Making money in stocks on a consistent basis is never a simple task. Many newcomers to the market in 2020 were lucky and found themselves on the winning side of many trades after the market bottomed in March. This may have given the impression that it is easy to make money but in reality much if not all of the easy money has already been made.
Here is a list of three ways traders can identify interesting stocks to invest in as making a profit becomes increasingly difficult.
The Bullish Case For Stocks Isn’t As Strong
The case for buying U.S. stocks was a lot easier to justify in April. New York state, the unofficial epicenter of the COVID-19 pandemic in the U.S., reached a peak, and deaths per day started to decline sharply.
Other reasons to support a rebound include: 1) the U.S. Federal Reserve making it abundantly clear it will do whatever it will take to support the economy, and 2) health care companies discovered new medical treatments against the virus while also stating a potential vaccine could be available in months, not years.
Investors started to declare 2020 to be a year of wasted returns and began looking forward to 2021 when an economic rebound would help lift stocks higher. But something unusual happened in April: stocks started to rise, and rise, and rise some more.
Investors briefly had their pick of hundreds of stocks to choose from to ride the bull-charge higher. By mid-2020, many stocks not only recovered their COVID-19-induced losses but traded at all-time-highs.
Apple at (split-adjusted) $53.15 was scooped up by investors buying one share or tens of thousands. The same can be said for Amazon at $1,626.03 or Tesla at (split-adjusted) $43.67.
Buying stocks at these levels is a dangerous proposition given what many consider to be overstretched valuations. Blindly buying stocks may have worked in April and May, but heading into 2021 the same can’t be said.
So how can investors find the next major mover? Here are some tips.
Platforms Like Stockstotrade offer traders the ability to sort through much of the stock market noise to identify trading opportunities. STT providers a scanner that lets traders find potential winners based on their specific criteria.
The scanner lets traders input the criteria themselves. Looking for a stock that is within 6% of its 52-week low, is down more than 10% on the day with above-normal trading volume? STT can do that.
Traders that prefer someone else to do the heavy lifting can opt for an additional service called Oracle, an artificial intelligence-powered 24/7 scanner that seeks out stocks on the cusp of a potential big move and notifies customers through daily email updates.
Interested in learning more? Check out this review about Stockstotrade that breaks down everything you need to know before getting started. And the best part of the platform? It offers a very reasonable 14-day trial for $7 — the equivalence of just 50 cents a day.
Listen To The Pros
The internet is a vast place full of experts that are willing to share their stock ideas with the world. YouTube is a great place to start as there are multiple knowledgeable podcasters and channels that help viewers become better traders and investors.
Investors should give each channel a try and not dismiss one because of the production value. Channels with big budgets do not necessarily equate to better content.
Major media outlets like CNBC and Bloomberg share with their listeners’ expert advice and commentary.
Practice For Free
Think you have a compelling trading and investment strategy that can generate profit? There is only one way to find out: put it to the test. Many stock brokerages offer a free trial of their trading platform that lets everyone “paper trade” — that is, trade stocks with fictional capital.
Anyone can come up with a strategy or method for finding what they believe to be stocks poised to move higher. And the best part about practicing is it leads to becoming a better trader in a completely risk-free environment.
Conclusion: Maybe Lower Your Expectations
Many stocks moved higher by 200% and more after bottoming in March and an opportunity like this may not present itself for quite some time. But this doesn’t mean that investors can’t be on the lookout for stocks that post a 50% return over one year.
This is in reality a very impressive return and will likely represent outsized gains versus the benchmark indices.