It’s been a tough market out there for many investors and traders, and if you’ve been struggling right now, don’t beat yourself up. It’s all part of the game. 

During my webinar last night, I saw so many questions flood the chat… but there was one question that stood out to me  — what are traders looking at? 

I kept noticing that question pop up, and that’s a signal that many traders are feeling lost. This is where I come in — to try to help as many of you as possible, I want to show you what’s working in this environment and what I’m watching at these levels.

You see, while many people are focused on the overall market and large-caps… wondering how it’ll affect their portfolios, I’ve been able to navigate the markets with ease. Not only that, but my clients have benefited from the brand new changes I’ve made to Jason Bond Picks.

How have I been able to find success in this crazy market?

 

Location Is Key To Finding Success In This Market Environment

 

Just like in real estate, location is key in the stock market. There are some areas in the market that are hotter than others right now. 

For the better part of my trading career, I traded in a bull market… and it was easy pickings. However, many questioned how I would fare in a bear market. Let me tell you something, my two simple patterns have been working extremely well even with all this volatility.

Today, I want to walk you through EXACTLY how I use my bread-and-butter pattern to reel in profits consistently.

The first step is to know where to find stocks, right?

Well, I’ve come up with a scanner that picks out momentum stocks and allows me to hunt them down with ease.

 

 

 

 

 

 

 

 

 

 

Some of the factors I filter for include:

  • Market Capitalization. I only want to trade small- and mid-cap stocks.
  • Volume. I want to find liquid stocks to trade
  • $ Volume. I like to look for stocks with a lot of volume, in terms of the dollar value traded that day.
  • Percentage Change on the day. For the most part, I want to look for stocks that are up on the day.

Pretty simple, right?

If you want to learn more about my scanner… you’ll have to gain access to Jason Bond Picks premium.

 

 

Once I filter down all the stocks out there, I further drill down my list of stocks to trade by looking at the overall chart pattern. Unless the stock exhibits one of my patterns… I’m not trading it.

Let me walk you through one of my setups in Dave & Busters (PLAY).

 

My Quick $6,000 Winner In PLAY

 

On Monday, I saw PLAY pop up on my scanner. In fact, it was third on my list… and I quickly pulled up the chart. Once I pulled up PLAY, I was so stoked because I saw my trusty fish hook pattern.

Here’s what I sent out about PLAY in Monday’s watchlist…

Finally, PLAY which I traded well last week is making a nice higher low after resting for a few days. If shares can get above $10 this really has a lot of room higher. I’m watching $8 as the pivot for now. 

 

 

Once I put the stock on my watchlist, I knew I had to keep an eye on it… and Jason Bond Picks clients knew to keep it on their radar.

Shortly after I sent out my watchlist, I sent out an ADVANCED Notice email. That’s right, before I got into the trade… I let my clients know about my plans.

 

 

If you look at the screenshot above, you’ll notice there was an entry zone, stop-loss zone, and target area. The only thing I needed to do was follow the plan.

Well, shortly after I sent out the advanced notice email, I noticed PLAY was having a stellar day and was diverging with the small-cap ETF (IWM).

Here’s what I sent out to my clients in real-time — letting them know I bought shares of PLAY.

So we’re seeing some weakness in the IWM as these overall markets try hard to find a real bottom. I like the divergence in PLAY up 8% at the time of my buy. I picked up 5k at $8.35, am monitoring $8 as my probable stop loss area and am looking for a test of $10 to see how it trades at those levels. Bought into the IWM low of day move thinking if it reverses today, PLAY might see that $10 level. If not, it’s diverging so I might be able to hold onto it for a swing.

 

 

Here’s the divergence on PLAY I’m referring to, meaning it’s up as the market is down, showing signs of headed higher despite a headwind. The thesis is if the wind shifts to the back of the overall market, stocks that were diverging will go up faster. We’ll see if it works.

 

 

Just a few hours after I got into the trade… PLAY jumped up 15%, and I was able to rake in $6,000 in real-money profits!

 

 

Of course, some of my clients did a heck of a lot better than me… like Sanmeet.

 

 

What’s working for me in this market environment are my patterns, finding areas of value, and catalysts. If you want to learn how to put yourself in a position to win in this market environment, click here to watch this limited-time training session.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

In the last several decades, investing in the stock market has become increasingly popular and has resulted in remarkable financial gain for those participating strategically. Though the average person investing in the stock market does so with the assistance of a full-service or discount broker, it is entirely possible to enter into this arena without such help.

