What Criteria Makes For the Best Stock Trading Strategy?
Before I get on to sharing my personal favorite stock trading strategy, it’s important to discuss the necessary characteristics.
Every individual is different. Personal preferences, personalities, and risk tolerances vary. These are just a few factors that can determine which trading strategy can suit you best. But at the core, the best stock trading strategies have three common characteristics – they’re teachable, repeatable, and scalable.
1.) Teachable: This means that the strategy can be passed on from one person to the next through education. Is this a strategy that can only work for one person? Or can anybody realistically learn and apply it? Sometimes strategies can become so complicated and elaborate that it’s simply not worth it to learn. You want a strategy that you can completely understand and implement without an impractically steep learning curve. Simplified approaches are oftentimes the best ones, so beware of strategies that appear to be extremely complex and difficult to grasp.
2.) Repeatable: This means that it has been proven to work time-and-time again. Anybody can get lucky on just a few trades, no matter what the strategy, but does it stand up over time? Is it something that can be adapted to market uptrends as well as downtrends? The best question to ask – does it work on a consistent basis? Some strategies simply fade out over time, and it’s critical to recognize that so you’re not pursuing something that’s ineffective and no longer produces results. Keeping a trading journal and reviewing it from time-to-time can help you understand which methods are working for you and which ones aren’t.
3.) Scalable: This means that the strategy can work for small portfolio values as well as large ones. With a smaller portfolio, for example, commission fees can eat into profits much more than a larger one. So if you’re pursuing a fast-paced strategy that requires many trades to be made on a short-term basis, it can be difficult to simply break even on each trade. Then if your portfolio value becomes too large, you have to consider if the stocks you’re entering have enough volume to support your positions. The last thing you want to do is enter a position and not be able to exit due to illiquidity. Some strategies are simply more flexible than others.
My Personal Favorite Stock Trading Strategy → Biotech Catalyst Swing Trading:
Biotech Catalyst Swing Trading is a strategy I learned from subscribing to Biotech Breakouts with Kyle Dennis. It’s a strategy that focuses mainly on technical analysis, some fundamental research, and most importantly, catalysts within the biotech sector.
A catalyst can be any sort of event or news release that can impact the value of a stock to the upside or downside. The great thing about the biotech sector is that all companies developing drugs have to go through the same process (Phase I Approval, Phase II Approval, Phase III Approval, PDUFA, etc.), so it’s somewhat easy to track such events. Especially with a tool known as BioPharmCatalyst.
When you have an idea on the timeline of when news is coming out, or better yet have an exact date, it’s that much easier to position yourself in the trade. What Kyle attempts to accomplish is capture his gains on the hype leading up to such events knowing that they tend to experience run-ups into them. When he pairs these catalysts with quality chart setups and fundamental research, the risk-reward ratio is always in his favor. As a result, he wins much more than he loses.
If You Want to Follow a Trader Who Has Turned $15,000 Into Over $3,000,000, Then Check Out My Detailed Biotech Breakouts Review.
Written by Matt Thomas
- What is a Catalyst For a Particular Trade or Investment?
- Swing Trading Success Stories – Jason Bond & Kyle Dennis
- BioPharmCatalyst Review – A Database of Opportunities For Biotech Traders
- What is Biotech Breakouts? Capture Explosive Gains in Biotech Stocks
- 3 Ways to Follow and Learn From Kyle Dennis (Millionaire Trader) For Free