5 Tips for Trading in the Coronavirus Lockdown
Dear Penny Stock Millionaire,
The coronavirus lockdown means more people are staying home … and trading.
Sheltering in place is a good thing. We all need to do our part to keep this virus from spreading.
I’m getting a lot of messages about the coronavirus lockdown and the market … It’s kinda overwhelming. The recent market crash is getting more people interested in the market and trading than ever.
I think it’s great that people are more interested in their financial future. So I want to help by giving you five tips for trading in the coronavirus lockdown.
These tips aren’t just for new traders — they’re also good reminders for experienced traders.
My number-one goal as a teacher is to teach my students to be self-sufficient traders.
Become a Self-Sufficient Trader
I’m happy to teach people who are eager to learn. I’m a firm believer in people taking control of their finances. And this crisis proves how important it is.
If you want to trade, you have to learn to understand the markets and how to react to them…
I never want anyone to follow my trade alerts or anyone else’s trades or stock picks.
This is why I teach my students to be self-sufficient. I give weekly live trading webinars, post blogs and videos and a lot more in my paid subscriptions. I don’t want lazy students.
Now let’s get to my number-one tip for trading in coronavirus lockdown…
#1) Avoid Overtrading
If you’re stuck at home, it’s easy to get in the habit of boredom trading. The world is strange these days — we’re all looking for distractions. And with more free time, it can be easy to start trading just for the sake of it.
Don’t overtrade. Boredom trading can lead to losses.
There won’t be perfect setups every day. If you’re trading because you’re bored … if you’re forcing trades to make up losses or to make money fast … you’re overtrading.
This is why discipline is crucial. Boredom is no excuse. If you can’t control yourself, step away from the computer.
I know a lot of traders who walk away midday so they don’t overtrade. If you struggle with overtrading, find something you can do when there are no ideal setups. Go for a walk, go work out, or take a nap — whatever it takes.
I get it. I tend to overtrade. That’s one reason I love traveling so much. It gets me away from the computer so I don’t force trades.
While I’m sheltering in place in Los Angeles, I’ve had to find other ways to use my time.
In trading, less is more. It’s OK to have a cash position and protect your account.
It’s also a good reason to…
Focus on the Best Setups
You need discipline to only trade the best setups for your strategy. Right now the coronavirus stocks and sympathy plays are hot.
If you’re not ready to trade just yet, use this opportunity to learn about hot sectors.
Trading can be addicting. You can get a rush if you profit. And losing can tempt you to trade more to recoup losses. Both cases can lead to forcing trades, which can mean more losses.
Remember, trading is a marathon, not a sprint. You won’t get rich overnight and it’s NOT easy. Let the trades come to you. Learn to react, not predict. There are a lot of plays right now…
Focus on the setups that work for you, and…
#2) Focus on Big Percent Gainers
How can you find potential trades?
You gotta watch for those big percent gainers. I can’t tell you how many times a day people ask me how I find the stocks I trade.
I always look for big percent gainers… It’s not rocket science.
That doesn’t mean that all big percent gainers will offer a trading opportunity. I study the charts of all of them and focus on the ones that fit my trading patterns.
And every day, I…
Use Smart Tools
I scan for the big percent gainers on StocksToTrade. Every single day. You can use the built-in watchlist for the biggest percent gainers. Or you can use any of the other 40+ built-in scans to find stocks that fit your strategy.
Students also ask me which broker they should use. Which broker you use depends on your strategy. So do your homework and research brokers before picking one.
If you want to trade OTC stocks, make sure your broker allows that. If you want to short sell, you need a broker that will have shares to borrow.
If you have any questions about your broker’s service, platform, or issues … call them.
Too many people ask me about specific broker issues. I teach people how to trade penny stocks — you gotta do your own broker research.
#3) Don’t Try to Predict the Market
When you try to predict what a stock or the market will do, you’re guessing. My students and I don’t guess.
I wait for stocks to prove themselves to me. Look for stocks spiking on news or breaking out to new highs.
No one can predict the market — and the market is always right. That’s why rule #1 is to cut losses quickly. You will be wrong sometimes. You have to protect your account by sticking to rule #1 and minimizing losses.
When you try to beat the market or fight a stock, you’ll always lose. If you’re down on a position, never try to fight it or add to a loser. Cut your losses and move on. It hurts less in the long run…
With experience, you’ll learn the nuances of trading and why stocks move the way they do. You’ll start seeing patterns and know which setups fit your strategy.
#4) Use FinTwit
Don’t use your time at home mindlessly scrolling through social media. Learn how to use social media to your advantage by searching financial Twitter, aka FinTwit.
It’s a wealth of info that uses cashtags instead of hashtags. A cashtag is like a hashtag … it’s a dollar sign with a stock ticker, like $FB or $TWTR. You can search for cashtags to see what people are tweeting about them.
Don’t ever blindly follow picks or trades. But you can use FinTwit as a useful tool to get ideas for possible stocks to trade. There are some Twitter accounts that can tweet about a stock and move it in real time — up or down.
I trade stocks up on Twitter hype as speculative trades. Things can move fast, so I’m in and out quickly.
Note that I use FinTwit as a tool to see what may be moving. Be careful of following anyone’s picks. And never send anyone money. There are tons of BS imposters out there trying to scam people. They make me so angry. I hate to see people lose money to these scams.
#5) Know Key Trading Patterns
I have my favorite patterns, and they’re working well for me lately. You don’t need to reinvent the wheel — but you have to study and prepare.
Dip buying recent runners on support after a morning panic is one of my favorite patterns right now. After a stock has a run-up for a few days, there will be traders taking profits…
There will also be short sellers trying to drive the price back down. After the mass sell-off, shorts have to buy to cover their positions, and traders who missed the move want to dip buy…
That creates a bounce, and the stock goes back up toward the high of the day. I don’t dip buy thinking these stocks will hit those highs again. Most never will. I try to catch the meat of the move and move on.
Keep former runners on your watchlist. They can offer trading opportunities for longs and shorts.
I know … I said I’d give you five tips.
But this one’s too important to leave out. Studying is by far the smartest thing you can do to help your trading with your extra time at home.
There’s absolutely no excuse to not study.
You can also check out the book by my student Jamil, The Complete Penny Stock Course. I wrote the foreword.
Not too long ago, a lot of people complained that they didn’t have enough time. If you’re sheltering in place or in a coronavirus lockdown, you probably have more time on your hands. Use it to study as much as you can.
Some of my most top students studied 15+ hours a day. Not every trader can put in that much time … But that’s the kind of commitment you need.
Be prepared to work your butt off. Respect the process.
The Coronavirus Lockdown Conclusion
The coronavirus is disrupting our lives in some major ways — from lockdowns to crazy market volatility.
Please, respect our healthcare workers on the frontlines of fighting COVID-19 and stay home. It’s critical that we stop spreading this virus.
I know this can be a frustrating and uncertain time. A lot of people just want things to be back to normal.
But think of it this way … You now have more time to pursue your dreams and goals.
Time can be a true gift — so use this opportunity well. Learn as much as you can. Immerse yourself in the market.
If you’re new to trading, you can paper trade or trade small until you’re comfortable with a setup.
Talk with you tomorrow,
Editor, Penny Stock Millionaires