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The 3 Best Swing Trading Strategies That Actually Work!

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In this post, you’ll learn how to use the best simple swing trading strategies, how to look for stocks to trade, and some of the best setups for generating profits.

Essentially, swing trading is a method that’s accessible to new traders, so it’s a great skill set to have in your repertoire. alt

The swing trading strategies are fairly easy to grasp, and this style of trading doesn’t require the same urgency and split-second decision making required in day trading.

For many people, swing trading is the perfect way to ease into trading, and can help build good habits that will serve you no matter which other directions your future investing takes you. 

Here’s an introduction to swing trading — what it is, how to look for stocks to trade, and some of the best setups & swing trading strategies for generating profits.

Download a PDF version of this post as PDF.

What is Swing Trading?

By ImageFlow/Shutterstock.com

First things first: What, exactly, is swing trading?

Essentially, swing trading is a method of trading where you only hold the stocks for a short period of time.

However, unlike day trading, where you move in and out of a trade within the same day, swing trading positions can last anywhere from two days to a couple of weeks.

The idea is that you’re holding on to the stock to profit from price changes or ‘swings’. These swings in the price change are where this style of trading gets its name.

Why Swing Trading?

What’s so great about swing trading? Well, several things …

First, swing trading is an accessible method for even new traders. While the pace is fast, it’s not as fast as day trading. This means that it allows a little more time to think out your process and make educated decisions with your trades.

For many, the quick pace of day trading can prove a little bit overwhelming at first. Swing Trading can be a great entry to day trading, and a strong trading practice in general. 

This doesn’t mean that it’s totally relaxed. But you’re only holding on to the stock for a few days or weeks, so it offers potential profits that exceed taking longer positions on a trade.

And since you’re only holding on to the stock for a short period of time, you can take advantage of the market volatility and potentially gain assertive profits from trades in a relatively short window.

Another benefit of the short term involved is that it allows traders to zero in on the work involved in coordinating entry and exit of the trade. Many traders find it easier to really focus on the trade at hand for the full duration of the time they hold onto the stock, since it’s relatively short lived.

Often, when you take longer positions, you can forget about the stock or it can be easy to stop being diligent, so it’s easy to lose track of what’s going on in the market and miss your opportune moment to exit the trade.

Put more bluntly, it’s easy to get lazy with longer positions. The short time period involved in swing trading helps guarantee that you’ll stay on the ball about things.

What is the Goal of Swing Trading?

Obviously, the primary goal is to earn profits. But how is that achieved?

The goal is for you to find stocks that are poised to make a movement over the course of several days, weeks or months — not just minutes or hours — and then capture these gains by trading within the trend.

To find these stocks, it’s your responsibility to employ technical analysis and research so that you can identify trends and catalysts that will ideally improve your chances of making profitable trades.

How to Profit With Swing Trading

Strategies
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To profit with swing trading, you must choose stocks with movement that will gain you profits as they fluctuate or swing in value.

The traditional model of investing is ‘buy low, sell high’. Simple as that is, it’s the most traditional way to profit.

You begin by identifying a stock that is gaining. Then you get really obsessed about it. You research the stock, pore over its chart, survey its history, and research potential catalysts that could be affecting the stock’s movement.

If, through your research, you determine that you’ve found a stock that still has room to continue gaining, you can invest, hold on to the stock for a short period of time, and determine when to sell so that you can profit.

Of course, to do this you must be disciplined and think about your entry and exit before you even trade. You’ve got to aim for the “just right” Goldilocks zone — where you don’t hold on too long, but not too short a period of time, either.

Yes, it’s easier said than done, particularly when your emotions get in the way.

You can also profit by combining short selling with swing trading. In this scenario, you’re basically going for the opposite phenomenon of the ‘buy low, sell high’ approach. You’re looking for stocks that you can try to predict losing big so that you can profit as they go down. (To learn more about short selling, check out this post.)

Whether you’re seeking gainers or losers, the most important aspect of profiting from this is choosing the right stocks.