A stock broker is a financial professional who works on your behalf to provide insight and services related to the stock market and trading. Using a broker is a good choice if you’re new to the stock world and would like assistance with the process. While it’s more convenient to use a broker when getting involved with the stock market, it’s not a requirement and comes down to personal preference. Below is an overview of how to start buying stocks without hiring a broker.

How to Buy Stocks Without a Broker

Buying stocks independently of a broker can give you greater freedom in your investments and help you save on the costs associated with a broker. You have complete control of the stocks you invest in, and you aren’t charged a brokerage fee for every single transaction. There are several ways that you can get involved in stocks and boost your finances without going through a broker. Some steps you can follow to start trading on your own include:

  1. Choosing the best way to invest, either with Direct Stock Purchase Plans (DSPP) or Dividend Reinvestment Plans (DRIP)
  2. Researching stocks to find the best place to invest your money
  3. Funding your account
  4. Purchasing stocks

This is a general overview of the steps needed to get started, but keep in mind that you will likely do steps two through four multiple times. After you start investing, it will be in your best interest to continue researching the market and purchasing more stocks as much as your comfort level and income allows.

Choosing the Best Way to Invest

Once you’ve decided to buy stocks without a broker, you’ll need to determine which broker-free plan you want to invest in. While either plan can help you earn additional income, one plan may better meet your needs than the other. Here are brief overviews of two of the most popular plans.

Direct Stock Purchase Plans (DSPP)

Direct Stock Purchase Plans, more commonly referred to as DSPP, involve purchasing stocks directly from a company or corporation without the use of a middleman (in this case, a broker). In these situations, you would make monthly payments to the company that would, in turn, be used to purchase stocks within the company.

The process is quite simple. You select a company you want to purchase stock from (usually a major corporation that is succeeding financially), deposit the minimum amount of money the company requires for this type of plan, and then set a monthly deposit amount. Then, you are officially a shareholder in the company and will be paid dividends as they occur.

One of the greatest benefits of participating in a DSPP is the freedom you have to select the company you wish to invest in. Rather than entrusting a broker to make a financial decision on your behalf, you can select a company of your choosing that you are either personally invested in or believe carries a large profit potential.

Dividend Reinvestment Plans (DRIP)

When you’ve invested money in shares of stocks, your profit is connected to the rise and fall of the stock’s monetary value. In situations where companies attain great profit, the company may pay out dividends to their shareholders. During this process, you may receive a cash or stock dividend.

A Dividend Reinvestment Plan takes advantage of the cash dividends you receive from the company you are invested in. Rather than being compensated with the cash dividends, these dividends are automatically used to purchase more shares of stock within the company. Essentially, these plans will reinvest your earned dividends and make you a larger shareholder within the company.

This type of plan requires very little direct involvement. For the most part, you can purchase a set number of shares or deposit a certain amount of money and sit back as your dividends are automatically invested back into the company. Unless you choose to do so, no additional money is taken from your account to invest.

Researching Stocks

Once you’ve determined which investment plan is best for you, you should research the companies that offer these types of plans. No matter which of the plans mentioned above you decide to invest in, the company you purchase stocks from should be a company you have confidence in.

For example, if you’re investing $100 or more every month in a DSPP, this could be a major lomg-term investment. It would be risky to invest this much money in a stock that is historically unstable or lacking positive growth in recent history.

When researching stocks, you should be looking at the stock’s history in terms of growth over the last few months and years. It would also be a good idea to analyze the reasons behind the trends. If a stock’s value experiences an extraordinary increase every time the company releases a new product, and the company has been consistently doing so every few months, this stock may be a great investment long-term.

You should seriously consider the future of the stock. Take a look at which markets are emerging and which are declining in popularity. Look at trends in technology, read diverse industry publications to see what types of technologies or companies are becoming more necessary, and look for trends within industries that show the direction each industry is heading.

Funding Your Account

If you’re investing in a DSPP, the only account you really need is a checking account from which your monthly deposits will be paid. With that said, you need to make sure your checking account maintains a balance greater than or equal to your monthly deposit. Failure to consistently deposit your set amount can lead to issues with the company and your bank account.

If you’re investing in a DRIP, you need to create a DRIP account. Rather than going to a broker to open one of these accounts, you can go to other financial institutions to do so. Like when you purchase any stock, you need to make sure this account is fully funded to process future orders with the same company. 

