Jul

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Best Stocks For Easy Profits

Posted In: Stock Market

Now let’s actually break down the title of this article so that we are both on the same page. By definition, the best stock for easy profits is not actually about specific stocks at all. It’s more about a system to find the best stocks that qualify for easy profits.

Now stay with me on this theme. When I say easy profits I mean a stock I can enter easily and safely and just as easily get out. Again for purposes of this article, the easy profits are the ones that are earned quickly. By quickly I mean in an hour or a day, two days tops.

And to be honest I think day traders have been unfairly picked on. Let’s remember that day traders add great liquidity to the markets. Take away day traders and all you would have are institutional and a few retail traders, and that would be mighty boring as stocks would hardly move at all.

In order to find the best stocks for easy profits one needs a plan. A simple plan with very few rules. No offence to the chart readers, the swing stock guys or yes even the guys who short everything, as the market needs you every day.

I follow this simple logic always “you don’t need a lot of information, you need the right information”. And let me share what I call the right information in the context of this article.

Finding the best stocks for easy profits requires that you follow but two or three rules. Rules that you never stray from.

Ok then, I hope you really pay attention to this part. At 9:45am, I find the stocks with the most volume. Weed through those and only focus on the stocks with unusually high volume. Meaning if a stock normally trades 400,000 shares in a day, we want to see that many traded by 10:00am. That extra volume means that the stock is “in play” . And we are here to play too!

Now watch these specific stocks that have the extra volume and see which ones open higher than the previous day’s close. After they spike up a bit on extra volume, wait until they pullback. A pull back with the extra “in play” volume becomes our entry point. No pullback, no entry period!

Example: XYZ stock closed at .22 yesterday on 400,000 shares traded. It opens this morning at .25 and spikes to .29 on 500,000 shares traded, then pulls back to .23 to scare out the weaker hands. We enter at .24 easily because there is extra volume. Within the next hour or two the unusual volume pops the price back up to .29 .

Now this part is critical to your success. We also know that .29 is a psychological price point threshold. The stock will stall there trying to cross over into the .30 area. We know this by watching Level 2. We get out easily at .28 as there are far too many asks at .29 . Level 2 makes us all smarter by allowing us to see the depth of the market.

What has happened here is achieved by unusual volume first. Your willingness to wait for the pullback just gave you a quick 17% profit. Put another way, you bought 30,000 shares and paid .24, cost = $7,200.00 and you sold your 30,000 shares at .28 or $8,400.00 .. that’s a net to you of $1,200.00 minus commission.

Now rinse and repeat, just twice weekly, and you’ve earned a tidy $125,000.00 a year. Your chances are greatly enhanced to make even more than that by the sheer numbers of your profits, as by month 3 or 4, you’ll invest far more into certain stocks than you did in your first week.

Here’s a quick thought, if you took your Canadian $5,000.00 TFSA and doubled it say every two months with this strategy, you would have over $300,000.00 by the end of the year. I kid you not!

The system works well because it already has two safety features built in. The extra volume adds huge liquidity, you get in and out safely. Forcing yourself to buy the pullback, ensures you never ever chase a stock, and get caught buying at the high.

The best stocks for easy profits happen when a proven system is in place and followed closely. And like I said, “you don’t need a lot of information, you need the right information”.

Keep it simple, stay focused, trade logically and without emotion, and you will make money! It make not sound like a very sexy system, but you know what, making money is always sexy, and giving it away, is even sexier!

Mike Perras manages the Canadian Stock Alerts blog. While these alerts are never meant as a recommendation to buy a particular stock, they are nonetheless a heads up or an alert to a certain potential positive trend.

His system Best Stocks For Easy Profits is also available online. Take a look and see some real life examples.

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