Some of the best companies for swing trading are those with high trade volume. By volume, that means the amount of stocks that are being bought or sold each day. For swing traders, these constant price fluctuations — even if by small amounts — can be beneficial.

The market also matters. When the market is operating in an extreme, be it bullish or bearish, it can prove difficult. During extreme times, stocks aren’t as easy to track; the stability isn’t there to help you plot out a clear course of action.

In an extreme market, momentum can make stocks do things that are out of the ordinary. This makes it hard to determine patterns. Since I’m all about patterns, I don’t think those are ideal conditions.

Times of market stability are the best times for profiting from this approach. It’s when you can do solid research and determine a stock’s history and potential future. This allows you to catch short-term movements with more of a sense of security.

Determining the market sentiment can prove challenging, particularly to new traders. However, with time, practice, tons of studying, and experience, it will become easier. 

Swing Trading vs. Day Trading

Still unclear on the difference between swing trading and day trading? Let’s tackle this now, because while swing trading bears some similarities to day trading, there are several important differences.

One of the biggest differences is timing.

  • In day trading, you hold a stock for a very short period of time; it might be minutes or hours, but won’t be more than a day.
  • With swing trading, you might hold a stock for a few days to a few weeks, or even several months.

Another one of the big differences is trend awareness. In this way, swing trading can be more like trend trading, where you take a long, hard look at the fundamentals that trends play into the value of a stock, and based on that info, hold the stock. 

With swing trading, you examine any trends playing into the stock’s value and trade based on a combination of fundamental research and examining the stock’s movement and chart patterns.

3 Of The Best Swing Trade Trading Strategies

While there are endless variations of swing trading strategies, several tried-and-true setups are considered traditional swing trading strategies.

Here are some of the important ones you should know.

1.) Breakouts

The 1st of the 3 swing trading strategies is the breakout.  The breakout strategy is an approach where you take a position on the early side of the uptrend.

Here, you monitor a stock, and when it has a desired level of movement and volatility and breaks a key point of support or resistance (i.e. it falls within a defined price range), you get into the trade.

Support, resistance, and volume are key. Of course, you’ll also monitor catalysts and other factors that might affect the price of a stock — those are important  strategy facets.  

The setup is a key starting point to enter a trade and benefit from future increases in volatility and price swings.

2.) Breakdowns

The 2nd of my recommended swing strategies is known as a breakdown.  Essentially, A breakdown is the opposite of a breakout, where the stock price moves below a defined support level. With a breakdown, the chart points toward lower prices, and you monitor the same fundamentals.

3.) Options

Coming in 3rd, but not least – Swing trading with options can be a great strategy, particularly if you’re looking for leverage on your investment.

By exercising trading with options, you’re gaining the ‘option’ to buy or sell later if certain criteria are met within a defined time period. You put in a call option or a put option depending on whether you’re buying or selling. 

Only commit to the trade if your desired levels are met. For this peace of mind, you have to shell out an advance or down payment of sorts. If you don’t exercise your option within the time window specified, you’ll lose this initial payment. However, it’s less of a loss than if you made the full investment.

swing trading strategies
By ene/Shutterstock.com

Setup of a Profitable Chart

What should you look for in a profitable chart? Let’s break it down.

Moving Averages

Moving averages are an important factor in determining support and resistance levels. They can also help you determine the current climate of the market. There are two key types of moving averages.

  • Simple moving average (SMA): The SMA can help you determine the current climate of the market. Is it bullish or bearish? You can also learn support and resistance levels as well as price points, which can help you decide where and when to enter and exit a trade.
  • Exponential moving averages (EMA): This variation looks at trend signals. It can help you determine your entry and exit points based on trends, which can help further refine your entry and exit points and plot a clear-cut trading plan.

Float

A stock’s float can be influential in helping you decide whether it’s a wise investment for you.

The float is the number of shares that are available for public trading. But don’t confuse it with the shares outstanding — that figure includes restricted shares.

