In our trading room, our primary focus will always be momentum stocks. But did you know a common characteristic among momentum stocks is a low float? See the float of a stock actually represents the number of shares that are available to the public to trade. So when demand for this particular stock is high, traders are scrambling over each other trying to get in. This pushes the price of the stock higher and faster than high float stocks, giving us the price volatility we need to get in and out.
Trading Low Float Stocks
On March 24, $HTGM was a monster stock for that particular reason with a float of only 4.25 million shares. It was first put on our radar due to its strong premarket gap up. That combined with a strong earnings release and a high relative volume was all it took. Once the market opened the frenzy of all traders trying to get in pushed it from $6.00 to highs of above $13.00, a higher than 200% move!
When the market opened, $HTGM started setting up for an Opening Range Breakout pattern on the 1 minute chart. Once it started pushing towards breaking out above the highs of the range we got in with 400 shares at $6.66. Our stop was underneath this breakout formation. $HTGM took off without looking back and we scaled out of our position as it pushed higher.
But this stock wasn’t done yet. A few minutes later it set up for a beautiful bull flag at the $9.00 level. Once it broke out, it continued to push to $11.00, then $12.00, and eventually $13.00.
This is the power of low float momentum stocks. Couple that with strong fundamentals, and we can have a trade that makes our year! If you’re not sure of the setups and price patterns that we’re talking about you can learn them all here at our Bulls Bootcamp. It's an intensive 60 day course to teach you exactly how I trade and why. To learn more or signup, email me at firstname.lastname@example.org today!