Let’s go one by one …
The biotech sector is hot right now. It’s been hot all year.
One of the great things about hot spikers is their ability to follow key patterns. One of those patterns is called sector momentum.
When a sector of stocks consistently produces hot runners, we can put more conviction behind trades on volatile stocks within that sector.
And we only want to focus on the best plays. That’s the first reason AVGR was an obvious opportunity …
Most people shy away from penny stocks.
That’s because we’re taught to fear them.
For good reason: Most of these spikes eventually fail.
But we can ride the momentum if we understand the dangers and mitigate the risks. Stocks under $5 are likely to spike higher. That gives us more opportunity and room for error.
AVGR spiked 100% intraday. We don’t have to catch the whole move, just the meat of the move. I’m OK with a 10% profit. Because most investors hope for 10% on the year. If I do that in one day … You do the math.
Plus, I’m a small account trader. I started with $5,000. And you can bet I lost some of that in the beginning. But once I learned to mitigate risk, I could load up on cheap shares and ride the momentum for big percent gains.
Float of 10 Million
The float is the amount of shares outstanding and available for traders on the market.
We want the stock to have enough shares so that there’s liquidity. Otherwise, we could get stuck in a position: We want stocks with a few hundred thousand shares at the least.
But too many shares is also a bad thing.
Too much liquidity and the price likely won’t spike as high. That’s a law of supply and demand. If the supply is low and the demand is high, prices will spike higher.
Usually, we want stocks with a float below 10 million shares. AVGR is smack on the money. And that’s good enough for me. This is an inexact science.
And by contrast: AAPL’s float is 15 billion shares.
News Monday Morning
I love it when a stock drops news in the morning. That’s the perfect time for momentum to build during premarket hours.
That’s when it lights up my scanner. And when the market opens at 9:30 A.M. Eastern … It’s go time.
Every stock we trade needs to have a reason for spiking. If there’s no reason, there’s no reason to watch it.
For AVGR, the company announced it launched the Tigereye ST Image-Guided CTO Crossing Device. Which sounds like some cockamamie B.S. … And it probably is.
Remember, these spikes don’t last forever. We’re just trading the hype caused by news and press releases.
Welcome to penny-stock land. There are trash spikers with meaningless news every week. And we can trade the volatility for profits.
Spiked 100% Intraday
I mentioned this a little earlier, but you need to understand how to find the 100% spiker BEFORE it spikes 100%.
We look for stocks that spike at least 20%.
A stock that can spike 20% can spike further. And it doesn’t stop at 100% … Some of these things go to the moon.
Here’s how to harness the power …
#2: Key Patterns
Without stock patterns, we’re lost.
And the only reason we have stock patterns is thanks to the predictability of human beings.
Tim Sykes showed me his process and I still use his patterns today. He developed them over 20 years ago. And they’re the same after all that time because people are predictable in stressful situations.
Like when they’ve got their kid’s college fund riding on a volatile stock.
All trading patterns rely on technical analysis. That’s the process of analyzing market data to map price action.
One of the most popular tools in technical analysis is support and resistance. If you’re unaware of this concept, this is the video I watched when I started …
There are a few different patterns we use to trade in the market.
And AVGR was an obvious trade for me. But without knowledge of the proper patterns, you likely won’t see what I see.
That’s why it’s so important for you to watch live-trade sessions.
YouTube videos are great, but the most value comes from a live stream where you can watch and interact with professional traders.
You can see me winking in the back!
The market isn’t for everyone. But for some people, there are real opportunities to profit. And you’ve read this whole article … Obviously, something is pushing you toward the industry.
Do the safe thing, watch a professional trader a few times.
It’s eye-opening, to say the least.