You’re aiming for the Goldilocks zone again here. You don’t want an excessive float, because when a massive float is happening, it’s harder for the stock to move in a way that will make you profits. A stock that has a smaller supply of shares is more likely to show more impressive action and movement.

A too-low float can also inhibit movement. If a stock isn’t highly traded, it may not be able to gain the movement you’d like.

Short Interest

Short interest can help expand your knowledge before making a swing trade. It’s a ratio that compares the number of floating shares to the number of shares short.

Often, short interest is calculated on a monthly basis, but there’s no truly accurate source of data for this so it’s more of a guessing game. It includes all shares that have been sold short.

So why does that matter? Because a high short interest may be an indication that the market is trending toward bearish with this stock. However, if the stock has a low price and a high short interest, this could be a warning sign that a short squeeze is occurring.

If a stock has a relatively high short interest that can be cross-referenced with a positive catalyst, this might give you a sign that short sellers want to cover themselves in this situation. This could affect the stock price.

Volatility

Looking at volatility is key in determining a swing trade setup. Volatility is the liability to change rapidly and unpredictably, especially for the worse.

In the stock market, volatility generally implies greater risk, which means higher odds of a loss. However, risk can also lead to reward, so it’s important to look at a stock’s volatility in conjunction with other aspects such as catalysts and other fundamental data.

5 Key Tips for Success with these Swing Trading Strategies

Here are some of my top tips for those who want to get started in this world.

1.) Limit Losses

I live and die by this rule: Cut stock losses quickly.

Obviously, I don’t want to lose anything. But if it becomes clear that a trade isn’t working, I’m quick to get out.

Say that I’m shorting a stock and expecting a morning panic the next day. If there’s no panic, yet my inbox has a press release from the company that’s serving to pump up the stock and squeeze the shorts and the stock starts going up, then I’m out.

It’s not about prospecting or holding on hoping to salvage a trade. I look to patterns, not hunches. Don’t try to be a hero — if things aren’t working out for you, in a swing trade or in any trade, cut losses.

2.) Never Risk More Than 1% Per Trade

I constantly tell my students to focus on small-but-reliable profits.

Not every trade has to be a home run. In fact, the smaller hits can add up to bigger gains over time. So I generally don’t advocate taking large positions.  

There’s a commonly held idea that traders should not risk more than 1 percent of their total account on a single trade.

If you stick to this idea, it can keep losses small. Though it might also keep gains small, they can amount over time. If you have a small account, 1 percent might be a drop in the bucket, so in this case, it could be safe to consider upping the limit to 10–20 percent. Don’t go beyond your comfort level.

3.) Mental Stops

Mental Stops
By winui/Shutterstock.com

A mental stop is the art of making an internal decision about when you’ll exit a trade or investment.

Consider a mental stop a promise that you make to yourself.

Having this plan in place and using mental stops when trading can help reduce your potential losses. If you’re able to remain true to the promise you made to yourself, it will help keep you from becoming too emotional or making bad decisions in your trade.

Mental stops can also help you cut your losses. Use them.

4.) Make Sure to Watch the Stock’s Historical Volatility

The best way to determine future volatility is to look at historical volatility. You can calculate historical volatility by using a mathematical equation. This book includes a helpful step-by-step process on how to easily do this in Excel.

To summarize the steps necessary to determine a stock’s historical volatility, here’s what you need to do:

Step 1: Assemble the historical data in a spreadsheet. Put together the stock’s past performance.

Step 2: Calculate the logarithmic returns. This might sound difficult, but it’s not. As you’ll see in the book’s tutorial, it’s just a calculation based on the ratio of closing price and the closing price the day before.

Step 3: Calculate the standard deviation. Now you calculate the deviation of the daily returns. This helps you begin to see the stock’s volatility over time.

Step 4: Annualize the historical volatility. You’ve already calculated the daily volatility. Now multiply it by the square root of the number of days of potential trading per year. Done!

