Were you scared away from one of the best potential trades yesterday?
As I was watching TransCode Therapeutics, Inc. (NASDAQ: RNAZ) in premarket yesterday, I saw a lot of people in my chat room asking about dilution…
After all, RNAZ is a low-float biotech stock with cancer news and it was up as much as 121% in premarket.
Most penny stock companies are eager to take advantage of those kinds of moves to sell stock to investors at a higher price…
Sometimes companies even have offerings ready to go on the same day the company releases good news.
But I’m going to share one reason why you shouldn’t let the potential for dilution scare you away from a trade opportunity…
Plus, I’ll share how you can be more confident in your trade…
See the indicator that can help you identify “price glitches” yourself to potentially bag winners the size of 89%, 165%, and even 250% in a single day — check it out here.
Why You Shouldn’t Be Scared of Dilution
TransCode Therapeutics, Inc. (NASDAQ: RNAZ) was a beautiful day one, low float stock with cancer news yesterday morning.
It crossed the $1 mark — a significant key level for these low-priced stocks — and it was on Oracle with a proposed entry of $1.75.
It was a good-looking box checker … That’s why I made it my number one watch…
RNAZ chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
However, in my morning webinar, I had some questions from traders about the potential for dilution.
The company has a shelf offering which means it can announce it’s selling shares into the market at any time.
But in this market, that was actually good news…
Short squeezes have been some of the best runners in this market.
And the fact that there was a shelf offering for RNAZ made short sellers even more aggressive when shorting it.
They anticipated it would sell off…
That’s why we got a move from an opening price of $1.31 to a high of $3.20 within the first hour of the market being open.
And as educated traders, we don’t anticipate, we react.
We have a plan in place with a stop in case the trade goes against us. And we can adapt our goals for a trade based on the information.
So while hearing news that there’s the potential for dilution is scary, it’s part of trading penny stocks … And it can actually create even bigger upside moves in the right circumstances.
If you want to avoid trading stocks with the potential for dilution, you’ll be stuck trading stocks like Apple Inc. (NASDAQ: AAPL) and Amazon.com, Inc. (NASDAQ: AMZN) that move 1% in a day.
But if you prepare your trade plan in advance and have a stop with room for slippage, you can catch some upside momentum while still trading safely.
That’s what we aim to do every day.
When it comes to penny stocks — expect the worst, and you won’t be disappointed.
Join me for live training webinars every day to learn how to build a process to trade these sketchy stocks.
If you want my daily stock pick and trade plan, find out how I choose top stocks like RNAZ and make plans to trade them here.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade