WHY WE TRADE SMALL CAP STOCKS

Robert Millar • 16th August 2018

People always ask why I trade small cap stocks instead of large caps. You know, the ones you hear about everyday like Facebook, Apple, Amazon, etc. There are clear advantages and reasons to trade small cap stocks over everything else. 

So…let’s get right to it with the basics. What is a small cap stock?  Typically, these stocks are priced under $15 per share, and usually have a market capitalization of $300 million to $1 billion.

A lot of them are developing companies that might not have huge publicity or reputation. Others used to be healthy companies that are now in bad financial shape from mismanagement or market pressures.

Our focus is small cap stocks with momentum. So stocks that are beginning to or have had a recent price movement generally with well above daily average volume.

Check out our Podcast on Why We Prefer Small Cap Stocks:

So why do people care about them? Generally, because there is reason for investor speculation. This could be earnings news, management changes, insider buy/selling, or nothing at all…just technical patterns and price action.

If they are “speculative” then why do we trade them? I’ll give you a few reasons…

With small cap speculation can come volatility and opportunity. However, it is a requirement to If you have a strategy nailed down and some experience. This doesn’t mean watching YouTube or reading books! Learn from a professional and adapt that knowledge to creating a strategy that works for you.   

You’ll find and work everyday to maintain your edge. If you can do that then opportunities are plentiful and your potential is massive.  

Not to mention you only need a 90 minutes a day!

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Our main goal is to find and take advantage of price action  and momentum that can occur in a short amount of time. We don’t get married to our stock trades. We want to make our money quickly in a calculated way, then leave the desk to enjoy life.

Small cap stocks are more small account friendly too.

When implementing the correct strategy in the correct manner (which we teach at Fous4) you can grow just a few thousand dollars into a much larger account quicker than you’d think is possible.

With small caps, you can take bigger share positions in these stocks due to their low prices as opposed to larger names like Facebook and Amazon. With just $2,000 for example, you can take 1000 shares of a 2$ stock, while maybe only 1 share of Amazon!

We are able to effectively capture big moves and profits with the benefits of still trading on the major exchanges like NYSE and NASDAQ with healthy volume on reputable brokerages.

This greatly contrast growing a small account through other trading mechanisms like Forex where you are lead down a dark tunnel dominated by a network of shady affiliate marketers.  Search anything today related to Forex and within 15 minutes you’ll be on a page or profile of a person that gets paid to lead you in certain directions. This might not be what’s truthful or best for you.

You may have seen stuff like this…LOLLLLL

Seriously, this guy’s computer is on his mom’s kitchen table with questionable currency in his hand #forexlife 😀

Don’t believe in that “package deal” they are selling with a $1,000 account and useless algorithm made by a German teenager.

Forex is a 24/7 market that spans the entire globe where banking institutions have billions at work with entire buildings dedicated to trading it. Somehow, the internet has convinced that Chad who’s 19 from Indiana with $1,000 can make it big 🙂

The fact that hedge funds and institutions turn a blind eye to most small cap stocks allows you to create your own edge with the right strategy which we provide. 

Think of it this way, would you rather play 1 on 1 against Lebron James, or a local high school player for a $5,000 prize? 

This is exactly why it’s best to learn a strategy and trade small cap stocks as opposed to trading large cap stocks or Forex.  The market is designed to chew and spit out those that are unprepared. That is why I openly teach what I do to learn before you burn (your money) in the market. 

Just remember, with every shortcut you take the harder you make it on yourself to be successful.

If you want to make things easier on yourself the Fous4Team offers a complete 90 Day Mentoring Program. Regardless of your location or skill level we can help you succeed in trading our strategies. 

Want to learn more? Register for our webinar below:

Get our FREE stocks to trade watchlist. Updated daily with the best stocks to trade.

If you have so already, please email me directly with any questions cameron@fous4trading.com

 

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