5.) Stick to Your Plan

Entry, exit, research, calculating risk …

If you’ve gained anything from this post so far, hopefully it’s the fact that to find success as a swing trader, you have to be on top of your research so that you can be extremely calculated about the trade.

You must consider your entry, exit, potential losses, and to be prepared to cut losses quickly if needed.

All of this is well and good, but as I — and most traders who have been at it for a while — know, things can get emotional in the heat of a trade.

So in a way, this rule becomes more important than any other: You must stick to your plan.

Make a trading plan and stick to it. Otherwise all of your hard work can go to waste and you can suffer losses. Sure, you could learn your lesson the hard way, but why not just stick to the plan?

How Do You Shortlist Stocks from Thousands of Stocks?

There are literally myriad stocks out there competing for your attention. How do you decide which ones are worthy of your attention?

This requires time, effort, and education. The StocksToTrade software can also help — in a big way.

What Is the Best Way to Learn These Strategies?

The best method to learn the swing trading strategies l’ve covered here is by pursuing a trading education.

While this article covers the basics and might help you decide if you’re interested in pursuing this style of trading, if you really want to dive in, you’ve got to commit to educating yourself. 

Who is Timothy Sykes?

I’m a trading teacher. My college experience was probably different from yours: I turned $12,415 in Bar Mitzvah gift money into $2 million and started a hedge fund during my senior year at Tulane.

After years of trading and running a hedge fund, I came to realize that my knowledge of trading is the best thing I can offer to others.

Experience led me to create Profit.ly, a community of traders who share their performance and trades openly (see ALL my trades here) to help each other learn and improve. Moreover, there’s Investimonials.com. Check it out.

Today, I’m still a trader — but my primary focus is teaching and mentoring trading students.

Trading Challenge

While I’m best known for teaching students how to trade penny stocks, that’s far from the only thing you’ll learn in my Trading Challenge.

My goal: to teach you how to forge a sustainable, long-term career as a day trader. My team and I strive to educate you on all sorts of different trading styles so that you can diversify and remain nimble in the market.

The Bottom Line

Swing trading can be a fantastic way for new traders to get their feet wet.

While I wouldn’t go so far as to say swing trading is easy, it’s one of the easier methods of trading to wrap your head around. Many traders find the concepts easy to grasp.

But, if you consider the pace, and the fact that it often rewards routine and research, AND the potential profits, you’ll understand why this type of trading is widely considered a worthwhile trading style for old and new traders alike.

To learn more about what I’ve talked about above, consider signing up for my Trading Challenge. You’ll gain a greater education on it and much more.

Have you tried swing trading?

Let us know in the comments below!

The post The 3 Best Swing Trading Strategies That Actually Work! appeared first on Timothy Sykes.



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Is Canopy Growth (TSX:WEED) Stock a Contrarian Buy at $20?

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The downward spiral in the share price of Canopy Growth (TSX:WEED)(NYSE:CGC) and other pot stocks continues.

What’s going on?

Canada’s largest marijuana company just reported disappointing results for its most recent quarter ended September 30, 2019. Canopy Growth lost $374 million for the quarter, representing a 13% increase in losses compared to the same period last year. Management says the hit is mainly due to rising operating costs.

Cannabis producers have increasingly warned of weaker-than-expected for the current quarter and into and 2020 due to a lack of retail outlets in Ontario and Quebec. In fact, there is growing concern that the marijuana industry has switched from a shortage of product that hit the sector a year ago to an oversupply.

Canopy Growth booked a $32.7 million charge on returned products and a $15.9 million write-down on inventory in the latest results. The problem appears to be connected to weak demand and lower sales of oil and softgel products in the recreational market.

CEO Mark Zekulin specifically targeted Ontario as a major pain point. The province is dragging its heels on allowing an increase to the number of physical stores that can sell recreational cannabis products.

Net revenue from the quarter came in at $76.6 million, down from $90.5 million in the previous three months.

Investors had hoped the company would get spending under control after the board fired Bruce Linton, the former founder, chairman, and CEO this summer. Canopy Growth’s largest shareholder, Constellation Brands, recently put its CFO into the chairman role.

