Except for a temporary pullback yesterday morning, Donald Trump’s social media company, Trump Media & Technology Group Corp. (NASDAQ: DJT) has been on a steady grind upwards since Monday…
DJT Two-Day, 5-Minute Candles Chart; SteadyTrade
Of course, our trading algorithm, Oracle, alerted us yesterday with a green entry signal of $42.19 per share. After reaching the high of the day (normal trading hours), DJT had returned 13.01%*.
And anyone who held their position after the market close until the high of $49.61 could have collected a 17.59%* profit.
To learn more about Oracle, the tool I couldn’t trade without, register for my free live training session tonight at 9 pm Eastern.
For DJT, it doesn’t hurt that the election is coming up in less than a week.
In fact, that’s really the only reason DJT has been up big these past few days.
As I told my StocksToTrade Advisory members in my Monday video:
“Don’t fall for the hype…At the end of the day, this is a momentum play. Ride the momentum and don’t become a true believer.”
I meant every word of what I said. DJT’s stock price right now gives it the same valuation as Twitter.
But hear this…Twitter has around a billion users and DJT has around 10 million.
And unlike Twitter, DJT is losing money and making very little revenue.
We’re not buying this stock for its fundamentals.
DJT’s price is inflated purely due to momentum. And I think the price action we’ve seen already will continue into the election, so hop on!!
Today, let’s talk about momentum stocks — what they are and why they should matter to you.
If you’re interested in moving the needle on your trades, momentum stocks are where it’s at.
Honestly, trading sideways stocks can be like watching paint dry. It’s tedious and can drive you crazy….
But with momentum stocks? That’s where the excitement is.
Table of Contents
It Starts With a Catalyst
Momentum stocks typically start moving on some sort of catalyst. Company news, a hot sector trend, or an earnings surprise have all the makings of a classic momentum move.
For example, DJT is running simply because the election is next Tuesday. November 5th is all this stock needs to set it in motion.
And I have more election-related trading news…
Jack Kellogg, a trading prodigy of my colleague and fellow trader Tim Sykes, will go live tonight, October 30th, at 8 p.m. Eastern for an emergency election briefing.
“There will be winners and losers…” warns Jack.
“And if you’re trading popular election stocks now, YOU could regret it for the next 4 years.”
You don’t want to miss this because that night Jack will be giving away a FREE ELECTION TRADE IDEA that could soar no matter who wins.
Don’t get left blindsided!
Sign up today to get in on this massive opportunity!
So, why are momentum stocks different?
It’s simple—there’s no ceiling in sight.
We call it a “blue sky chart,” and it’s exactly what it sounds like — no previous levels holding it back, no traders in the red waiting to sell as soon they get back to a breakeven level.
Many momentum stocks are IPOs, SPACs, and especially 52-week breakouts because they have no previous weight to hold them down.
As of yesterday, DJT was not at its 52-week high, but it’s on the way. If it gets near that level, which I think it will, the upward price action should make recent moves look like child’s play.
When these stocks hit new highs, it’s like a party—everyone’s in the green, and they just keep buying.
These charts can be free to run without resistance, and that’s exactly why we love trading them.
The best way to spot momentum stocks is to run daily scans. Look for stocks that are breaking out of previous ranges, hitting 52-week highs, or showing an increase in volume.
Do you have a trading platform with the tools you need to spot momentum stocks?
If you don’t have one already, I highly recommend StocksToTrade.
It has the trading indicators, dynamic charts, and stock screening capabilities that traders like me look for in a platform. It also has a selection of add-on alerts services, so you can stay ahead of the curve.
Grab your 14-day StocksToTrade trial today — it’s only $7!
How to Trade Momentum Stocks
Here’s a strategy that I recommend to keep you disciplined and consistent:
The Dip and Rip:
This is a classic momentum setup. You wait for a hot stock that’s spiked in pre-market to dip at the open and then look for it to rip back up. When the stock holds a key level and reverses upwards, that’s your entry point.
Learn more about the Dip and Rip in my video.
Set a Stop Loss and a Target:
If you’re trading without a plan, you’re asking for trouble.
Set your stop loss based on key support levels, and have a target in mind.
It’s tempting to hope the stock will keep going, but disciplined traders set a goal and stick to it.
Use the 9:45 Rule:
Momentum stocks can be tricky right at the open. They’re volatile, and that initial burst of buying or selling can shake you out if you’re not prepared.
If you wait until around 9:45 a.m. Eastern, the stock has usually settled down, and it’s easier to spot the real direction. This keeps you out of unnecessary early-day risk.
Lock in Gains Gradually:
Momentum stocks are known for explosive moves, but they’re also known for sharp pullbacks (look at DJT yesterday morning).
Consider locking in gains on the way up rather than holding out for that top tick. Take partial profits as the stock climbs.
My Final Thoughts…
Momentum stocks can transform your trading account, but only if you approach them with the right strategy.
Run your scans, find the stocks with strong catalysts, and follow your trading plan.
Momentum trading isn’t easy, but if you put in the time and practice your strategies, it can be one of the most rewarding ways to trade.
Remember: small losses, big wins, and keep your eyes on the prize.
And to learn more about momentum stocks and how to trade them, join our StocksToTrade community.
We have tons of free live webinars.
They run all day and offer trading tips and tricks, info on Oracle, and other valuable training.
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade