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When it comes to the markets and trading, I am sure of one thing: the markets are forever evolving. 

There’s no better way to put it than this old saying: “adapt or die.”

I have recently picked up on a few adjustments that could be implemented to remain relevant and prosper in the current market environment.

I have spoken a few times to my members about the details behind my trading plan switch. Two days ago, I recently wrote exclusive content for my members in the Biotech Breakouts, where I discussed the topic and plan in detail.

It’s essential that I, and other traders, generally recognize when a shift in the market and opportunity occurs. Identifying that change of environment will allow me to make the changes necessary.

Essentially, in making the adjustments that I am, I am being proactive. 

Making those necessary changes is essential because remember, as Economist John Maynard Keynes famously said, “The stock market can remain irrational longer than you can remain solvent.

 

What adjustments am I making?

Typically I have focused heavily on technical analysis when analyzing trade opportunities and weighing up trade decisions.

In the future, I will focus slightly less on technical analysis and increase my focus on fundamental analysis when making my trade decisions with biotech stocks.

This is not something I am just doing for the fun of it. 

I have noticed a lack of follow-through in the current environment, specifically with small-cap biotech stocks. 

So I believe that doubling down on fundamental analysis and getting long a biotech stock with solid fundamentals and attractive technicals will increase the odds of favorable continuation in a breakout or trend.

 

What is fundamental analysis?

Fundamental analysis is all about trying to measure the intrinsic value of a stock.

As I mentioned before in my post to my members in Biotech Breakouts, this can be done by considering any of the following data points:

  • Overall economy
  • Industry conditions
  • The financial strength of the company
  • Company Management
  • Earnings report
  • Expenses
  • Assets
  • Liabilities

It’s important to note that I’m not doing this for fast-moving penny stocks.

I am talking about biotech companies that are developing new drugs and other technologies. 

Therefore, I want to make sure that the fundamentals are solid to increase confidence in the price action’s strength.

 

So what about technical analysis?

As you might know, I love technical analysis and have a host of favorite patterns and technical setups.

I will still be conducting technical analysis on my ideas and plays. However, I will be doubling down on fundamental analysis and looking to place higher importance and weighting on the fundamentals of biotech stocks going forward.

In the past, I might have led with technical analysis when deciding whether to make a trade, whereas going forward, I will lead with fundamental analysis and then use technical analysis for precise entry and exit targets.

 

Author:
Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

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2 Comments

  1. I’ve just joined an options trading app and would like to know how I should go about trades with little or no true knowledge of the market?

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