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Steady Trade Podcast Episode 4: How and Why Stocks Move
Stock prices change. That’s easy enough to understand, right? But what’s not quite as easy to understand is how and why they move. What factors determine which stocks will move and which will not, and how rapidly? Furthermore, what are the catalysts that trigger movement?
In Episode 3, hosts Tim Bohen and Stephen Johnson discussed choosing the best stocks to trade. In Episode 4, they build upon the subject by exploring the phenomenon of stock movement. What does it mean for a stock to “move”? And further, what factors cause a stock to go up or down in value? As it turns out, it’s not as unpredictable as you might think. By the time you finish listening to this episode, you’ll have a much firmer grasp on how to reliably monitor stock movement.
Stock movement 101: looking for spikes
As Tim shares in the episode, particularly for new traders, it’s important to focus on stocks that are “up”. There’s no point in trading slow moving stocks if you are just starting or have a small account; it simply won’t deliver the results you want.
Therefore, a stock spike is what you’re looking for. If a stock is spiking, there are multiple opportunities to make money on both the up and the downside, both as a buyer and by short selling. But how can you tell if a stock is in the perfect Goldilocks zone where it is spiking, but not too far or too fast? In the episode, Tim and Stephen share their own experiences with approaching a stock spike and offer specific percentages to look for.
Catalysts: the key to stock movement
A catalyst is the thing that can cause a stock to spike (or to fall rapidly). Basically, a catalyst is any happening or event that can affect the company’s value or offerings. To determine potential catalysts, you might follow the news, earnings, announcements, contracts, and fundamental opportunities related to the company in question. However, as you’ll learn, it’s not quite as easy as just seeking any old catalyst.
The trouble with monitoring catalysts and stock movement
Unfortunately, monitoring catalysts to track movement is an imperfect system. In part, that’s because a lot of news which is publicly released is biased or self-serving. For instance, a company may issue press releases, but they can be spun in a favorable way that might not be completely accurate.
As Tim and Stephen discuss, a far more accurate picture can be gained through reviewing a company’s quarterly earnings reports, which are mandated by various regulatory agencies. These reports offer a much more realistic look at the health of the company and can help traders determine the worthiness of buying. Trouble is, these reports are only issued a few times a year. So where’s the middle ground between sifting between what’s real and not having to wait for the facts?
Keeping track of catalysts requires effort and dedication, that’s for sure. However, there are some tricks that can help you intelligently discern when a catalyst is going to positively affect a stock.
Monitoring stock movement intelligently
As you learned in the last episode, there are certain tried and true methods for determining what stocks are in play. In Episode 4, Tim explores what catalysts to look for specifically, when in the so-called “earnings season” (the period one or two weeks after the last month of each quarter) to look for them, and how to cross-reference catalysts with earning reports to make more educated decisions on investment opportunities.
Tim and Stephen review various catalysts such as press releases, contract wins, new deal announcements, sympathy plays, earning winners, and others that can have an effect on the value of a stock. Tim offers helpful tips on how to look at a company’s history and what positive markers might indicate that it’s a good idea to buy; alternately, he advises on some red flags to look for that might make you want to avoid investing.
Ultimately, the decision is yours, but learning about how stocks move can help you improve your trading and make more educated investments.
Bonus: catchphrase faceoff!
While Tim and Stephen agree on a lot of subjects during this show, they can’t come to an agreement on whose stock movement catchphrase is superior. Leave a comment in the show notes and let us know which you prefer!
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Another great episode, full of information for us newbies.
Thanks Debbie! Glad you find them useful!
Regarding biotechs, their phase 2 news seems to really big HUGE movements if their floats are low to under 25 million shares,
Phase 3 not such huge movement albeit sometimes,
FDA acceptance as well as orphan designation,
tend to move stocks & on slower Nasdaq days even potential chart patterns can move up to wedge patterns that can potentially break out if there are conferences going on at the same time where potentially corresponding to the chart- news can be hinted to be announced at these conferences.
These biotechs tend to hold 5 & 15 min trend lines with clear risk reward & can be up 80%+ on the day where capturing 5-20% gain has some safe spots.
Would you recommend watching & trading biotechs to grow a super small account or earnings & contract winners rn or both?
Just that holding over night with this crazy North Korea news & these natural disasters going on esp after last fed speech has these markets a bit timid.
Some traders that trade the higher priced stocks say that the dips there tend to be safe so micros might too, but I know better. 3-4 stocks tend to follow the market unless we can spot nice short squeeze set ups.
Tim awesome Bohen, which would you say are the best to focus on this Autumn 2017 (where hopefully we don’t have another 7 year crash but would maybe be *healthy* ?
🙂
it was nice podcast better than last 3 still listening and trying to be good listener ..
trade on morning spikes and news that pushes stock price up , earnings winner .
Thanks our goal is for each episode to better than the last!
You guys are the Abbott and Costello of the trading world. (Yes, I’m testing your age).
Keep it coming.
I know what you mean, but guessing Stephen wont! 🙂 Thanks!
Steady improvement. Still a little to much chit chat: but it is showing progress.
Good input, thanks Todd!
Great craic between you both.
Learning is fun listening to you both.
You cannae beat the geordie accent especially with myself being Scottish.
Tim your challenge webinars are also great for learning.
Thanks Gary!
Thank you both for another great podcast. I like how information from the previous session was mentioned today which made me go back to look at my notes and review. You both are definitely getting better. One observation is that maybe you both should calm down with the old and young comments because it seems awkward and a bit harsh. Maybe only stick to experienced/wiser and inexperienced? And thank you for the challenge, I liked that!
