With names like McDonald’s, Amazon, and Starbucks, all releasing quarterly reports this week, it’s natural to see earnings stocks take the spotlight.
However, they aren’t the only stocks moving. In fact, biotech stocks remain among the top gainers on Wall Street, and yesterday wasn’t any different.
And while many of those stock symbols may look foreign to the average investor. These are the type of stocks that I’m watching and building trade plans around…
That said, I want to walk you through a real-money case study on an actual trade that I locked in over $25,000 in trading profits.
I’m also going to explain the “catalyst” and why the stock instantly popped, allowing me to exit the position before the market officially opened.
Furthermore, I’m going to explain my process so that you too will be able to spot the opportunity and profit from the next catalyst event.
Take These Three Steps Before You Get into Your Next Trade
How many times have you heard people say, Trading is hard… I can’t do this… There’s too much to learn… and other things of that nature.
Well, I’m going to let you in on a little secret.
Trading isn’t as difficult as many people think.
In fact, trading is easy…
… if you know the Three C’s.
What am I talking about here?
It’s my 3-step plan to consistently pulling profits out of biotech stocks… it’s all part of a system I call Fortune Forecaster.
How exactly does it work?
Let me show you how I made $25K on just on trade in just 8 days time… all by knowing the Three C’s.
Step 1: Find A Catalyst Event
The first step I took to lock in a $25K winner in a biotech stock recently was finding a catalyst event.
Now, what is a catalyst event?
Well, it’s basically a fundamental reason the stock could go up. It could be earnings, or and FDA catalyst event. With practice and time, you’ll be able to use your research to anticipate what type of move the event could create… just like I have over the years using the Three C’s.
For example, I like to look at BioPharmCatalyst to look for upcoming events in stocks on my watchlist.
Here’s a look at the catalyst I spotted in Chiasma Inc. (CHMA) a few weeks ago.
You see, the company was expected to report Phase 3 data for one of its treatments during the third quarter of 2019.
Well, I knew there was an upcoming catalyst and that news could potentially attract more investors.
However… that was just the first step… the second step I needed to take was to find a bullish pattern.
Step 2: Pair the Catalyst With A Bullish Chart Pattern
In this step… all I need to do is look at the charts to see whether there is price action indicating the stock could run higher.
With the chart pattern in CHMA… it pulled right into a key support level and uptrend line. Typically, when we see this price action, the stock stays above the support level because there is demand for the stock.
Here’s a look at the daily chart in CHMA.
Now, here’s the trading plan that I sent out to Fortune Forecast clients.
Basically, my clients know exactly where to get into a stock… stop out and take profits. They can really just put on the trade… set their stops and orders to take profits… and go about their day.
However, there’s one more step that I took to lock in $25K in CHMA.
The final step is to look for credibility.
Step 3: Look for Credibility
What I mean by credibility is whether there is insider trading activity and institutions own the stock. In other words, whether people close to the company are buying the stock and money managers are invested in the stock.
With CHMA, all I had to do was go to Finviz to find the information that I need.
If you look in the snapshot above, you can see that over 75% of the company is owned by money managers, exchange-traded funds (ETFs), hedge funds, etc. That lets me know the stock is credible and could be a high probability setup.
Well, I actually changed my plan up a bit and bought more shares at $5.75, right around a key support level.
Just five days later… I was able to lock in $25K after the company released positive data yesterday morning… what a perfect way to wake up on a Tuesday morning.
I took profits ahead of my target… but I’m okay with that because who can say no to $25K in just a few days.
Now, if you want to learn how these steps in detail and forecast your profits… and receive my real-time text alerts, and so much more… then click here to get started…
… or if you want to ease into trading catalysts, then check out my Sniper Portfolio here.
[Ed.note: Kyle Dennis runs BiotechBreakouts.com. He is an event-based trader, who prefers low-priced and small-cap biotech stocks.
Source: BiotechBreakouts.com | Original Link