There’s one thing every stock needs to climb higher — and one thing that can help it get there faster…
That’s why I look for these two things in every single stock I consider for a trade.
They’re the basics of how the market works…
So if you still find yourself trading the wrong stocks — waiting all day for a measly 10% move— then you’ll want to pay attention.
These two things are what are creating some of the 100% and 200%+ gainers we’ve seen lately…
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Two Things To Look For In Every Stock Before You Trade
The stock market is like any other market where people go to buy and sell goods.
And what drives prices in any market?
Prices go up when there is more demand than supply.
And prices go down when there is more supply than demand.
So how can you use this in your trading?
As long-biased traders, we want prices to go up. So we have to look for stocks that have a low supply and high demand.
Here’s how you can do that…
Look For Low Float Stocks
When it comes to day trading and short-term trading, one of the biggest criteria we look for is low-float stocks.
The float represents the freely tradable shares or the supply of a stock.
So stocks with a low float mean there is a limited supply.
And that’s exactly what we want.
Because low-float stocks have the potential for explosive price movements.
Now, you have to combine that low supply — or float — with the other half of the equation…
High Volume (AKA: Demand) And Float Rotation
Volume and float rotation are two key indicators that can help you spot potential trading opportunities.
Volume refers to the number of shares traded, and float rotation measures how many times the float is being exchanged.
Why are these important?
Well, high volume and float rotation can indicate increased interest in a stock. And that can represent demand.
And when you have high demand and a low supply — that’s what creates quick and volatile moves to the upside.
That’s why my premarket prep always includes looking at a stock’s float and volume.
And if the stock has float rotation or the potential for it later in the day — even better.
That means more new buyers are coming in willing to pay any price for the stock…
And that can drive prices even higher.
Understanding the impact of supply and demand on stock prices, and paying attention to volume and float rotation, are crucial to making smarter trading decisions.
So focus on stocks with these two criteria and avoid this one blaring red flag as you head into the short trading week.
Have a great day everyone. See you back here tomorrow.
Lead Trainer, StocksToTrade