Author: Jim Hartwell

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Combat Stock Trading Company Limitations That Anger Investors

What happens when an investor sets up a profitable trading strategy but the trading company platform (think Robinhood) limits functionality (trading options) for the particular stock being traded? A potentially profitable trading strategy can lose money because volume is an important part of the trade set up and if purchasing of shares is being limited by the trading platform then entering and exiting a trade is hindered before a profit can be taken. As the saying goes, you make money when you buy so the decision to buy and the amount of shares to buy is key.

Recently when the idea of trading shares of GameStop  (GME) went viral it caused so much volatility that some trading platforms like Robinhood placed limits on trading the stock. That angered investors trading on Robinhood due to the fact that a sufficient amount of shares in GME could not be bought that would allow for sufficient profit in the intraday price moves that the stock made. How can traders combat such moves made by stock trading company platforms?

The best way of combating limits placed on trading in specific stocks is to find another stock to trade. Too simplistic? Not hardly. There are thousands of stocks that trade on the U.S. stock exchanges everyday. Many stock traders and investor focus on the price movement of the 30 stocks in DOW. But the DOW Jones stocks are only representative of their respective sectors not of every stock in the sector. If the market (DJIA) is down for a given trading day there are many individual stocks, dozens at minimum, in the broader market that are up for the day.  The same is true for sectors that may be down, there can still be stocks within the sector that are up for the day. The key is to find one of these stocks and trade it.

When a stock receives unexpected interest from a lot of investors, whether retail or professional ones, the volume created in trading it can overwhelm a trading platform used to trade the stock's shares. Clearing all the trades (which is a different subject for a different article) can be problematic for a trading company since the amount of floating shares for the volatile stock may be limited. This may cause a problem for a trading company with limited shares to obtain shares for all investors who wish to purchase them.

Stock traders and investors want to be able to readily buy and sell stocks that are making big price moves so that a profit can be captured quickly. If everyone is limiting their attention to trading the same stock then share availability may be impacted and limitations by trading companies will result.

Since the US stock markets are the most liquid in the world there are always opportunities to be made outside of the viral stocks being traded. Profitable intraday trading happened for more stocks than GameStop when it was red hot. The way to combat the limitations were placed on GameStop, and other stocks, with limitations,  is to find highly traded and profitable stocks that don't have limitations placed on them. There are respectable stock research sites (like this one) that can help you identify stocks with high interest (measured in volume) along with volatility (measured in price movement). Trading in diversified profitable stocks that don't have limitations (yet) allow for quick profits  to be made smoothly.  Happy trading!

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Determine Where You Will Invest, Is It Easy Or Hard?

What To Invest In

There are several different types of investments, stock market,  real estate, artwork, and there are many factors in determining where you should invest your funds.

Determining where you will invest begins with researching such things as, the various available types of investments, determining your risk tolerance, and determining your investment style – and your financial goals. The most liquid and diverse place to invest in is the stock market.

Stock Research Importance

If you were purchasing a new car, you would do quite a bit of research before making a final decision on your purchase. You would never purchase a car that you hadn't fully investigated and taken for a test drive. Similarly, investing in stocks works much the same way.

Learning about the stock market and the individual stocks in it takes a lot of time… time well spent of course. There are numerous books and websites on the topic, and you can even take college level courses on the topic – which is what stock brokers do.

Stock Research Shortcut

Does researching stocks have to be time consuming? With access to the Internet, you can actually research stocks, play the stock market with fake money to get a feel for how trading works and see if you can make money at it.

You can make pretend investments by searching for ‘Stock Market Games’ or ‘Stock Market Simulations.’ on any search engine. But how do you choose which stocks to "play with"?  You can fake trade but you can't fake research. Or can you?

No you can't use fake research to trade stocks, but you can take a shortcut. Let someone else do the research for you. That's how financial analysts and consultants make their money. But rather than interview or research analysts you probably would rather spend your time researching stocks you can buy.  A better shortcut is to use stock research already distilled into a list of the stocks that seem most promising based on the research already done by others.

