Nathan Bear Weekly Money Multiplier Service | Try to keep your "basket" of stocks small

Did you know are over 3,500 stocks to trade across multiple exchanges?

It can make your head spin, trying to get intimate with all those companies.

Not to mention, a huge waste of time, something I can’t forward as a husband, father, and trader.

While it might sound exciting to trade a stock you’ve never traded before…but I don’t trade for thrills or excitement…

I trade to put food on my family’s table and provide them with opportunities I never had (my kids went from the worst school in the district to now attending one of the best in the State of Georgia).

When I’m trading I like to keep my “basket” of stocks small. In fact, I tend to focus on large-cap companies that have option contracts. And I’ll trade them throughout the year.

For example, I traded SHOP on multiple occasions—scoring massive winners along the way.

You’ll be shocked at how much better your trading will be once you declutter.

I know because I struggled with this for years—thinking that more was better.

Not anymore though… and I’m going to show you the process I took to declutter and become a seven-figure-a-year trader.

Contents

1 Keep a list
2 Common Filters
3 Find trending stocks
4 Consolidating patterns
5 What do you do if you still don’t have time?

Keep a list

The best traders I know go back to the same stocks over and over. Some day traders become so intimately familiar with a stock, they know when the market maker goes to lunch.

You don’t need such a deep relationship with a stock. However, having a list of go-to stocks slashes the time it takes to find trades.

First, you need to identify your strategy. My bread and butter works option swing trades. While I will day trade from time to time, my sweet spot works over several days.

Stocks that work well for swing traders need volatility. I know for a fact I can’t trade stocks that trade inside of ranges.

After years of journaling, I found these produce poor results. So, unless I have a really good reason to look for them, I ignore them.

Second, I like to keep stocks that I’ve traded well on my list. These stocks often produce similar setups over and over. Probably just as important…they give me a psychological boost.

That’s why after I took this trade back in July…

I wasn’t shy about trading SHOP later on. The stock makes significant moves when it takes off. Just look at how explosive moves followed nearly every pullback in the last year.

SHOP daily chart

Common Filters

Most trading platforms contain scanners. This lets you cull down the number of stocks you look at to something reasonable.

While not all scanners have the same criteria, here are common ones I use.

High short interest – I want stocks that will make explosive moves. Options need these to pay off. High short interest helps me find stocks that get an additional kick from short-covering.

Price – I tend to stay away from small price stocks. Anything under $10 doesn’t really hold much interest for me.

Low Implied Volatility (IV) – This criterion isn’t required, but it helps. Option prices increase with volatility. Buying when volatility is low lets increases in IV work for you.

Near all-time highs – Many of my trades tend to be long calls. So, I often look for stocks consolidating near their all-time high. This gives me a reference where buy stops will be tripped.

Find trending stocks

My TPS system starts by identifying trends. It’s one of the easiest things to spot on a chart.

I’d previously written on Spotting Trends the Right Way. These techniques work great to quickly identify a chart trend quickly.

Here’s a way to practice identifying trends quickly.

Look at the daily chart for the last year.
Draw a line with your eyes from the first price on the left to the last price on the right.
If you aren’t certain of the trend, move on.
Try to flip through 10 charts in 1-minute.
Then go back and use a drawing tool to connect the points to see how you did.

Most traders overthink trends. I like to keep it simple. If you can’t identify the trend, then just move on.

Consolidating patterns

Don’t start looking for consolidations until you establish a trend. That’s like trying to decide how fast to drive a car without knowing where the road is.

You identify most consolidation patterns by comparing trendlines.

Start by drawing a line that encapsulates most of the top wicks of the candles. Then do the same thing on the bottom side. You want to see the two lines converging at a point. This signals price preparing to break out of the range.

Here’s an example from a trade I took in TGT. I had a stock near the highs, a clear trend, and converging trendlines.