Low stock price bias

[rossmorgan 0]

Hi All, 

I am very new to trading and have just been a member of the BBT chatroom for the past week. I have learned a huge amount on there and from watching all of the strategy videos etc. to date my trading has been rather frustrating, up a day, down a day. Not losing money but not making any money either. I have been trying to analyse my performance and approach to understand why and one thing that jumps out at me is that I clearly have a bias for trading stocks with a low price ($20-$30). I assume this is because I am starting out with a small account ($6k) and I am probably overly eager to enter trades with as many shares as I can afford to maximise potential gains. One thing that struck me this past week watching the guys trading in the chatroom is that the same pot of stocks seem to be traded most days I.e. AMD, TSLA, AMZN, NVDA etc. for the most part I have avoided trading these stocks given their prices and I am wondering is this the route of my problem. I spent a lot of time trading the likes of AI and PLTR this week instead of focusing on the stocks that most others seemed to be trading. Apologies for the long post, I guess I’m not asking a specific question really, instead just hoping for some guidance from you more experienced traders and interested to know if this type of low stock price bias is something you have come across before.

Ross 

Edited May 19, 2023 by rossmorgan

[Martin D 29]

Hi,

you have to find your own edge, some trade low price stocks some trade high price stocks.

Doing it for the reason of most shares is generally flawed though, TSLA for example can easily move more $ vs PLTR so you need less shares to make the same amount of money.

Those stocks get played because they move in a more predictable way for a lot of us and often run in conjunction with the market or the sector. At the moment most of the catalysts are market catalysts rather than stock specific catalysts. If PLTR had a good catalyst and high volume then people may trade it but otherwise it would be tough to trade for many of our styles

[Alastair 114]

Study the stocks that have the largest ATR........then select the ones with a "reasonable" price........ which u get better value for money.  Use FINVIZ to find the best for ur acct size and highest ATR.

[Angela Kuzeva 23]

The stocks you trade will depend on your strategy, and not on their price. Set the right expectation in making money at that early in the trading journey.

You goal must be finding your strategy, practice to execute it flawlessly, improve your entries, improve your SL location, hold to target. These all comes with time, practice and journaling each and every trade, collecting data, aka statistics of your trades over time.

ATR shows the volatility of the stock and its average daily range. Between two stocks choose the stock with the higher ATR as it will move quicker than the one with a small ATR. But also, you must consider how the stock trades as there are stocks which price action is not clean.  Another thing is to look at RVOL and shares traded today. This alone will not give you success but will add to you edge.

All these observations you will gain from your stats, for example, I know I don't trade well stocks with less than 2.5 mln shares traded today, RVOL below 80% and ATR less than 0.50$. My stats. show that most of my winning trades are after 10:30AM. 

 

[rossmorgan 0]

Thanks so much everyone for taking the time to reply. Some very useful advice there.

Much appreciated 🙂