Stock Watch Lists

Stock watch lists is what this website compiles for its members to refer to when they are buying and selling stocks. If you want to be an independent investor you will want to pull the trigger on your own trades and buy and sell according to your own preferences and tolerances for price movement.

Check out the watch lists in our member's area. Buy the stocks listed at the approximate time shown on the watch list and sell when the price rises to a point where you make the profit you desire, then sell the stock. For stock day traders this buying and selling can take place multiple times throughout the trading day, with the same stock or with different stocks. Financial planners don't recommend this type of investing because there is the danger of inexperienced traders losing money instead of making money.

If day trading stocks is too much risk for you then you should speak with a financial planner. Tell him or her your goals, and ask for their suggestions – this is after all what they do! A good financial planner can help you determine where to invest your funds, and help you set up a plan to reach all of your financial goals. Many will even teach you about investing along the way.

For just a dollar you can try using our watch lists produced daily for each hour of the trading day to pick stocks you want to trade. You'll have time to "paper trade" (fake trade) using one of the simulators you can find as mentioned previously in this article. Quite quickly, and cheaply, you can see whether day trading stocks using our watch lists will work for you.

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Stock Trading For Beginners

How Do I Trade Stocks As A Beginner

Some may say if you are a beginner you shouldn't be trading stocks. But that sentiment ignores the fact that even current expert stock traders began as a beginner.  Whenever you decide to make your first trade you are by definition a beginner. But "beginner" doesn't have to equate to "dummy".

Obstacles For Beginner Stock Traders

It's easy to see how good or bad news about a company can make its stock price rise or fall.  Everyone will avoid the stock of a company with bad news. But it may take some time to learn about how volume, moving averages, moving average convergence and divergence, resistance levels, and support levels affect the  price of stocks. You can add to that the effect of interest rates, the economy, politics, and other factors to confuse things even more. So a beginner will have to take some time to become educated. An educated beginner can become successful fairly quickly as a stock trader, but that education need not take years.

Beginners Can Start With An Advantage

A well equipped beginner can also become successful quickly. Equipped how? With tips and a head start. Money is made as a stock trader by finding stocks that can be bought at  a low price and sold later at a higher price (buy low, sell high - no duh). Where are the stocks with a low price - relatively speaking - and relative to what? Well, winning stocks, the ones that can be bought low and sold higher later, are everywhere in the market, even on days where the market is down. Timing is what matters. Most successful stock traders subscribe to services that spotlight stocks ready to pivot and make a move. (The article you are reading now appears on such a service (this site)).

The Most Excellent Investor Advantage

Some stock traders prefer a service based on news or earnings fundamentals, others prefer technical trading indicators, many prefer both. This site spotlights stocks in watch lists based on a combination of technical indicators that signal that a stock is relatively low compared to the market in general, stocks in its sector, or to itself, and indicators signal the stock has enough interest from the market that it is ready to pivot up in price. Starting stock research with a watch list can give a trader a head start. The remaining activity is to check for news about a stock to make sure that there isn't any bad news that would make the relatively low price more expensive based on new risk.

To allow time to become familiar with using our stock watch lists all Most Excellent Investor membership levels begin with a seven day free trial period. During this trial period allows time for daily back testing and paper trading putting no money at risk.

With at least some education and the head start that our watch lists can give a beginner can mean less stress in becoming a successful trader.

Happy trading.

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Why Should I Trade Stocks After The Market Closes?

What Is After Hours Trading?

When you talk to others about the stock market, you may find that some people are unaware of the vast potential there is to make money in it. The lack of knowledge regarding stock trading is because finding money making stocks can be very confusing, and time consuming. There are tricks that many learn at the beginning of their trading endeavor that always stick with them because they don’t have the time or inclination to learn more enhanced strategies or habits.  But add after hours trading to the discussion of making money in the stock market and the conversation becomes more complicated, but the results can be more profitable.