Constellation Brands invested $5 billion in August 2018 to boost its ownership to 38%. The investment was done at a share price of $48.60.

At the time of writing, Canopy Growth’s stock price is down to $20.20 per share. That’s a 17% decline on the day and well below the high near $70 the stock hit in April.

Upside potential

Cannabis bulls say the total Canadian medical and recreational market is more than $5 billion, and the opening of hundreds of new retail locations in Ontario and Quebec in the next two years should boost sales of legal pot products.

In addition, Canopy Growth is positioned well to benefit from rising demand for medical marijuana in Europe and South America, where it has established production and distribution operations.

The wildcard remains the United States. Selling cannabis products is currently illegal at the federal level, but many states have allowed the sale and consumption of the products. Canopy Growth has an agreement in place to acquire Acreage Holdings in the event marijuana is legalized federally south of the border.

Acreage has production and distribution operations in at least 20 states.

Should you buy Canopy Growth today?

The company now has a market capitalization of $7 billion, which still appears expensive based on annualized revenue of less than $400 million and no clear path to profitability.

Contrarian investors might want to start nibbling on the hopes of a near-term bounce, but I would keep any new position small right now. There is a risk we could see further downside across the sector before the dust clears and bargain hunters put a new floor under the stock.

Other oversold stocks in the TSX Index might be better options to consider today.

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Fool contributor Andrew Walker has no position in any stock mentioned.



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Best 3 Day Trading Indicators – On and Off Chart [Video]

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Day Trading Indicators Video

Before we dive into day trading indicators, first review the below video which is a nice primer.

 

When you are just starting in day trading, you will likely feel overwhelmed with where to begin.

You need to think through your trading plan, trading strategy, trading platform and this is just the beginning.

The other key area of focus is what technical approach will you leverage to succeed in the market. Let’s be clear, you cannot day trade the market using fundamentals. It’s a short game. So short, that most of my gains are made in 3 to 4 minutes.

So having the right tools to analyze the market is paramount to your success.

To this point, we are going to highlight the three-day trading indicators you can use to beat the market.

The three components we will cover in this post are (1) time frames, (2) on-chart indicators, and (3) off-chart indicators.

Picking the Right Chart Time Frame

I do not want to suggest there are any hard rules around the best time frame to day trade. You may have a higher patience threshold and prefer to use 15-minute charts, and I might have a lower patience threshold and prefer tick charts.

You should, however, consider a few things to make up your mind about picking the best time frame for your trading style.

First, you need to answer what time of day do you plan on trading.

Early Morning

If you have a day job, you probably are only going to be able to trade the first 30 minutes to one hour. If this is the case, then you are going to want and trade the one minute, two minute or three minute chart time frames.

Why such low time frames? Simply put, you need to ride the quick waves higher and also protect yourself quickly if things go against you.

For example, if you are trading a low float breakout, you will sometimes know within seconds if the trade is real. You don’t need to wait for a 15-minute bar to print to tell you where to buy and scale out of your position.

Midday Trading

I do not trade in the middle of the day because the action is too slow and give back gains from the morning.

Since the action is slower, you will only confuse yourself using lower time frames. If you are trading after 11 am, you will want to use the 5-minute or 15-minute chart.

This will allow you to draw trendlines connecting key support and resistance levels. You will also not overreact if a high or low of a candlestick is breached.

You essentially are going to use the higher timeframes to quiet the noise from choppy lunchtime trading.

End of Day Trading

You can use the same approach for the end of the day, as the early morning setups. The only difference is the end of the day is the driver to getting you in and out of the market quickly.

You do not have time for 60-minute charts since this would only give you two bars to make decisions at the end of the day.

Bringing it Altogether

So, the rule of thumb is that you should use a lower time frame when you have less time for day trading activities. Similarly, you should use a higher time frame when you are keeping an eye on the market throughout the trading day.