Purchasing Stocks

To purchase stocks with a DSPP, the most direct route is going to the website of the company you wish to invest in or to ComputerShare. With ComputerShare, you can search for stocks that offer DSPPs and select the company you want to invest in. The website will then outline the details of the investment plan and additional fees associated with the plan. This is, by far, the easiest plan to start because there is no middleman.

In order to become involved with a DRIP, you must already be a company shareholder. If you are not already a shareholder, you can enlist the help of a transfer agent who can enroll you in a DRIP. There is also the possibility that you can purchase your stocks directly from the company rather than using a broker or transfer agent. After purchasing the stocks, you can contact the investment department of the company to pursue DRIP enrollment.

No matter which of these two plans you go with, you should be constantly monitoring the stocks and their values. Though you shouldn’t immediately sell the stocks when they begin to lose value, you should recognize when a stock is fading out and when to cut your losses.

Final Thoughts

The stock market, and stocks in general, carry great potential when it comes to income and profit, but not just anybody can benefit financially. If you’ve considered involving a broker and eventually determined that it was too expensive or lacked the control you would like to have in the process, there are two options that allow you to purchase stock without a broker. When it comes to determining your plan, you should consider these facts.

  • If you’re confident in a company’s potential and can commit a set monthly payment to purchase more shares of the company’s stock, your best option would be investing in a Direct Stock Purchase Plan.
  • If you’re invested in a company and would rather your dividends be used to purchase full or fractional shares of the company’s stock, rather than being paid cash, the better option would be to invest in a Dividend Reinvestment Plan.

After you’ve selected your ideal plan, you’ll research stocks that you wish to invest in, create and/or fund an account, and finally, purchase the stocks. If you need more help with investing on your own terms, sign up to receive our free e-book to learn more about trading.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

Extended hours trading is not for the faint of heart. It is a type of trading activity that is dominated by large institutional traders. While individuals can take part in this activity, institutional traders have a natural advantage. However, astute traders have greater opportunities for profit.

Extended hour trades present traders with unique advantages, but they also carry high risks. If you would like to engage in extended hours trading despite the level of risk involved, you need to do some research on different stock exchanges, closely monitor stock prices, and learn about your competition.

Here are some key takeaways:

  • The two types of extended hours trading are pre-market trading and after-hours trading.
  • Most extended hours trading generally occurs close to normal trading hours.
  • News that affects stocks occurs shortly before or shortly after open or close.
  • There is generally a lower volume of stocks during extended hours, which leads to increased volatility.

What Is Extended Hours Trading?

Extended hours trading is a type of market activity that occurs before or after the trading day of a stock exchange. Extended hours trading is also known as electronic trading hours, or ETH, because it occurs with the help of Electronic Communication Networks (ECNs).

Regular trading hours for major exchanges in the United States, like the New York Stock Exchange and Nasdaq, generally begin at 9:30 a.m. and end at 4:00 p.m. Eastern Time (ET). Pre-market trading or ETH that occurs before the trading day generally starts around 4:00 a.m. ET and ends by 9:00 a.m. ET. After-hours trading or ETH that occurs after normal trading hours begins at 4:00 p.m. ET and ends at 8:00 p.m. ET. Normal and extended trading hours may vary, depending on the exchange and the asset or security that is being traded.

Most extended hours trading occurs around 6:30 a.m. ET on a trading day. By then, investors have time to react to the news that affects stocks, and stock prices are closer to normal.

When Did Extended Hours Trading Begin?

Since 1985, regular trading hours for major exchanges in the U.S. were set to their current schedule, but extended hours trading would not exist for another 14 years. In 1999, extended-hours trading began as ECNs were introduced to allow traders to invest without being on a stock market floor to place a trade.

At first, ETH was limited to investors that had a high net worth and institutional investors, such as mutual funds. However, ECNs eventually allowed individual investors to engage in after-hours trading as well.

What Are the Advantages of Extended Hours Trading?

There are several potential advantages of extended hours trading. First, electronic trading can be convenient. Investors who may not otherwise be able to take part in the stock market can invest in their own time. Secondly, traders can instantly react to the news that affects a stock to take advantage of favorable prices. Generally, bad news about a company may cause its stocks to drop sharply, which will lead to quick selloffs. Astute buyers can pick up certain stocks on the cheap.

What Are the Risks of Extended Hours Trading?

