Category: Trading Terms

What Is a Dead Cat Bounce?

By Tim Sykes•

What the heck is a dead cat bounce … other than a morbid band name? (Sorry, music fans, that’s just not my beat.)

I’m talking, of course, about the dead cat bounce in relation to the stock market. It’s a stock chart pattern that can occur with some downward trending stocks.

Market downtrends aren’t great. But here’s the thing … The dead cat bounce isn’t all bad, even if the name’s a bit grim.

Today, I’ll give you the lowdown on the dead cat bounce pattern — what it is, how to spot it, and how you can use it.

Thinking about joining my Trading Challenge? Consider this a free lesson. And the more you know about chart patterns, the better you can use them in your trades. Let’s do this!

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All About Stock Splits

By Paul Scolardi•

Want to improve your trading strategies and your ability to spot opportunities? You need to know how different catalysts can move stock splits prices.

So let’s look at a specific catalyst: stock splits.

Stock splits can impact share prices in a big way. Understanding what stock splits are and how they affect stock prices can help you understand your trading options when this event occurs.

A stock split doesn’t directly impact a company’s value … but it can pave the way to a number of trading opportunities.

Let’s take a deep look at stock splits: what they are, real-world examples, and how you can use this information to help inform your trading decisions.

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Copycat Trading: The Good, The Bad, and The Ugly

By Tim Sykes•

When I talk to students about copycat trading, I’m quick to point out that there are different kinds of ‘copycat’ strategies.

Some people want to actually piggyback on every single trade that somebody else makes. That ‘strategy’ (if you can call it that) is kinda doomed to disappoint, because of lag time and a slew of other factors.

But if you learn to copy someone’s overall style and principles instead … that can have value.

So I teach my Trading Challenge students the downside to a ‘copycat’ scenario: You’re still operating blindly as someone’s follower. You could say you’re trading according to what you see this person doing.

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A Beginner’s Guide to Stock Scanners

By Tim Bohen•

Do you want to quickly find top trading opportunities each day with just a few mouse clicks? Do you want to shave hours off your pre-market analysis? Do you want to start the market day prepared and focused? 

If your answer is yes to any of those questions … you need to learn how to use a stock scanners in your trading process.

New to trading or scanning? Read on to learn about the different types of scans, smart practices for scanning, how to use scanning in your trading strategy, and more. Here’s how a scanner can help you streamline your trading day.

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What Is a Shell Company?

By Tim Bohen•

If you follow business news (a smart way to spot catalysts, BTW), you’ve likely heard the term ‘ shell company.’ And usually, when a shell company makes headlines, it’s due to some sketchy business dealings.

Most people cringe when they hear about shell companies. But they’re not all are bad. They aren’t inherently illegal and they do have some legit uses.

But can’t shell companies be used to hide business assets or for underhanded and illegal activities? Short answer: yes. But that’s not always the case.

Let’s dig into what a shell company is and why you need to understand how it can operate.

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Understanding The Pattern Day Trader Rule (and Trading Around It)

By Tim Sykes•

So you want to jump into the stock market and be a day trader.

Problem is a little something called the pattern day trader rule that can restrict the number of trades you can make within a certain time frame. There is an exemption … but you need an account balance of at least $25,000.

This is a rule new traders seem to struggle with the most, and I get a ton of messages about it. (Quick side note … this rule maybe isn’t so bad. More on that shortly.)

Here’s the thing: There are ways to avoid the pattern day trader rule that can allow you to start trading with far less than $25,000 in your brokerage account. I didn’t have anywhere near that amount when I was first getting started. Many of my students in my Trading Challenge start with just $1,500 or $3,000.

In this article, I’ll cover exactly what the pattern day trader rule is and how to start trading without it getting in your way.

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Using Sympathy Plays in This IPO Frenzy

By Tim Sykes•

Lyft, Pinterest, Uber, Airbnb … 2019 is shaping up to be a big year for startup tech IPOs.

These big companies can generate a lot of hype by deciding to go public. Traders wanna grab as many shares as possible before prices start to skyrocket. IPO announcements can be big news catalysts.

But buying into the hype isn’t always smart. We see it all the time — after an initial spike, prices start to fall once the hype dies down. That doesn’t mean it’s always a bad idea, but you’re playing with fire with high-risk trades like these.

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The Beginner’s Guide to Scalp Trading

By Tim Bohen•

Love market action and crave more? Scalp trading is a strategy that can offer multiple rapid trades per day. It’s not for the faint of heart … it requires intense focus and real-time data.

This strategy demands quick reflexes and lightning-fast decisions. Make a mistake? There’s no time to fret over what went right or wrong. You need to quickly move on and eagerly plan your next move.

Underwhelmed with the long game of watching trends? Scalp trading might just satisfy your appetite for a challenge. It’s not a stress-free strategy. You need more than a trading plan — you also need a solid grasp on what you’re getting into.

It’s all part of your education and preparation. You need to adjust your trading mindset so you can manage your expectations.

This long-standing trading strategy remains one of the most popular methods to date. Not every trader will take a shine to this style. But if executed well, it might just suit you. Let’s check it out.

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Catalysts : When News Sparks Stock Moves

By Paul Scolardi•

If you want to keep track of trading opportunities, you definitely need to stay on top of the news.

Certain news stories have the potential to be catalysts. That means they can cause stock price movements that savvy traders can learn to spot early on … if they’re vigilant.

News catalysts should be a fundamental part of your stock research. They can help you spot rising trends and trend reversals. It’s one more aid to help your trading choices.

Some common catalysts should be on every trader’s radar. Earnings reports, product releases, new contracts, and big-name new investors … that’s just the short list of news worth tracking.

So how do you trade on a catalyst? First, educate yourself.

Here’s your quick primer on news catalysts: what to watch for, critical considerations, and how the news can help you decide if a stock is worth your time — and money.

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