Before the trading day begins, you need to have a plan going in.
If you have no idea how to make a plan before the day starts, that’s what I plan to help you with today.
The steps are as follows:
1. Target the stock or stocks that you plan to follow.
2. Decide how you want to trade them (long or short), and let the VWAP confirm it
3. Execute your trades
Simpler said than done right?
Maybe when you first start off. But the more you do this, the easier it becomes.
Let’s go through these steps then…
Step 1: Target the Stocks That You Plan to Follow
The easiest way to know what stocks to target is to look at my watchlist.
This watchlistis a comprehensive list of stocks that are worth following.
Before the market opens, I’ll do the heavy lifting for you and have it sent directly to your email.
Out of this list, I suggest choosing 1-3 names that you would like to try trading.
I usually add all these names (and some extras that I’ve had my eye on) to my scanners.
Remember, what we want in a stock is that it’s high in volume (one million shares traded on the day) and that it’s moving (gapped up or down, or trending up or down).
But Kenny how do you get these names for the watchlist? I hear you ask…
Well, the first place I look is at what companies are announcing earnings.
There are a lot of sites out there that will list earnings announcements, but my favorite is Earnings Whispers.
It’s straightforward, no-nonsense, and easy to see who is reporting on what day.
Their Twitter is also a good resource to quickly see what earnings are worth following before the day begins.
On Sunday, they do a look ahead at the biggest earnings for the week, so be sure to check in by the end of Sunday for that info.
The second place I look, as much as I hate it, is CNBC.
After the market closes, and before it opens, CNBC releases an article that is always beginning with “Stocks making the biggest moves”.
They’ll focus on the big companies out there with news of some sort.
But while it will contain some stocks I like to watch, it’ll also contain a lot that isn’t worth trading with the VWAP.
It also focuses on household names that everyone knows, and never mentions the smaller names that can net you some big gains.
For instance, today’s trades for my VWAPians were NFLX, JWN, and GNS. NFLX was on their list, but GNS was not. On top of that, they listed plenty of stocks that had low volume and no one cared about them.
If you want to find the stocks they aren’t talking about, the Finviz scanner is a great resource.
This is a free screener that will list out stocks depending on what you want to look for.
Their unusual volume screeneris a quick and easy tool that will often target the unknown names that are seeing a strange uptick in volume.
You have to be careful with some of these names as they could be pump and dump stocks.
The good thing to check is the articles that are listed under each chart that they list so you can see if the stock is legitimate or not.
Oftentimes, the more news on a stock, the better. That’s how you could have found our GNS play this morning.
Step 2: Make Your Plan and Let VWAP Confirm It
Ok, so now you have two or three stocks in hand that are high in volume and are moving.
How do you determine how your plan of attack on a stock?
The simplest way is that if a stock is up, you’ll want to short it and if it’s down you’ll want to buy it.
But always remember that you need the VWAP to CONFIRM your trade either way. A stock could gap up and keep going up.
I don’t touch those stocks.
Those long on a stock have to sell for profit at some point, and those short on a stock have to cover for profit.
Let’s take our trade GNS as an example today…
The stock gapped up 100% overnight.
So, we went into today looking to short it.
And lo and behold, it worked.
The VWAP gave us two chances to short the stock.
If you missed the first move down, you could have gotten in on the second.
That chop you see between the two circles confirmed its bearishness.
And a $4.20 short could have gotten you all the way down to $2.80 before you would have wanted to cover.
That’s a 33% gainer in just an hour of trading.
Be aware that your plan going in may never come to pass.
I wanted to short NFLX today and all it did was go up in the morning, sell off a little back to the VWAP and then just chop around for the rest of the day.
That happens. But that’s also why we let the VWAP tell us what to do.
Step 3: Execute Your Trades
If you’re new, the more you trade, the better you’ll get at trading the VWAP.
You won’t learn anything if you don’t put on trades.
And you can’t be afraid to fail a bit before you get the hang of it.
If you are risk averse, use tighter stops on your trades, and risk only a $10 loss instead of a $100 loss.
Or even paper trade to get the hang of your platform.
Let me know if this was helpful by emailing me at KennyGlick@MoneyMapPress.com. And feel free to shoot me any questions you may have that you want me to answer.
I will see you all next week!
January 20 2023