You might mistakenly think of after hours trading as putting your order in to buy or sell stock after the market has closed and before it opens the next day, and then your transaction would be completed as soon as the market opens. But that is not after hours trading, that would really be putting in a very late or a very early one since nothing takes place overnight.

After hours trading really means stock shares and money is actually exchanged after hours. This used to be something that was only open to corporations or private entities that would be buying or selling large blocks of stock, but after hours trading is now something that almost anyone can do. However, it should be done with a great deal of caution.

For one thing after hours you cannot do all of the things you can normally do during the traditional hours of the stock market.  For one thing the market is closed so there aren't as many players in it so trading volumes are lower which limits what takes place. You may only be able to enter a sell order to close a trading position, or only enter a buy order to open a new one. Round trips for the same stock usually isn't available. Also if you are trading overseas but just because the U.S. stock market is closed and you trade overseas that's not after market selling because those markets are just trading on their normal working hours.

Why Trade After Hours?

It's enticing to be able to take advantage of news that breaks after the market closes. Act soon enough and a buyer of stocks can benefit on a gap up in price at the market open by taking a position the night before if favorable overnight news about a particular stock brings tremendous interest in it. The next day. Reciprocally, it's advantageous to be able to get out of a stock after the market closes when bad news breaks. Using this strategy means paying close attention to market news all day every day.

If you really think that after hours trading is something that you should do, you do have to know what you can do and what you cannot. You should know exactly what you are doing and what to expect when you trade, and you may find that it is a bit more complicated and a bit more risky than you first thought. You should contact your broker about after hours trading to see what their policies are, and if it is something you can do or not. You may find that the best strategy for your particular portfolio is to keep on doing what you have been doing all along.

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Can I Really Make Money Day Trading?

How To Trade Intraday For Profit

Buying at the right price and then selling at the right time is the way to make money day trading in the stock market.  Strange as it may sound money can be made intraday on a stock that loses money day to day, and the reverse is also true. Money can be lost intraday on a stock that makes money day to day.

Intraday Profitable Case Study - Fortress Biotech, Inc. (FBIO)

Proof for the statement above is seen in the 10-20-2020 trading chart for Fortress Biotech, Inc. (FBIO). A long stock position taken by buying FBIO at 9:34 a.m. at $2.58 could make a profit if sold intraday at 10:06 a.m. at $2.65. That trade would yield a gain of 2.7% in the span of only 32 minutes. There was over 69,000 shares of FBIO traded in the 32 minute timeframe mentioned above. Those 32 minutes was not the only intraday profitable timeframe for a position taken at 9:34 am, at 1:17 pm the price hit $2.65 again so there was a second chance intraday.

Further Money Making Intraday Opportunities

If profit was taken on the FBIO 9:34 am position even more money was available to be made by buying again at 10:44 am at $2.51. Another 4% gain could be made selling FBIO at 11:09 am at $2.63 which is a time span of only 25 minutes.

So by identifying and trading one stock intraday a greater profit can be made in minutes than a bank will pay on a savings deposited for a year.  So the answer to the question "Can I really make money day trading" is a definite YES!

Note: The FBIO 9:34 am entry entry point was identified on the MostExcellentInvestor.com 9:30 am - 10 am watchlist in the subscriber area.

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What The Largest Stock By Dollar Volume Amazon (AMZN) Tells Trader’s About The Market

Does high dollar volume always mean rising price momentum? Of course not. Case in point is Amazon that actually has a price that has been trending down.  Check out the Friday 10-16-2020 1 day chart below:
Amazon (AMZN) 1 Day Price Chart
From Yahoo Finance

Subtly this stock is trending down if you look at its 5 day average.  Other high dollar volume stocks that are trending up instead of down are Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA). The trend up or down for these high dollar volume stocks can be long  and slow to build. Patience is needed, and they are worth investing in (holding for a long time) and are not good for trading (selling quickly).

On the other hand stocks that are good for trading are usually small cap stocks like JAKKS Pacific, Inc. (JAKK), and Ocean Power Technologies, Inc. (OPTT). Small caps like these two stocks can be traded for a good gain intraday. If the right entry point is entered then even if ultimately the stock drops in price by end of day a profitable exit point can be found.