Figure 1: Comparison of a Bullish Move of Apple Inc. on 5-Minute and 15-Minute Chart Time Frame

In the above chart of Apple, notice how the 5-minute chart produces three times the number of bars. You can easily see this presents some buy and sell signals that otherwise would go unnoticed.

You will need to think through which time of day works best for you and then the corresponding time frame which will give you the most success.

Using On-Chart Indicators for Technical Analysis

If you add many indicators to your chart, let me be the first to tell you it’s a complete waste of time.

Hence, taking a “less is more” approach would not only help you declutter your chart, but also make it much easier for you to interpret the price action.

Best Day Trading Chart Indicators - Volume, 10 Period SMA, and ATR Indicators

Figure 2: Apple Inc. 5-Minute Chart with Volume, 10 Period SMA, and ATR Indicators

I strongly recommend that you keep the Volume indicator on your chart at all times.

In addition to the volume, I always keep the 10-period simple moving average (SMA) indicator on the chart. The 10-period moving average is one of the most popular day trading indicators among day traders. It is fast enough to give an early indication and direction of a significant price move when you are expecting a stock to break in a direction.

Lastly, I like to use the Average True Range (ATR) indicator to gauge the volatility of the security.

For example, Microsoft is not as volatile as a stock like Tilray. Therefore you need to know the behavior of the stock you are trading. This will allow you to adjust your risk parameters and money management rules.

So, to quickly recap, you need candlesticks, 10 SMA, volume and the ATR. This is more than enough for you to interpret the price action.

Using Off-Chart Indicators in Day Trading

While you would find the on-chart day trading indicators to be essential for technical analysis, at the end of the day, charts and indicators are just sugar-coated versions of the order flows that makes up the overall supply & demand in the market.

If you were a retailer, selling fruits, would you prefer to buy from wholesalers or the farmers themselves? Where would you get the best price? Of course, from the farmers.

In this analogy, if you would get the wholesale information about the market from technical indicators, you would get the best data from the Level II quotes. These quotes are the actual pending orders that other traders have placed with their brokers.

Figure 3: Apple Inc. Level II Data

Figure 3: Apple Inc. Level II Data

There are times where my chart will scream buy the breakout, but level 2 is telling me to stay away. I have no quick way of telling you how to interpret the level 2 data. It’s simply going to come down to you watching price action and level 2 to “feel” the market.

I know that sounds like nonsense, but I know when my stock is done. I can feel in the pit of my stomach that the move is over. When I don’t listen to that 6th sense, this is when I get into trouble.

To put it in more concrete terms, if you know that there are a large number of pending buy orders below the current market price compared to sell orders, which way do you think the market is going to break?

To explore more on level 2, please check out our article here.

Time and Sales Data

Figure 4: Apple Inc. Time & Sales Window on TradingSim.com

Figure 4: Apple Inc. Time & Sales Window on TradingSim.com

When it comes to day trading, I also heavily depend on another off-chart day trading indicator – the time & sales window. Tradingsim offers this data in the which is also known as the traditional “Tape.”

Once you start watching order flow in the time and sales window and depth of the orders in Level II, you can take your day trading to the next level.

Conclusion

Keep things simple when trading the markets. The more day trading indicators on the screen the harder it will be to figure out what the hell is going on.

Start with the tactics identified in this article and see if it doesn’t help bring clarity to your trading.

There is also something called total view which displays all of the open orders in the market. I do not feel total viewer is something you need to actively trade stocks, some of you might find it useful.

It is provided via the Nasdaq and of course comes with a fee.

The post Best 3 Day Trading Indicators – On and Off Chart [Video] appeared first on – Tradingsim.



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Uber Share Price vs. Uber Service: The Truth About Big Companies, Popular Products, and Dying Stocks

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There seems to be so much confusion around the Uber IPO, Uber share prices, and Uber service…

The company’s popular around the globe, right? So why isn’t the stock soaring?

Let’s talk about 2019…

This year, a lot of well-known, popular companies had IPOs — Uber, Slack, and Peloton. These companies produce some of the public’s favorite products … but their stocks are complete garbage.

