So how can you take advantage of moves like this that seem to come out of nowhere in the middle of the day?
I'll show you how you can approach Breaking News Chat plays and a pattern to look for...
How to Approach Breaking News Alerts and the Pattern to Look For
Step 1: Use the Right Tools
First, make sure you're using a reliable breaking news chat service.
These services send out alerts in premarket, during market hours, and even after hours. So, you're always in the loop when big news drops.
I might be biased, but I think StocksToTrade's Breaking News Chat is the best one out there — try it out here.
I use it daily and it replaces multiple subscriptions I had and keeps everything in one place. That saves me a ton of time.
Once you see breaking news hit the wires, here's how you can approach a potential trade…
Step 2: Look For a Reaction
Remember, we're not here to guess which stocks will react to news or find hidden gems that nobody knows about.
We want to find stocks that are already spiking and look for high-odds setups that we can repeat.
So when news hits, the first thing you want to see is a good reaction...
You want to see a quick spike in the stock's price with high trading volume. The spike and volume tell you that traders are interested, and that can mean a potential trade…
Step 3: Watch For Confirmation
The trick to trading Breaking News Chat alerts is to not jump in right away. Patience is key in trading.
We want to avoid jumping into a stock that ends up immediately failing.
So a good approach is to wait for the stock to pull back from its initial spike...
This will show you if the stock can hold any of its gains and has the potential to continue higher, or if it's going to fail.
If a stock can hold its gains on a pullback and starts to trend back up — that's where it gets exciting.
Here's the pattern I would look for…
Step 4: Look For A Pattern And Entry
Remember what we look for in every premarket… We look for stocks moving on news that are trading a ton of volume and ideally have a low float.
Then we look for a pattern…
For trashy day one spikers that's usually a dip and rip.
And that's the same thing you can look for in stocks with news alerts during midday…
You want to see that the stock can spike, but also that it can hold up and continue higher.
Let's look at yesterday's winning Breaking News Chat alert as an example…
The stock had COVID news which we've seen move stocks recently since it's back in the mainstream news headlines…
Plus, it has a low float of fewer than 10 million shares and traded in high volume at the time of the alert.
After the initial spike on the news, it pulled back and consolidated around VWAP. Then it broke through the high from that initial spike and continued to run for almost an hour.
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