If you want to trade and grow your account, you have to learn to adapt to what the market gives you.
And right now few plays have been hotter than true penny stocks.
Since I’m committed to teaching and mentoring — I’m here to help you learn how I approach trades to these low-priced stocks…
So today I’ll show you why I picked a true penny stock as my number one watch yesterday, the criteria it had that created such a big move, and the safest trade plan to avoid the choppy morning price action.
I’ll even tell you which pattern I’m watching for today! Let’s go…
If you’re a part-time trader looking for moves you can take advantage of at a specific time each day — you’ll want to tune in here to see the market phenomenon that happens at the same time almost every trading day!
The Safest Approach to AXLA
True penny stocks (stocks that trade under $1) are hot thanks to big multi-day runners like T2 Biosystems, Inc. (NASDAQ: TTOO) which went from around 20 cents to 70 cents in a couple of weeks…
And Nikola Corporation (NASDAQ: NKLA), which was trading around 60 cents a share in early June and ran all the way to $3.70 by early August.
They aren’t my favorite stocks to trade, but you don’t have to trade like me…
I’m here to share what I know about the market and trading. You can take those lessons and trade whatever you like.
And the patterns are the same whether you trade a $5 stock or a 50-cent stock.
You also have to learn to take what the market gives you…
That’s why I made yesterday’s massive premarket spiker my number one watch — even though it was trading around 30 cents…
During Pre-Market Prep I gave traders a few reasons to like Axcella Health Inc. (NASDAQ: AXLA).
It’s a crappy biotech penny stock, so understand what it is and don’t believe the hype or headlines…
I liked it because it capitalized on COVID-19 which is back in the news every day. It’s not quite a hot sector yet … But it’s macro news that has a lot of people’s attention.
So when hot news headlines hit, it can bring in more buyers and demand which pushes prices higher.
The other thing I liked about AXLA was that it has a lowish float.
It has 26 million shares in the float but it’s a 30-cent stock. So traders can take larger positions than they would in say a $10 per share stock.
And when larger positions are being bought up, it can make that stock move like a lower float stock.
AXLA was also trading good volume and it was a breakout on the daily chart…
AXLA chart: 6-month, daily candle — courtesy of StocksToTrade.com
But once you have all the criteria together for a potential trade, what’s the best way to plan a trade?
Especially when a stock is already up 235%…
How to Trade True Penny Stocks Safely
Here’s what I explained to traders in Pre-Market Prep yesterday morning…
Trading AXLA in the premarket would be aggressive since it already spiked so high.
So the safer play was to wait for the Oracle level after the market opened and wait for that signal to get hit…
The even safer play was to wait for that signal, and until after 9:45 a.m. to enter a trade.
Following that plan could’ve helped you avoid getting caught in the morning selloff to 25 cents…
A lot of times these stocks don’t come back from that. That’s why I don’t dip buy and try to guess bottoms.
But AXLA did come back…
It hit Oracle’s 40-cent signal in the afternoon…
The stock didn’t hit my goal of 55 cents, but it went as high as 50 cents and that’s still a 25% move!
AXLA chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
Now that AXLA closed strong, we can look for another pattern right out of my ebook…
The weak open red to green move.
If you want my number one watch and trade plan every morning, plus live mentoring in Pre-Market Prep — join our live training webinar here.
See you on the inside!
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade