The market has been pretty rocky the past few trading sessions… and I don’t think it would be wise to start picking sides just yet.
For me personally, I’m going to stick with momentum stocks because that’s where my bread-and-butter setups are.
Now, when it comes to trading in this environment, I believe patience is key.
What I mean by that is not jumping into trades just because stocks are moving.
Today, I want to show you some ways to practice patience and how I’m able to uncover momentum stocks poised to move.
How To Practice Patience
When it comes to momentum stocks, it’s so easy to get caught up in all the price action and just randomly buy shares… thinking they’ll continue higher.
I believe that’s one of the quickest ways to damage a trading account because I believe that’s pure gambling.
One thing I believe that many successful traders have in common is that they’re patient.
Now, being patient doesn’t mean you have to be twiddling your thumbs or sitting on your hands.
For me personally, I like to be on the hunt for momentum stocks.
However, I’m not necessarily staring at my screens all day.
You see, I actually have a scanner that lets me know which momentum stocks might move… and when I narrow down my list, I just look for my favorite chart patterns.
By doing so… I practice patience.
First, I let the opportunities come to me. By having a scanner, I’m able to filter out the noise and only see the stocks I may want to trade.
Source: Scanz Technologies
Second, I’m only looking for my best setups. When I see momentum stocks pop up on my scanner, I don’t just hit the buy button… I pull up the chart, identify clear entry and exit levels… and execute.
Let me show you what I mean by that with one of my recent Monday Movers trade ideas.
My whole theory with Monday Movers is that money never sleeps… and I want to look for the hottest stocks on Friday that are poised to run higher the following week.
In other words, even though the markets are closed on the weekend, I can still put my money to work and place myself in a position to profit.
For example, the cannabis sector has been pretty hot recently… Hexo Copr. (HEXO) was one stock that popped up on my scanner and actually had one of my bread-and-butter patterns.
Now, here’s a look at the hourly chart in HEXO.
Chart Courtesy of StockCharts
If you look at the chart on Friday, it was actually starting to fill the gap… and forming a bull flag pattern.
With the bull flag pattern, I want to get into the consolidation area (the flag / pennant portion of the pattern)… because this is typically where stocks can break out of.
I knew I had to be patient with this one because it was Friday heading into the long weekend… and the chances of HEXO popping into the close and filling the gap entirely… and potentially getting to $1 were slim.
So I game planned and wanted to hold HEXO into the long weekend.
You see, there is a looming catalyst with cannabis companies… and I figured come Tuesday morning… traders would want to get in ahead of the potential catalyst.
Here was my plan…
I’m interested in entry around $.58 with a stop loss below $.54 and a goal or 20%+ next week, assuming I take a position. Currently at $.63 I’m not looking to chase but enter on a dip, should one present itself.
I wasn’t able to get my exact entry. However, I had a high conviction, and I didn’t want to miss out on the potential gap up… so I chased it a little but planned accordingly.
I was able to buy shares at $0.6177…
Guess what happened with HEXO after the long weekend?
Well, HEXO actually gapped up and hit a high of $0.77 and completely filled the gap!
Chart Courtesy of StockCharts
By being patient, I was able to lock in $2,784 on the trade!
Now, my Monday Movers watchlist drops on Friday… and if you want to find out how I’m able to uncover stocks poised to gap up on Mondays… ahead of time, click here to watch this important training video.
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