With literally thousands of stocks available, where can you find the best trade ideas? This is a common question for day traders, whether they are brand new or long established veterans…and my topstudents and I know EXACTLY how to find them.
If you’re trying to make your way as a trader, chances are that it’s a subject that is frequently on your mind. If you’re wondering how to find the right stocks, including what criteria to use and what technology to employ, you’re in the right place. Be sure to watch this entire free guide and use this crucial new tool too and also please read on to find 7 tips for finding great trade ideas:
1. Learn about trading. Do you seriously think that you’re going to generate trade ideas without knowing how to trade? Think again. While you may have inklings about industries or companies that might yield lucrative trades, without the knowledge to back up your theories, you’ll just be gambling.
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Learning the mechanics of trading before you begin spending your money, you can begin by reading this other free key guide from start to finish. I established the Tim Sykes Millionaire Challenge to help my students learn how to trade. This is because when I was first starting out as a day trader, I had plenty of ideas, but no guidance. As such, I had to learn a lot of things the hard way. I lost a lot of money that in retrospect, I didn’t need to lose. This is part of why I established the challenge. Many people saw what I was doing and asked for guidance, and this is the way that I deliver it to them.
Learning all about day trading, learning how stock charts and setups work, and creating this strong foundation is the first step to being able to generate educated trade ideas.
2. Invest in some technology. When I first started trading, the technological landscape was much different than today. In fact, in retrospect the resources that day traders had when I was first starting seem rudimentary.
Fancy technology alone will not make you a great trader (you need to learn how to trade first: refer back to #1). However, the incredible technology at our fingertips today can really help you generate trade ideas and gain insight on stocks.
Programs like StocksToTrade allow you incredible resources for filtering stocks based on your chosen criteria. You can gain access to the top percent gainers and losers, quickly scan the highs and lows, and filter data for research.
Readers of this blog and people who have followed my career know that I’m all about studying stock charts. Truthfully, I consider it one of the secrets to my success. Investing in a program like this allows you to do it easily and efficiently…far more efficiently than I ever did in my first few years…so definitely utilize it and make your life easier!
3. Listen to podcasts. There are a myriad of amazing trading podcasts out there, and they can absolutely help you generate trade ideas.
Some podcasts, like The Steady Trade Podcast, offer interviews with successful traders wherein they speak about their specific methods and tricks for generating trade ideas. This offers a lot of valuable information on successful practices, and can be very inspiring.
However, there are many other podcasts out there. You can look at my blog archives to review podcasts I’ve been featured on, or search your favorite podcast directory for investing episodes. Listen to them while you’re driving, taking a run, or cleaning your house. Always keep learning, because it will help you expand as a trader.
4. Scanning and research. Study, study, study. That might as well be my mantra. I gained my millions by being obsessive about reading stock charts. This is a habit that I try to firmly instill in my millionaire students.
Studying stock charts is one of the best ways to begin to determine patterns. This is what will help you determine if a stock is a good investment. However, it’s not just about looking at the stock charts. It’s about actually figuring out what they mean.
For many, the process will start by scanning the stock charts and filtering gainers or losers. Then, the trader might zero in on a few potential stocks to trade. But filtering the volume and percentages isn’t enough. The trader in question will need to do research to back up the information that they are finding.
Often, during the process of scanning and researching, you’ll find that you will begin to have trade ideas. Even if you never end up moving on the particular stock you’re researching at any given moment, it can inspire future success. For instance, if you notice that most of the gainers are in a particular sector or industry, this can inspire you to be proactive to look at other opportunities in the same arena. This can help you be a nimble and proactive trader.
5. Seek out catalysts. Catalysts can be a powerful predictor of a stock’s success. Or, they can be a predictor of a stock’s downfall, which can also lead to opportunities via short selling.
A catalyst is anything that happens to a company that might affect the value of its stock offering. And yes, a catalyst can be good or bad news….and it’s not just about the news, it’s more important to see how a stock reacts to the news.
Let’s start with good news. Say you have Company X which is offering a new product. They claim that this is going to be the next big thing. Or, they say that they’ve hired a new bigwig CEO. Things like this can potentially affect the value of their stock, causing it to go up.
Following the news and world events can clue you in on potential catalysts like this. Alternately, catalysts might be something that you seek out after you’ve scanned stocks in a particular arena. No matter when or how you are looking for catalysts, they often can help you generate trade ideas.
6. Look at the market’s past performance. Look to the past to inform the future. No, I’m not turning into Yoda or anything. I’m just saying that to give yourself trade ideas today, look at what was happening yesterday.
History repeats itself, not exactly, but closely enough to give you trade ideas.
So, as you are looking at stocks and beginning to notice patterns, be smart and look to the past. Say that you notice a big gainer. Don’t just accept it. Look at how that stock, or how a similar one, has performed in the past. Doing this kind of research can give you extremely helpful information on how the pattern might play out this time, and whether not you can stand to profit or you might lose big. Of course, you can never completely predict what will happen, because the market is constantly evolving and changing. However, by looking really closely at the market’s past performance, you can make far more educated decisions.
The world of trading stocks, particularly penny stocks, can be very risky. Honestly, this will never change. So as a trader, all you can do is research and study and do all you can to mitigate that risk.
7. Follow other traders. If everyone else is doing something, should you, too? Absolutely not. But, you may benefit from watching what they’re doing from a safe distance.
Keeping an eye on the “competition” so to speak can be a great way to generate trade ideas. Following successful traders like my Millionaire student Tim Grittani can help give you ideas for setups and trading styles that are consistently successful.
It’s important to clarify that you’ll never become successful by trying to copy another trader. Even if all of their trades are public, you can’t know what goes on in their mind or the exact process by which they do their research. This means that you will never execute a trade exactly like them, so why bother? It’s an exercise in futility.
So instead of trying to emulate another person’s trades, try to take what you can from their overall approach and style. Follow their progress and use it to stimulate your own growth. Never forget that ultimately, you have to develop your own trading style to ever be successful.
As a teacher, I don’t want to tell my students how they should trade. I want to offer them the information I’ve learned so that they can forge their own successful path. It goes back to the idea of “if you give a man a fish…” If I tell a student how to make a trade, they might gain success that one time. However, if I teach them how to approach trading in a broader way, they are setting themselves up with the building blocks for a long, successful career. They’ll be able to generate their own trade ideas and spread their own wings.
In conclusion, as a trader there are many different ways to generate trade ideas. It’s less a matter of looking in one place and more a matter of approaching your trading from a variety of different angles. Educating yourself, studying plenty, and expanding your horizons will help you begin to make smart trade ideas so that you can be a proactive, nimble trader for the long run.
How do you come up with trade ideas? Leave a comment below and let’s see who can answer with the most useful strategy!