And all of them have underperformed. And traders still ask, “Is now the time to buy?” Let’s look at these ‘hot’ IPOs and Uber share prices to better understand why these stocks aren’t great for small accounts.

Don’t Fall in Love With a Product

Companies continuously produce new and improved products for the public to love. Once the public bites, media outlets jump on and overhype the companies. The results are huge overvaluations, and it just sets up stocks and traders for disappointment.

Just because a company makes a great product doesn’t mean the company itself is good. There can be a ton of things wrong with a company … But people will overlook huge red flags if they love a specific product. So they look for the right time to jump in.

And as these overvalued companies start to fade, that question keeps popping up: “Is now the time to buy?”

Dip buying on large companies isn’t the same as my dip-buy pattern. It’s challenging to know where the bottom actually is with larger companies. The price could continue to fall for months, like Uber share prices. Let’s check out some recent examples.

Slack Technologies, Inc. (NYSE: WORK)

uber share price vs. uber service: the truth about big companies, popular products, and dying stocks
WORK Chart: 1-year, daily candle — chart courtesy of StocksToTrade.com

Since its June IPO, WORK has basically gone straight down. Although it didn’t dump following its IPO, the stock has consistently declined for months. Specifically, it’s dropped roughly 10% every month since the IPO or nearly 50% from its highs.

I can’t tell you how many traders, investors, advisors, and articles I’ve seen calling every one of the dips the bottom. Like when it dropped from $42 to the $30s, according to the financial media, this was a good dip to buy.

And again, when it dipped from $35 to $31, people said it was absolute panic. They thought that was the bottom … only it continued to drop further.

People thought it was an excellent time to buy when WORK dumped to new lows thinking, “Okay … this is down from $42 to $26. This 100% has to be the bottom.

That mindset is a slippery slope. I always follow rule #1 and cut losses quickly. I don’t hold and hope. Anyone who believed in WORK as a company and bought at the “bottom” lost a lot of money.

Don’t get me wrong, I like Slack’s product. I know a lot of people who like Slack and use it every day. But you can’t judge a stock based on a product alone. You have to understand the company’s fundamentals. And even then, these big companies may not be the best investment. That’s just a small piece of the puzzle.

Uber Technologies, Inc. (NYSE: UBER)

Look at Uber share prices and you’ll see another bad IPO. So why is the stock so bad when so many people around the world use its service?

The stock’s down nearly 50% because they have a lot of issues with their cost structure, growth, management, and company culture. I mean, they have endless problems. Uber’s share prices and stock chart speak volumes.

uber share price vs. uber service: the truth about big companies, popular products, and dying stocks
UBER Chart: 1-year, daily candle — chart courtesy of StocksToTrade.com

But if you listen to mainstream media, Uber stock was the greatest buy of 2019. So many pundits and experts hyped UBER as a great buy. People and the media fell in love with the product…

… but they failed to look at all of Uber’s underlying issues. That’s a huge mistake.

Again, I love Uber’s product and will continue to use it. I don’t want to see Uber fail — I’m merely being realistic. Big companies with popular products usually aren’t the best investments.

None of my millionaire and six-figure students made their profits investing in these large, overvalued companies. They used predictable and repeatable patterns like the ones I teach in my Trading Challenge.

Peloton Interactive, Inc. (NASDAQ: PTON)

Uber and Slack aren’t the only failures. This pattern happens every year with several companies. Peloton, the indoor cycling company, was supposed to be a hot IPO this fall.

But what really happened?

uber share price vs. uber service: the truth about big companies, popular products, and dying stocks
PTON Chart: 1-year, daily candle — chart courtesy of StocksToTrade.com

Not much. It dipped a little off its IPO price and has been chopping around. It’s nearly impossible to grow a small account with this price action. That’s why I only trade penny stocks.

