When I first got my start in the markets, I was actually trading while working a 9-5 job at a real estate firm.
It definitely wasn’t easy trying to do two things at once, and I actually took it on the chin because I really didn’t know what I should be focused on.
These were some thoughts that went through my mind…
- Do I need to look at chart patterns?
- Should I focus on the fundamentals?
- Do I need to take a quantitative approach and become an algorithmic trader?
- Do I focus on catalyst events?
I just bought random stocks and kept getting chopped up…
After I lost about half of my $15K account, I had an epiphany — stocks are very similar to the real estate business, I need to focus on…
Timing and Location
I developed a strategy known as the catalyst runup strategy, and it helps me identify where I should look for opportunities and how to time my trades to near perfection.
How does it all work?
Timing And Location Are Everything In The Market
Let’s face it if you’re able to locate a sector and time your entries properly… you can put yourself in a position to make money.
However, the hardest part is to understand which area of the market, or which stocks, will pop off next. What’s even more difficult is trying to time your entries and exits.
I’ve actually developed a strategy that pinpoints when I should get into a specific stock and lock in gains, or take a loss if it goes against me.
You see, I believe catalysts are what truly move stock prices. Sure, chart patterns might work, but what causes these chart patterns?
If you guess catalysts, you’re absolutely right.
Catalysts are simply a fundamental reason why a stock moves, they can range from earnings announcements to a data release.
The key is to spot these catalysts AHEAD of time, and trade around them.
Now, most traders try to trade stocks after they release news. To be honest with you, that’s a little too difficult to analyze and dissect all the information… and I prefer to keep it simple.
Let me show you what I mean by that.
Here’s a stock on my radar that I may look to trade if it stays within my buy zone.
Acasti Pharma (ACST)
Catalyst Dates: Phase 3 data due likely late August
Buy Zone: $.65 to $.80
Profit Zone: $.95 or higher
Stop Zone: $.60 or below
Option: No options
Take a look at that trade plan above.
There’s a catalyst date there. The goal would be to get in before when it’s expected the company would release data, which is late August. So if I were to take this, it would be a relatively quick swing trade.
I laid out my buy, profit, and stop zones clearly so I know exactly when I should get in, stop out if the stock moves against me, and lock in gains.
Listen, I can come up with ideas all day just by focusing on catalyst events, which lets me know where (location) and when (timing) I should get into a specific stock.
If you’re struggling to come up with trade ideas, then check out my catalyst training workshop.