Trading Tips for Tech Investing
Wall Street’s smallest technology stocks offer you the best chance for oversized gains — but only if you know where to look and when to strike.
I’ve learned some incredible investment secrets over the years — including how to find opportunities that most investors miss.
That being said, breakthrough companies tend to behave differently than the kinds of stocks you’re likely used to. So there are three key features to keep in mind:
- The stock prices can sometimes be very low. We’re talking under $10.
- These companies can have very limited trading volume. In layman’s terms, the number of shares exchanged on a daily basis can be quite small. This can result in orders not always being filled at the price you see. I often suggest using limit orders (which I will cover more in just a minute) when placing your trades. This will let you set the price you want to pay and not be forced to take whatever price comes across the tape.
- These stocks can be very volatile. By volatile, I’m referring to daily movements. One piece of good news about a company could send the stock up double-digit percentages. Or a big order could be placed, which could cause the same thing to happen. The reverse is true as well. Negative news or a larger sell order could push the price down. But don’t sweat the daily movements.
Those are the three features of breakthrough technology stocks that we find most important. Now I want to tell you what to do with that information.
How to Buy Breakthrough Technology Stocks
Breakthrough technology stocks offer incredible opportunities to earn life-changing gains. The key is to invest wisely.
That’s because investing is a risky business… and breakthrough technology stocks can be some of the riskiest of all because of their volatility.
With this in mind, I want to highlight how best to play these stocks.
First, don’t bet the farm.
Don’t borrow any money to purchase shares.
You should allocate only a portion of your overall portfolio to buying these stocks. This, however, can work out in your favor. With some of the stocks, a $100 investment in a $2 stock could double — or more — very suddenly. So with just a little money, you will be able to buy the stocks without losing your shirt if something goes wrong.
Second, always keep some cash ready at hand.
As I said, allocate a certain portion of your portfolio only to breakthrough technology stocks. Diversification is important. Spread your cash out.
Finally, use limit orders.
A limit order, if you aren’t familiar, is one way to purchase stock. Instead of taking the current market price, you can tell your broker that you don’t want to buy above a certain price — or sell below a certain price.
Hopefully, these suggestions will help decrease the risk elements of investing in breakthrough technology stocks. With these ideas in mind, you should be able to successfully buy and sell shares of small companies without getting fleeced.
When we’re looking for these mispriced companies, we’ll do the following:
Search for innovation. There are plenty of technology stocks out there. But only a small handful are developing innovative products and services that could take their brand (and their stock) to the next level.
These companies must boast a portfolio of unique offerings that have a superior chance of disrupting industries and gaining market share.
The business must also be easy to understand. If investors can’t grasp what a company is doing to make money, how enthusiastic will they be to buy shares?
Time your buys. Timing matters. When you buy and sell a stock determines whether you make money or take a loss. There’s no way around this simple fact. You have to remember that the stock market is not a rational beast. It’s not magically pricing stocks where they should be at any given moment. That’s especially true when it comes to smaller, more volatile stocks.
If we want to maximize our gains and minimize our losses in the market, we must remain keenly aware of market conditions and time our entries and exits as perfectly as possible.
Putting It All Together…
Along with trying to find dislocations between price and value, I also have interesting trend ideas. These are companies that may not be making any money at all. They may have been around for only a very short time. However, there are huge gains to be had by investing in whatever trend they are exploiting. Triple-digit gains riding these trends are not out of the question.
Now you should have an idea of what breakthrough technology stocks are and why I like investing in them. I have many exciting ideas that I look forward to showing you.
For Technology Profits Daily,
Chief Technology Expert, Technology Profits Daily