There are 6 hacks that you can employ that can go a long way in exploding your net worth. Interestingly enough, few people know about these hacks.
Usually, when people think about trading stock, they think about 401K or mutual funds or they think about trading “hot stocks” with their 401K portfolio. Rarely does it enter their mind that by simply changing the way they invest, they can increase their net worth quickly.
Here are 6 investing hacks or small changes in your investment philosophy and practices that can end up enriching you.
Heavy Volume Stocks Trade in Predictable Patterns
Did you know that a lot of the stock trading in today’s global financial markets are done by institutions? And among these institutions, increasingly, a lot of their trades are being handled by artificial intelligence. We’re talking about software. So what you have is just giant positions being traded by software on one end and giant positions being traded by software on the other end. The individual investor is caught in the middle.
You might think that this is a bad situation and individual investors stand to lose time and time again. Well, think again. Given the fact that there is this huge volume and then a lot of it is programmed, this situation opens a tremendous amount of opportunities for people with an eye for spotting opportunity and taking advantage of it.
Heavy volume stocks are often traded with predictable patterns. Now, if you’re right in the middle of it playing out, it may not seem that there is much of a pattern, but if you look at the big picture and you distance yourself enough as far as the trading periods are concerned, you can see a situation where you can connect the dots. This produces tremendous opportunities for making money.
Cash Flow Per Share Reveals Better Performing Growth Stocks
The problem with growth stock trading is that it’s too easy for people to trade in terms of trends. If you see that the top players are playing around with the same growth stocks, you just jump in and do what they do. Eventually, everybody’s on the bandwagon and this gets factored into the price of the stock. You’d be lucky to enjoy short term gains. You would have to ride the stock for quite a while.
I’m not saying that this a nonstarter. I’m not saying that this a sure fire way to lose money, but time is of the essence. You want to redeem the value of the time that you have invested in making money with stocks. This is why cash flow per share is a better metric for determining whether a growth stock has a more upward potential.
Again, if you invested in a growth stock, chances are, it may keep going up because everybody’s on the bandwagon, but it may appreciate at a fairly slow rate because everybody is just piled on. It would be nice to spot a stock that is currently under appreciated or currently unpopular and you would stand to make a lot more money in a shorter period of time. This does happen.
Ride the Dips and Pops of Heavy Volume Stocks
One key hack you should employ when trading stocks is to ride the dips and pops of heavy volume stocks. In other words, stop looking at the fundamentals or the inherent or intrinsic value of the stock. Stop worrying about how much debt they have, how many products they have in the pipeline, how awesome their CEO is. Forget all of that. Instead, look at the actual trading pattern of the stock, how much of it is being sold, and its price fluctuations.
Understand that if you picked the right stock in any given day, it will have a lot of dips and pops. There would be a lot of volatility. But if you look at the patterns of this volatility, you can see certain predictable behaviors play out time and time again. Once you start seeing a signal that it’s going to enter a certain pattern, you can then ride a dip or you can ride the stock up to a pop. It’s more predictable than you think, but the stock has to have a heavy enough volume.
For Big Ultra Short Term Gains, Exit Stocks Before the Trading Day Ends
If you want to make money off your stock investment and your total portfolio value is north of $25,000, you might want to do day trading. Basically, what you do is you look for high volume stocks with a tremendous amount of intra-day volatility and find an entry point where the stock is either sinking or the stock is starting to rise.
You give yourself a target, like 1% or 2% gain, and you stick to it. As long as you’re able to maintain discipline, you can enter and exit the stock several times and these small 1% to 2% gains can add up quite a bit. However, make it a point to completely exit the stock before the trading day ends.
If you’re able to maintain this level of discipline, you can stand to make quite a bit of money because it’s all about the volume of moves you make. This an also shield you from losses because if you’re doing day trading, there will be losses. Don’t get caught by surprise if you lose some cash in one trade. It’s all about trade volume.
Low Volume Price Erosion Can Signal Stock Price Rise Ahead
If you notice that a stock started to drop, although the volume being traded is very low, this can indicate an opportunity for people who are already in the stock to scoop up some more. They can see this as a bargain. If this is the case and you see this pattern, don’t be surprised when the stock starts ratcheting back up. So use this as a signal to buy.
Heavy Volume Price Stability Can Signal Stock Price Rise Ahead
If you notice that the price of a stock continues to remain fairly stable despite the extreme volume of shares being bought and sold, this can mean that enough buyers are keeping the stocks stable so that there is a lot of built-in demand. This can indicate that the stock may rise in the future.
Keep these patterns in mind because they speak volumes as to the stability, built-in demand, as well as overall market habits and patterns involved in the stock that you are trading. These are, by no means, random signals. They mean something. You just need to know how to put all these signals together so you could see the big picture.
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