Learning how to judge a stock and predict what it’s going to do can be one of the hardest skills to learn as a beginner. For a lot beginning traders it feels like every trade is a shot in the dark. Most people might start by investing into a few trades and get discouraged by their returns then give up. This doesn’t have to be your reality! We believe that stock trading can 100% be a viable source of income for you.
My brilliant assistant coach John Balauat in my stocks and crypto trading academy shares some valuable tools and walks you through his daily routine with trading and how he analyzes stocks to get profitable returns.
Why I Look For Stocks That Are Already Moving
Every morning I have a routine to get ready for the trading day and one of my habits is to look for stocks that I can add to my watchlist so that I have a good chance to catch good trading setups.
I use the Tradingview screener to find stocks that have moved at least 20% and I’ve taught how to do this several times in our morning webinar.
This week a student asked a really good question: Why do you screen for stocks that have moved 20%? Isn’t it too late to trade them by then?
The Dating Analogy
To explain why I do this, Imma use another dating analogy.
I don’t remember how it started, but I’ve been using dating analogies to explain trading concepts. It seems to be working, so I’ll continue rolling with it.
Say you’re looking for a person to date. Would you want someone who has the potential to have the qualities you want … or someone who already has the qualities you want?
Would you want someone who has the potential to get a job and take care of their own bills … or someone who is already working and paying their own bills?
Well … if you’re only dating people with potential, you’re probably gonna get your heartbroken.
The same thing goes for stocks. When I look for stocks, I’m looking for stocks that are already moving and have characteristics that I already want. I don’t need to catch the whole move of a stock to make good money, I just need a piece of that move.
Trying to play the guessing game about which stock is gonna move is a sure-fire way to blow up your account. There’s no edge in that strategy and you’re just gambling.
Once I see a stock is moving, it gets my attention — but it doesn’t mean I’m gonna trade it.
One of the first things I do is find out if there is a good reason for the move. The better the reason, the more likely the move will continue.
Go to Yahoo Finance and look up the stock. Is there news that caused the move? Is it good enough news to warrant a prolonged move? Is the whole sector moving, or is it just this stock?
After that, take a look at the trading volume. Remember, volume is important for the momentum of a stock, and the more significant the increase, the more likely the stock will continue up.
Lastly, check the chart and price action. Do you see a pattern or setup that you think you can make money with? Are there areas of support or resistance that you need to keep an eye out for? If so, create a trading plan and follow it.
Finding good stocks to trade is a skill in and of itself but you’ll get better at it the more you do it.
Make this process part of your daily routine so that you can build a watchlist that’ll help you find the best trading setups!
– John Balauat
Do you want to become a better trader? Come join our Stocks, Trading & Crypto group. We meet every morning at the trading bell so that everyone can learn faster and more effectively. We’d love to have you join us!