Can you make money on volatile stocks? How To Research & Trade Volatile Stocks
One thing you need to know if you're planning to get into the capital market is its association with risk. No trade doesn't have its own peculiar risk. Whether you trade futures, stocks, forex currencies, or cryptocurrencies, you're bound to come across something that'll trigger risk in one way or another. The whole concept of the market is built on risk. The higher the risk, the higher the profit. If it goes sideways, however, the higher the risk, the higher the loss. Now, most of the time, investors are swayed by certain events that impact their investments. Sometimes, these events also impact their decisions on where and where not to invest. One of these events is meeker volatility. In this article, we're going to discuss all you need to know about volatile stocks when to trade volatile stocks, and the most accurate technical indicators used in trading volatile stocks. Let's get into it, shall we?
You Can Trade Volatile Stocks With Technical Indicators
Volatile stocks are generally sensitive stocks. They are said to be quick to react. This means as a trader, you have to patiently wait for the entries and then make a quick decision once the entry appears. Yes, there are indicators in which a trader can apply in trading volatile stocks but the trader must also make sure to check the price movements as time goes on. Let's take a while to discuss the indicators you can use to trade and how to look out for the price action.
This indicator is majorly applied when the market is said to be trending. It consists of three bands, the lower band, the average line, and the upper band. It's often used to determine if the market is making higher highs or higher lows, lower highs, or lower lows. When the uptrend is high, the price would climb on top of the upper band. Reversals rarely reach the middle band and never cross the lower band. Hence, it can be determined that the middle line is usually the entry point. Place a stop order when the price is two-thirds or halfway in between the middle band and the upper band and place your exit when the price is right at the upper band.
Another useful technical indicator that can be used to trade the most volatile stocks. This indicator works on a 1 - 100 range basis and is mostly used on asset prices that do not have a perfectly determined trend. A price is said to have a higher uptrend when the reading is above 80 and is said to have a lower uptrend when the reading is below 20. We recommend you don't wait to trade once the Stochastic reading of a price gets to 80. Once it hits 80, trade immediately. Don't wait for the completion of the price bar. There will be secondary and contrary signals on the chart, it's important you ignore these signals and proceed with your trade as intended.
How To Find The Most Volatile Stocks.
Finding the most volatile stocks is probably not as complex or complicated as you might think. In fact, due to recent additions to the market, you no longer need to perform hours and hours of research and screening. Instead, you can just decide to set up an ongoing screener to help determine which stocks are consistently most volatile. One example is NASDAQ.
Nasdaq is consistently listing companies that made massive gains and massive losses on the NYSE, AMEX, and so on. These companies however are not individually researched as this is going to be the work of the trader. It only reflects the most volatile stocks for that day. So if you want to determine which stocks are continually volatile, you would have to go on a little journey and go through these reflected results.
Another great tool is Volume. Not only does this tool help filter the results and produce the most consistently volatile stocks, but it also makes entry and exit points easier to locate.
StockFetcher also helps determine stocks that move up to more than 5% per day. It provides filters you can customize to your liking and produces results that date from the past 100 days.
Free Tools For Tracking Volatile Stocks
Sometimes, research-based on live exchange info isn't enough. Sometimes, you might be required to do some stock tracking on your own. To do this, you can turn to platforms that help track volatile stocks. These platforms can come in form of browser extensions, web pages, or even mobile applications. With these tools, you can either personalize your research or just randomly go through the most volatile stocks that are displayed for you to see. This section will provide a list and talk a little about the features of these subsequent tools.
This tool offers a result on volatile stocks from both the US and Canada. It has a lot of features which include and are not limited to Advanced Stock Screener, stock analysis, stock charts, and so on. In other words, this tool offers a good blend of volatile stocks that, as we said earlier, includes the US and Canadian Stocks.
This tool offers, alongside the list of technical indicators, charts, information, and data relating to these consistently volatile stocks. There's a new feature that allows you to plot option charts with your underlying stock to determine the relationship between the two. Apart from this, the tool has a trading simulator feature that lets you start a trade, place an order, stop trade and track your position and price movements. If you're a new trader or you're one always looking to learn something new, you might want to give this feature a trial. All these are closed off with the fact that it allows you to practice trading risk-free so you can hone your skills without having to invest your funds.
Yahoo and Google Finance
That's right, the two search engines have their designated finance portals that help reflect results regarding the most volatile stocks. If you want to quickly go through the market data and check the technical indicators without having to necessarily do a ton of research, this might be your go-to tool. This portal also comes with a stock screener that can accurately help you track consistently volatile stocks.
Apart from all the features you've been seeing from the above tools, Chart Oasis offers downloadable technical software that analyzes the market to the last number. Features of this software include breakout patterns, market data files, and required indicators that track consistently volatile stocks.
Now, at this point, it's important to note that although these tools are free, they come with a few challenges.
The first challenge is that, although they are free, all their features may not be completely free. At the very least, there would be pricing plans and you will be required to pay a certain amount before you can gain access to certain features. However, the most basic features, you would be able to have access to if you're on the free plan.
Another challenge is that most of the time, the filters aren't customizable. If you want to be able to access the filters and also customize them to your liking to provide specific results, you're going to have to upgrade to a paid plan.
How To Buy And Sell Volatile Stocks
The steps to this are not complicated if you can follow them accurately.
The first step to doing this is to find these stocks. This shouldn't be hard since the stock screeners you can use have been accurately provided. Stock screeners like Volume or StockTA are powerful in helping track volatile stocks.
The next is to set up a trading plan. Determine what time of the day the price moves the most and sell at that time. This is easier for day traders as most of what they do is find when the market is at its most volatile.
The third step is the utilization of brokerage orders. With features like limits and stop orders, the trader will have more control over his stocks and determine when and when not to sell.
Finally, you may want to consider online trading. FINRA (Financial Industry Regulatory Authority) advises traders to inquire from their brokers how online trades are made and what time in the market is said to be the most volatile.
How Traders Can Take Advantage of Volatile Markets
Before you can make money in the trading market, there must be price activity or movement. Since this happens most of the time, it won't be hard to determine exactly how fast or slow the prices are moving (with the right technical indicator, you can do that.) With that being said, here are a few ways in which you can use the volatility of the market to your benefit.
1. Be clear on your objectives. This means you're okay in trading in markets with high volatility and are also prepared for the losses if the trade goes sideways.
2. Don't overlook short-term strategies.
3. Keep your eyes peeled for breakouts from consolidations.
4. Keep your focus on stocks that are trending.
And there you have it, all you need to know about tracking and trading volatile stocks. Trade safe and have a lovely day.