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Tuesday, July 5, 2022
What makes a stock a potential trade?
How to separate the best from the worst...
Good Morning!
On Friday we had multiple biotech penny stock runners…
I hated all of them except one.
And that brings me to an important lesson I have to share with you...
Because too many new traders don't understand why one stock is a potential trade, while a similar stock isn't.
So today I'll share what the difference was between multiple stocks for me on Friday.
Pay attention, this might save you from crashing and burning this week…
Recently we've seen a lot of true penny stock biotechs spiking. Some traders think that's a great thing, but let me explain why they're not my favorite…
First, I don't like true penny stocks. (Stocks that trade under $1.)
Second, I don't love sketchy biotechs, especially on their first green day.
These sketchy companies are known to drop offerings to take advantage of their increased stock price. And that usually sends the stock off a cliff. No thanks.
It was spiking again in premarket on Friday. But here's why I didn't like it…
I just can't get excited about these true biotech penny stocks.
Most traders won't short true penny stocks because of the $2.50 rule. And while there are opportunities to catch good percent gains on low-priced stocks, they just don't have the same range as low-float stocks.
That limits their ability to squeeze and get parabolic moves.
Now, with hindsight, I can't really say Evofem Biosciences, Inc. (NASDAQ: EVFM) is the best. Ultimately, I didn't get the move I was hoping for. But it was one of my top watches on Friday…
I thought it could break $1.20 on Thursday afternoon. It tried multiple times but it couldn't break out. So I wanted that move on Friday.
Why did I like EVFM more than the other two true biotech penny stocks?
You could argue that EVFM is also a true penny stock. But here's my counterargument to that…
EVFM has traded 1.2 billion shares since its big spike following the supreme court news headlines on June 24. After the initial news, it had two days of consecutive gap-ups. And it's still hanging around…
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*Please note that these kinds of trading results are not typical. Most traders lose money. It takes years of dedication, hard work, and discipline to learn how to trade, and individual results will vary. Trading is inherently risky. Before making any trades, remember to do your due diligence and never risk more than you can afford to lose.
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