Again, don’t confuse the stock and the product. Here’s one last example for you…

Celsius Holdings, Inc. (NASDAQ: CELH)

I drink Celsius. I think it’s a great pre-workout drink, kinda like a healthy energy drink. A lot of health-conscience fitness professionals recommend their product.

Theoretically, this should do very well. But, over the past two years, CELH has done nothing.

uber share price vs. uber service: the truth about big companies, popular products, and dying stocks
CELH Chart: 2-year, daily candle — chart courtesy of StocksToTrade.com

Even some of the world’s wealthiest people invested in Celsius, but it’s failed to perform. Li Ka-Shing, the world’s 30th richest person, is an investor who planned to bring the drink to Asia. Celsius should’ve been a big hit there. For whatever reason, it’s not taking off.

I can’t say this enough. Trading isn’t about the product or the quality of the company.

And if you’re trying to grow a small account, getting 10% growth a year (which is considered good on Wall Street) won’t help you much. What can work for your small account? Day trading penny stocks.

Need a place to start? Check out my free penny stock course here.

Stay Out of Dying Stocks

uber share price vs. uber service: the truth about big companies, popular products, and dying stocks
© 2019 Millionaire Media, LLC

You can’t hold and hope. Well … you can, but it’s not a strategy, and it doesn’t work.

I hate seeing traders fail. Trust me, I personally love a lot of the products these companies have created. I even use a lot of them, but that’s not enough for me to trade these tickers.

If trading has taught me anything, it’s that the stock market will never value a company based on people’s reaction to the product or service. I know people still think that’s possible because that’s maybe what happened in the market a few decades ago.

Unfortunately, after a 10+ year bull market, you can’t rely solely on a popular product.

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For example, if you want a company’s stock to go up, the company will have to come out with new products. Especially with big, multi-billion-dollar companies like Uber or Slack. Also, the product can’t be a fad, and the company also needs to be structurally sound. Even if a company has everything going for them, there’s no guarantee the company’s stock will spike.

I see this trend again and again. It’s challenging for people trying to get into the stock market. Many are busy and think…

“Hey … I just want to invest. I want to invest in what I know!”

That’s a popular adage in the market, “invest in what you know.” But people take it too literally. And sadly, it’s not that simple. People like to oversimplify things.

Popular Products, Good Companies

I’m not saying this strategy never works — sometimes it does. Starbucks is near its highs. Sometimes, people love the product and the stock, like Chipotle.

Chipotle had some food safety issues, and the stock got crushed 50%. But the company is solid, and people continue to love its product. Now it’s right back at all-time highs.

uber share price vs. uber service: the truth about big companies, popular products, and dying stocks
CMG Chart: 2-year, daily candle — chart courtesy of StocksToTrade.com

But there’s no discernible pattern with these big companies.

Nike (NYSE: NKE) is near its highs, but you don’t know what will happen next. A lot of people love and use Twitter (NYSE: TWTR) … but it’s been very choppy over the last two years. A huge portion of the business world uses Microsoft (NASDAQ: MSFT), which just hit all-time highs as of this writing. There are just too many factors to consider.

The Reality of Wall Street

uber share price vs. uber service: the truth about big companies, popular products, and dying stocks
© 2019 Millionaire Media, LLC

You can’t guess a company’s value solely based on personal experience. These simple assumptions don’t make for smart, self-sufficient trading.

Let’s say you pick your 10 favorite products and buy the stocks. Maybe you’d get lucky and buy the next Microsoft. But more times than not, you won’t grow your account that way.

If you look at Uber share prices now — and you bought in on day one — you probably already know this lesson firsthand.

Learn from that experience. Learn from my experience. Focus on how you can be a smarter trader and adapt to the market. That’s exactly what I teach my students in my Trading Challenge. Apply today.

Learn patterns like the ones I explain in my How To Make Millions DVD. These penny stock patterns are far less talked about and less counterintuitive.

What do you think about ‘hot’ IPOs? I love to hear from you!

The post Uber Share Price vs. Uber Service: The Truth About Big Companies, Popular Products, and Dying Stocks appeared first on Timothy Sykes.



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