Stevie Swai
We hope you’ve been taking notice and even trading some of the small stocks we share in the pre-market comments. We write about stocks we are observing for setups which we will likely trade along with stocks that have made a move , but may set up for a reaction. Many of these stocks remain volatile for a day or two and great trades can be mined for profits throughout the day once you master your psychology and understand that these are NOT investments, but short term holds for impressive profits.
Take DRYS for example – we’ve brought up this stock several times in the past 6 weeks or so. A long term chart will tell you that this company, at least investment-wise, is not wise. On the other hand, when watched on a day-to-day basis, due to it’s volatility and the way it moves, there are excellent trading opportunities to be found. We saw this on June 1, when DRYS hit a low of 2.20 at 9:35 AM, only to shoot up into the 2.73 buying climax at 10:55 AM. It had a similar type of setup on June 6 with a low of 1.77 and then rallying to 2.29 right into another buying climax, just 10 minutes before the market closed. Trader Scott and I traded it and we hope you saw the opportunities as well.
Now imagine that trade on June 1 – the maximum potential profit was 24%. Where in the world can you make a 24% return on your money in an hour and 20 minutes? And Scott and I do not use any margin when trading small stocks. So let’s just assume you don’t get in and get out with maximum profit. Even a 5-10% return on capital in an hour and 20 minutes is incredible. Also keep in mind, that without using a massive amount of leverage, trading stock indexes can never have opportunities like this. Which is another reason why we put a lot of emphasis on trading small stocks to build your account. And it’s real important to point out how much leverage (risk) which a stock index future trader must use in order to see similar potential results.
Another winner on our watch list was ABIL. Scott had done a video in the early hours of June 8 called Biggest Winning Stocks – The Common Thread? We had talked about what all these stocks had in common which may be leading up to a big move. ABIL was one of the examples he used in the video. When the market opened on June 8, this stock just exploded like a rocket ship and soared straight up. It opened at .83, rallied, and then started it’s descent at the buying climax high of 1.69. When I see momentum like that, and these are my kind of trades, I jumped in at 1.12 and hopped off the rocket at 1.58 for a sweet .46/share profit.
Now, I don’t usually do this, but I’m going to tell you how big my position was, simply to inspire you if nothing else. Those of you thinking your account is too small to trade with should think again. I bought 1000 shares for $1124.95 and sold those shares for $1575.01, making a $450.01 profit. And all within about a minute. These are the kinds of opportunities and profits that can be found trading these small stocks when one is well prepared. And when I say prepared, I mean, not only well researched, but prepared psychologically to step off that moving train before it makes an abrupt U-turn. Also further prepared to accept that perhaps the train, still moving on momentum, will keep rallying after you step off. And you’re left having to deal with the “if only I had waited” thoughts.
Two more winning stocks of the week included in the June 7 afternoon comments were XXII and HUSA. The next morning, HUSA opened at .74 and hit a high of 1.05 around 10:30 AM. Regretfully, yours truly was not in on that trade, but I hope some of our subscribers took advantage of it.
XXII went on to open at 1.63 that same day and steadily rose to close at 1.85. It went on even higher the next day to top out at 1.97.
As you can see trading small stocks can be rather profitable when taking a professional approach to trading them. And understanding that the majority of them are not to be invested in, or held for very long at all. In and out is the key.
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