Today I want to talk about why I trade the stocks that I do. There are specific reasons why I trade stocks between $10-$200 million and why I never go above that and rarely trade below.
Being consistently profitable in one sector takes work, and once you become comfortable, you must focus on maximizing your profits from there. Many factors go into tracking, such as finding the average percentage of the morning push and drop. It takes massive amounts of discipline and research to trade live and moves on to trading multiple stocks in different sectors at once. I can trade stocks between $100-$200 million while also trading a billion-dollar stock.
The key to this is understanding the factors needed for each sector and distinguishing the two as you go back and forth, such as average percentages, volume news, and company news. When you know those details, your mindset can automatically switch to and from. However, I find it especially tiring trading two sectors simultaneously because I’d instead focus on building a higher success rate in just one.
If I’m day trading and focusing on options, futures, and penny stocks, then there’s also more room for potential mistakes and missed opportunities.
Another factor to think about is level two options, and this is the difference between float sizes and cap sizes. Caps and floats are related because they react differently to each other. An example would be 200,000 shares on a bid, which is considerably small compared to a 200 million float and $2 billion market cap. But if you had 200,000 shares in micro float, that’s potentially 20% of the entire float.
So if you’re trying to trade two tickers at the same time and those level two’s don’t react the same way, you’ll easily be confused as you’re trading live back and forth.