There are generally more risks associated with extended hours trading:

  • There is less trade volume during extended trading. This means that it is harder to execute trades outside of normal market hours.
  • There are wider big-ask spreads during extended hours. This may lead to unfavorable prices for the buyer.
  • The lack of trade volume and wider bid-ask spreads outside of normal market hours lead to increased price volatility. The risks are especially pronounced in after-hours trading, which is generally when the worst news about companies happens.
  • The increased volatility during extended hours means that the price of a stock is uncertain. This is a bigger problem for after-hours traders. The prices of securities tend to settle during pre-market hours and resemble prices investors may see during normal market hours.
  • Extended trading participants tend to be large institution investors, like mutual funds. Since large institutions have a vast wealth of resources, it is harder for individuals to profit outside of normal market hours.

Limits on Extended Hours Trading

Now, most brokers put limits on traders outside of normal trading hours. For one thing, traders are required to enter limit day orders during extending trading sessions because market orders are riskier due to the decreased liquidity. Also, most brokers only allow traders to offer Regulation National Market System securities and bar over-the-counter securities, many funds, and some options. Certain markets may not be accessible outside normal trading hours.

Related Terms

Here are a few pertinent terms regarding extended hours trading:

  • Asset: An asset is a resource that contains economic value and that is owned by an individual, company, or government. An asset may provide its owner with a future monetary benefit, especially if it can generate cash flow or reduce expenses.
  • Bid-Ask Spread: This is generally the difference between what a buyer is willing to pay for a market asset and the lowest price that a seller will accept for that asset.
  • Electronic Communication Network: An ECN is a computerized system that instantly matches buy and sell orders for securities for trade in a market. When individuals use ECNs, they can directly trade between major brokerages over a geographic distance. Someone can simply place an order to buy a certain number of shares at a specific price, and an ECN will look for such a sell order.
  • Exchange: An exchange is a marketplace where investors can trade financial instruments (like stocks and bonds) and commodities. An exchange can be a physical location or an electronic platform. Exchanges are governed by rules set by various government agencies to ensure fair trading and transparent pricing. Governments, companies, and groups can use exchanges to offer securities to investors.
  • Foreign Exchange: The foreign exchange (which is also referred to as forex or FX), is a transaction that occurs when someone trades one currency (like the dollar) for another (like the yen).
  • Forex Market: The foreign exchange market is where currency swaps take place. The foreign exchange market has no central location, but it consists of an electronic network of banks, brokers, institutions, and traders. The forex market is also the largest in the world, so it has the most liquidity.
  • Liquidity: This refers to the ease with which an asset or security can be converted to cash. The liquidity of a market increases with more activity since more investors are putting their money into it.
  • Market Order: A market order is a request by a trader to buy or sell a stock at the best current price. Such an order is often made through a broker or brokerage service, and it’s the fastest way to enter or exit a trade.
  • Regulation National Market System: This is a set of rules established by the Securities and Exchange Commission (SEC) with the intent to improve exchanges, promote competition, and establish fair market pricing.
  • Security: A security is a financial product that holds economic value. It may represent ownership in a publicly traded company, a creditor relationship in a government, or the right to ownership, as with an option.
  • Volatility: In securities trading, volatility refers to the big swings a stock’s price takes over a sustained period in either direction.

How to Make the Most of Extended Hours Trading

Day traders who prefer to do most of their trading during normal hours can use extended hours trading to help them analyze stocks. Instead of acting on the stock during the hours before most exchanges open, traders can analyze a few economic indicators to predict how certain stocks may perform for much of the day. Most of this information is released at 8:30 a.m. ET, one hour before the stock exchange opens on Friday. For example:

  • The Economic Situation Report is considered the most important economic indicator for traders. The information in the report lets traders know basic information about who is employed. That information includes demographics, data on which industries have lost employees, and data that shows how buying power has shifted among the public.
  • Investors use the “corporate profits” and “inventory” data from the Gross Domestic Product (GDP), often from different countries, to predict which economies are experiencing fast growth.
  • The jobless claims report is generally used by investors to gauge the general health of the economy. Investors look at who has claimed unemployment benefits during a given period, and the increase or decrease in claims will generally have an inverse effect on the market.

Of course, none of these indicators can allow investors to perfectly predict which assets and securities to buy and sell, but these are still leading indicators.

Ultimately, trading comes with a set of risks, but extended hours trading holds some of the greatest risks for investors. To make the most of extended hours, investors must be aware of the risks, the limitations placed upon them by brokerage firms, and analyze common economic indicators. If you would like to know more about extended hours trading, look to the experts at Raging Bull. They’d be glad to help you define a good day trading strategy.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

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