The basics of stock trading is to buy low, sell high or sell high, cover low. OK, but how? Do you wonder why some stocks keep going up and up and up? Momentum. It doesn't usually appear on large cap stocks (which on better traded for liquidity fees). This strategy can be used by traders with retail brokerages (I suggest IB).
In the morning, scan for news and abnormal premarket activities. If there is a stock with an abnormal premarket volume and it keeps going up, watch it. Check to see if it is a small cap stock. You need to find stocks that have a small float, so the supply will be very limited and we already know the demand is great. If it continues to go up when the market starts, buy it and hold! Obviously, it won't happen every single time, but if you buy with the same amount of money for 10 different stocks that fit the description, chances are 7 or 8 of these times will earn you money. Simple enough? You can also go deeper with more analysis, but experience tells me these stocks only move based on supply and demand theories, and you can ignore the bad propect of the company or how you think it will have bad earnings. If at that moment, everyone wants that stock, then it will skyrocket, simple as that. It's not too unusually to see stocks go up 20, 30, 100% in a day. Usually it won't sustain if you buy long term, but the momentum will usually last within the day.
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I've seen stocks go up as much as 600% in one day!
I am a daytrader myself and will put your blog on my favorites and add to it as well!
Here are a couple of websites to use for the OTC market:
www.microcapmarkets.com
www.otcbb.com
Both of these sites are on a 15-20 minute delay; however, your online broker (I use Scottrade) SHOULD have real-time quotes.
I scan the websites above and filter by MOST ACTIVE (volume) and take note of the ones that are up 15%, 25%, 50%, etc. in the first 20-30 minutes! After that, I take a look at the 5-day chart. I only trade on stocks that are completely flat (with very little volume) the previous 4 days.
I also avoid stocks that trade with triple zero's in front of them (ie: .0001, .0005). Unless you are COMPLETELY SURE and 100% POSITIVE that the stock will continue to rise, then jump in! Lets say you get in at .0002 (ask), the stock has to rise to .0004 (bid will probably be .0003) before you can get a 50% gain! And then just like that, on one down tick, you're back down to .0003 (bid .0002).
You HAVE TO HAVE an exit strategy! I cap mine at roughly 25%-30%, UNLESS the stock continues to rise with no noticable corrections! You can't get greedy, you have to take your profits when you see them, BECAUSE YOU WILL LOSE ON SOME TRADES! And if you go on a lunch break or take a 15-20 minute break, BE CAREFUL, ANYTHING can happen in a short time!
Lastly, I try to exit my trades by 2:00 PM EST, because the "real day-traders" ALWAYS exit their trades by the end of the day and GENERALLY the last hour of trading is swamped by sellers; therefore, making the stock come back down to earth!
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