When people hear the word “hedge fund trading”, they often think of these quants who use sophisticated mathematical models and algorithms to pull out money from the stock market.
That leads to the common misconception: Trading is complex and you can’t make money in the markets, unless you’re one of Wall Street’s elites.
But the thing is, trading is easy when you break it down to steps.
You see, all you really need to do is narrow your trading universe and execute. For the most part, when I generate my best trade ideas… I filter for:
- Biotech stocks that meet specific criteria — volume, price, upcoming events
- Chart setups — Once I’ve got a couple of stocks, I look for bullish patterns
After, I just find my highest conviction trade and plan accordingly. I know my buy zone, profit zone, and stop zone… that means I could “set it and forget it”, walk away from my desk and trade stress-free.
Today, I want to walk you through some of my best techniques to simplify your trading — so you could still have a life without the need to sit and stare at your trading screens all day.
Table of Contents
How to find the hottest stock on The Street
There are thousands of publicly-traded companies out there… so many to pick and choose from that your brain may get “information overload” and just crash even before you get into a trade.
If you’ve struggled with “overtrading” and just throwing down random bets… losing on a bulk of them… the root cause of the problem is probably because you didn’t filter for your bread-and-butter setups.
For example, when I look for stocks to trade, I just enter a couple of filters on Finviz.
This filters for biotech stocks trading under $10 with at least 500K in average daily volume (ADV). That means these stocks are fairly liquid and allow me to get some leverage. By just cutting down my universe to biotech stocks… I increase my odds of success.
How?
Well, biotechs are my bread-and-butter… and I have an extremely high win rate in them (it’s one of the main reasons I’ve been able to cash in $7M in career trading profits).
Once I have some stocks to look through… I analyze the charts and try to spot bullish setups.
For example, here’s an interesting setup in Aptose Biosciences (APTO).
It just broke out of a bull flag formation… and it’s got levels above at $2.80 and $3.10. That means there are clear areas to take profits.
Not only that, but it’s got some support around $2.10. From a risk-reward standpoint, this trade makes sense… but you do have to find the “perfect” buy zone to properly manage your position.
So I have an idea about my trade plan… the next thing I look for is the catalyst.
Event-Driven Trading For The Win (FTW)
Biotech stocks are always releasing new data points, and it’s so easy to find upcoming catalyst events. This allows us to take advantage of the “catalyst runup”.
You see, ahead of a key data release, many traders pile in and try to play for an explosive breakout… and we can directly take advantage of the momentum and just ride the wave.
If you check out BioPharmCatalyst, you can search for catalyst events… and APTO has one coming up in December for a Phase 1b data release for one of its drug candidates.
Source: BioPharmCatalyst
That means it’s a prime catalyst runup play.
So here’s how I would plan the trade…
Catalyst Dates: Phase 1b data due early December at ASH conference
Buy Zone: $2.30 to $2.40
Profit Zone: $2.70 or higher
Stop Zone: $2.10 or below
Pretty simple right?
I know where I’m going to buy, stop out, and take profits… and that might be the only trade I place using my highest conviction trading strategy, Fast 5.
If you want to simplify trading and break it down to just one trade alert, just once a week… in on Monday… out before Friday, click here to find out how you could spot some of the most EXPLOSIVE stocks on Wall Street.