That’s awesome to hear man thanks for the feedback
Tim, you mentioned you like chart porno. Is there a posibilily you could ever write a book “Chart Sutra”?
This is a real question, there are so many chart patterns, would be great to have it all in one place.
By the way, thank Tim and Stephan for sharing so much valuable insights. Much appreciated.
haha that’s quite funny maybe one for the next episode 😉
A Podcast so nice, listened to it twice. It has been great how each podcast has built on the one before it. A struggle I am dealing with is entry points. I’m definitely looking for the charting discussion coming up and the podcasts yet to come.
Twice! No way!
Another great episode guys full of useful gems! It hadn’t even occurred to me these companies include contract figures in their news headlines whilst companies like GE don’t. Also love the banter kicking off between you two. In the first few episodes you seem to be giving each other just a few jibes but you were properly going for it this week! XD Looking forward to the next episode providing Tim hasn’t been put on a ship!
Love to hear that haha – awesome to hear.
Great info. Love the bantering between you to. Makes it fun to listen to. Thanks for the time.
Awesome man really appreciate that!
Excellent! Excellent topic on this episode, like episodes1-3. I like how youplay your roles, very engaging. My suggestion, to keep Steve out of jail is to use “Playboy Chart” instead. Just kidding! Keep up guys, I’ll look forward for Monday again…
Awesome man really appreciate that!
Keep being yourselves guys. You are doing just fine!
YES! Love to hear that!
Thank you guys for another great episode. I started taking notes and find it helpful when you do a quick recap after discussing a certain amount of information after cracking us up. SEC filings are still something I want to grasp a little better so I appreciate the reminder to pay attention to certain key points. Thanks for your dedication and congrats on month 1 of SteadyTrade!
DEFININITELY – me too – we will do an episode on this in Season Two hopefully – let’s see – it will definitely be brought up at some point.
Thanks a lot Tim.. Great Info.. Learning more everyday..
I would like to hear more tips on how to approach any given catalyst(s) AND how to play them based on momentum. For example, Tim mentioned he only reads the first paragraph of an earnings report. Little tips like these will help new traders like myself with the learning curve and become a better trader faster than without them.
I’d also like to know when to enter a trade and what support to use based on the chart’s catalyst (if this is a pattern that has been studied before) and if not, is a catalyst(s) just the first step in identifying a stock? As in, once a stock doesn’t move after a catalyst(s) then that stock is done for the time being, but once a stock spikes after a catalyst(s) then you simply don’t worry about the catalyst as much and worry more about the momentum and volume/hype into the play. If the latter is the case based on any of you two’s experience, then is a catalyst is just then a “Kickstarter” for a stock to be in play.
Thanks a lot Tim and stephen.
Learning more everyday..
I prefer the previous podcast over this one. Although it was entertaining at certain parts however, I really feel like Stephen has too many unnecessary comments such as trying to compete with Tim as to who sounds cooler. The sound effects are great, however, there are moments where there’s just too many sound effects and it covered up what is being said then the podcast will just pause and skip a little which was a little frustrating.
I’m sorry you feel like this Jen – I’m just trying to have fun.
I prefer the previous podcast over this one. Although, it was entertaining to listen to them bicker and give out their personal stories on trading but there was moments where Stephen will give out too many unnecessary comments. Comments such as competing who sounds cooler on certain terms, it really doesn’t matter as what sounds cooler as long the concept is explained. Also, the sound effects were entertaining but there were certain time where there’s too many sound effects in which some will cover up what the hosts were saying. Then there will be a short pause and it will skip a bit which was a little frustrating.
Bohen’s catchphrase superior as ultimately “Only Price Pays”. Short, simple and to the point. (Maybe age has to do with preference 🙂 ) I’ve been told ‘The older, the wiser’ since I was in elementary.
Great job guys!!!
Thank you Dylan!!
Could you guys go more indepth about float? like what exactly it is and where to look for it and what exactly qualifies as a “low float” stock? and also how to compare float and volume and what information you can take away from comparing them?
thanks for another great episode guys keep it up! <3
great episode . so valuable.
Thank you Peter!
Great show once again. On point with the detail, explained very well.
Thanks guys, this information is priceless and I appreciate everything your doing for me and others.
You guys are doing a awesome job….Keep up the good work…love the podcast and we learning while laughing.Thanks you.
Love this comment!! Thanks 🙂
Good Stuff!! Good to hear more than once. Look for Catalyst: Earnings winner, Contract winner, News/Press Release, Sympathy plays, past price action. Look forward to more info on Chart Porn!!!
Haha thanks Jeanine!
I keep loving the podcast shows!
“Only Price Pays!”
Podcast is good, still just a little little too much filler(pointless talk) from what I think. But am learning and taking notes from this series 😀
Terrific episode! I’m pleased with the topics; exactly what I needed to hear! Thank you guys!
Only the price pays. The price action does work. But on the long it comes to the bottom line to make the money. Each episode gets better. Always something new.
I don’t know how I didn’t get this on Monday to watch.
I voted for Stephen’s catchphrase- but that was ‘sympathy play’ 🙂
Thank you, both!
This episode helped me able to stay green on a trade since Sept. 25. Amazing how everything clicked. This episode started my AHA! Moment. I am forever grateful to Tim and Tim. You gave me lessons that will change my life and the people around me for the better!
Another useful and informative episode, delivered with your usual dollop of humour and quick-witted repartee. Was a bit late in catching this one up, but glad I did. I enjoy listening to these whilst putting together my watch-list. Keep up the good work. Cheers Guys.
Chart porn does get me excited.
Can you tell me what platform are you using on this site?