Note: The entry entry point for JAKK and OPTT was identified on the MostExcellentInvestor.com 9:30 am - 10 am watchlist in the subscriber area.

 

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Why Does Stock Price Momentum Reverse?

Stock Price Momentum

Momentum is good while it's moving in the direction of the trend that you want to capitalize on. If you are long on stocks (meaning you want to buy them first then sell them when the price is higher) then you are looking at rising price momentum and want to capitalize on stocks with prices that will move higher after you buy them. But we all know, or learn soon, that momentum doesn't continue in the same direction forever ("trees don't grow to the sky"). At some point momentum will change.

What causes Momentum To Slow Or Even Reverse?

The answer is friction. A car rolling without engine power may have enough momentum to keep it rolling for a while after the engine stops. But it will come to a stop because of friction. The surface of the ground rubbing against the tread of the tires will slow and eventually stop the wheels from turning which will bring the car to a stop. If there is an incline such as the car was going up a hill when the engine stopped then when forward momentum stops then the car will start falling back down the hill when all of the momentum is exhausted.

Stock prices are like the car in the example above. Just like a car under engine power can overcome an uphill incline, so a stock's price can move higher even if the market is falling. The opposite is true too. When the market is risinig even a stock with a price that had forward momentum (rising prices) can run into friction and the price can begin to drop even while the market is rising.

What Kind Of Friction Slows Stock Price Forward Momentum?

The biggest source of friction for stock prices is bad news. News about the market in general can be bad, or it can even be bad news specific to one stock (hopefully not your stock). Bad news can put the breaks on forward stock price momentum and send it into reverse. Backward momentum can be shockingly worse than previous forward momentum. "Stock prices take the stairs up, but the elevator down" is a saying that is familiar to most trades because it is great picture for an absolute reality.

Bad earnings surprises, a competitor's better product offering, and key negative changes in leadership within the company are all things that cause friction for a stock's price and may cause it to slow or reverse downward. Some of these things can not be known ahead of time by the general public. That's why advanced analytics on key indicators are essential to have. There are analytics that can tell you how a stock compares with its peers, the direction and strength of its price momentum, where the ceiling (resistanct) and floor (support) is likely to be. Compiling and examining the analytics that reveals the foregoing information for a stock can be time consuming but is worth it.

Want a shortcut for your stock trading research?

That is what membership to this website is all about. Giving traders the best stocks to watch and approximate times to trade them.

 

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If stock trading is so easy why do I keep losing money?

Asking this question is something that many new stock traders do too often. After all, no one gets into trading stocks to lose money. But it happens. Until a you find a winning strategy.

What winning strategies you ask?

One of the most popular strategies is called momentum trading where a trader looks for stocks with a rising price on rising volume. Doesn't that mean this is a good stock because more and more investors are interested in it? Maybe but not always.

More and more investors may get interested in a stock because the company behind the stock has a good story. A stock may have a good story that hits the news and draws the attention of investors based only on the sensationalism of the story. If it's a short story then the price of the stock can come crashing down. Usually this is because the stock price was based only on the story no viable product (viable meaning product that makes money).

Rather than trying to ride a stock that is already rising due to a great story it's better to find a stock with a price that will begin rising soon, and get in before the rise. How do you find those stocks. Believe it or not there are foot prints to follow. How to do that will be in the next post.

Note: Most Excellent Investor subscribers get access to watchlists that contain multiple stocks per hour.

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Greed, Fear, Or Research – Stock Trading Strategies That Work

Greed Versus Fear

When the market is going up investors and traders that actively participate in it are said to be motivated by greed. When those same investors refuse to participate when the market is going down, by either cashing out or not adding to current positions, those same traders and investors are said to be motivated by fear. Contrarians are told to buy when everyone else is fearful and sell when everyone else is greedy.

