There weren't a whole lot of stocks to choose from in premarket on Friday.
Oracle had Virgin Galactic Holdings, Inc. (NYSE: SPCE) and Nikola Corporation (NASDAQ: NKLA) on its radar … And they were the only two stocks with bullish price action near the open.
Right away, I didn't like NKLA…
It already had seven green days in a row. If it continued higher on Friday, that would've been the eighth day.
And I just didn't see high odds that it could continue higher.
I mean it could have … But I'm not here to play guessing games. I want to stack the odds in my favor.
And when I looked at the chart, it showed me it was due for a first red day at some point…
Turns out, the first red day ended up being on Friday. So anyone who was in my morning webinar could've played it safe and stayed out of a losing trade…
Next up was SPCE...
I didn't like the large float, but I loved the chart pattern. It baited shorts all through the premarket and it had a solid support level.
So I made a plan for it with an entry signal above $6.
If it went sideways, I didn't care about it. If it faded, I said, rot in hell…
I only cared if it could get over $6 and potentially squeeze shorts.
In this case, the shorts won and it faded, so I didn't care about it.
It was worth making a trading plan for. And following that plan and waiting for the right signal level would've kept you safe from a losing trade.
So why did SPCE fail?
It was easy and cheap to borrow shares for short sellers.
It has a huge float so it needs a ton of volume to spike.
The stock is full of bagholders since it's down from about $50 two years ago to now around $4…
On Friday — Mullen Automotive, Inc. (NASDAQ: MULN) — another ultimate bag holder stock was brought up multiple times in Pre-Market Prep...
How do I know it's the ultimate bag holder stock?
About six people typed the ticker into the Pre-Market Prep chat on Friday. And when I brought up the chart to see if there was something going on with it, I saw that it was up 1 cent — 1 CENT!
Bagholders were actually excited it was up one cent and were trying to get others to buy in and pump their bags…
I've been talking about this stock for probably nine months … I keep warning people that the company keeps diluting shares. Yet traders have kept trying to guess the bottom…
If you want to know how to recognize a bag holder stock, just look for people spamming tickers like crazy in chat rooms and on social media.
And if it's only up one penny — you know it's the ultimate bag holder stock.
So if you want to put the odds in your favor for a trade this week, pay attention to the float and the history of the stock, and wait for your signal levels to get hit before entering a trade.
Waiting for confirmation can save you from a lot of unnecessary losses.
Also, ignore stocks that have gone parabolic for multiple days without a pullback. Stocks can't go straight up forever.
Hopefully, these lessons and examples help you in your trading this week!
(As an Amazon Associate, we earn from qualifying purchases.)
13809 Research Boulevard, Suite 500, Austin, TX 78750
*Please note that these kinds of trading results are not typical. Most traders lose money. It takes years of dedication, hard work, and discipline to learn how to trade, and individual results will vary. Trading is inherently risky. Before making any trades, remember to do your due diligence and never risk more than you can afford to lose.
This is for informational purposes only as StocksToTrade is not registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund.
StocksToTrade cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing.
StocksToTrade in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, StocksToTrade accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.
Post a Comment
Post a Comment