Is all of this investing behavior correct, incorrect, or a mixture of both? If it's a mixture then which part is correct and which is incorrect? Everyone must admit that greed has paid off, but so has fear, and contrarianism. So buy and hold is the strategy that is recommended to take advantage of all of the ups and all of the downs in the market.

Buy And Hold

Since the stock market averages up over time the wisdom is stay in it for the long-haul and don't worry about its price fluctuations.

Experts say "if an investor were to have held an S&P 500 index fund between Jan. 1, 1995 and Dec. 31, 2014, they'd have netted a cumulative return of 555%, or 9.9% a year. This includes holding through both the dot-com bubble and the Great Recession. But, had they missed just the 10-best trading days over this 20-year period because they'd scurried to the sidelines out of fear, their aggregate return would have been more than halved to 191%."

But isn't the reverse also true? What if an active trading investor hadn't been in the market for just the 10-worst trading days over a 20-year period where would their portfolio have been? Wouldn't the aggregate return be far-higher than the average return over that period?

Timing The Market

All experts agree that this can't be done. While it is true that it can't be done with 100% accuracy is it possible for an informed trader to be right more often then he or she is wrong? Thus maximizing participation in the market on it's best days and minimizing the damage done on it's worst days? Sure, sure that's a better way but only professional trading gurus and large analytical staffs could ever hope to succeed at this strategy, right?

Research To The Rescue?

The internet has opened up information to retail investors that used to only be available to experts. Gurus used to process this financial information and come up with indicators that could give them an advantage in knowing when to limit or maximize trading in particular stocks. But now with the internet, and the research available at various trading services, even retail investors (non-experts) can improve their ability to trade in and out of stocks manifesting trading signals for price increases and decreases. Technical indicators combined with the financial news now available for stocks that trade on the US stock exchanges can warn retail traders as to which stocks to avoid and give a heads up regarding stocks to buy because they are poised to move up in price.

Now it comes down to choosing which stock research site to use. There are a prolific amount of research sites to choose from and success at the use of any will be dependent on the skill of the individual trader to execute on the information given. With care and attention to detail the right stock research site combined with timely news about stocks on a watch list can result in an above average success rate on choosing and timing the buying and selling of winning stocks.

Resources for financial news on stocks:
Yahoo Finance
CNBC
Bloomberg
MSN Money
Zacks

Resources for easy trading research and signals:
Most Excellent Investor - our site

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Why Intraday Stock Trading Is Not Just For Professionals

Non-Professional Stock Traders Beware

Non-professional stock traders are told to leave the intraday stock trading to the professionals. This warning is a protection for the unprepared stock trader but a well prepared (and disciplined) amateur can still win trading stocks by holding very short-term (less than a day) positions in the stock market.

Why Intraday Stock Trading Is Risky

It's a given that high reward brings high risk.  There is very high reward from high returns that Intraday trading brings. When the market, or even an individual stock, has a down day often times there are times during the trading day that a profit can be made as stock price(s) dip and recover. Get it right and a trader can win during the day even when the market is down.  But get it wrong and an trader could lose intra day even when the market is up. But the trader who is prepared ahead of time for the day's trading can jump on an opportunity when it appears.

Prepared How?

Besides real-time stock trading information something else must be added to the arsenal of the intra day stock trader. We like to refer to it as ahead-of-time analytics. Specific stock trading opportunities based on trading indicators gathered on watch lists ahead of time can be used in conjunction with real-time analytics as the trading day progresses toward the pivot time(s) indicated by the ahead-of-time watch list.

Where Can You Find The Stock Analytics Necessary For Intra day Success?

The internet is a wonder. Expert information on a variety of subjects are found at your finger tips. But to be successful at trading stocks intra day requires actionable information. There are high cost stock trading services that can provide actionable trading information. This website is one stock trading resource that provides specific watch lists based on trading indicators that ensure the stocks listed are volatile enough, have the proper market interest and technical signals for the time(s) indicated.

A daily snippet of a sample from one of our watch lists is provided for free. Use of the stocks with the research that has gone into the ones chosen for our watch lists can help even non-professionals trade stocks intra day with consistent success.