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Our Approach

Patterns don’t work 100% of the time. But they are still critical because they help you define your risk. If you ignore patterns and focus on hunches, feelings and hot tips, just forget about achieving consistency.

This is the mantra that we live by.

Besides the potentially explosive upside, it is the reason why we focus on small caps (companies with a valuation under $2bn), as we understand them in detail. Furthermore, it is why we trade tried and tested setups that we have perfected them over time.

After all, nobody possesses a crystal ball. We wish we did. However, what we can do is skew the odds in our favour. We do this by following a structured method through the four services that we provide to you, which marries the best of technical and fundamental analysis together.

Mo-mo-momentum

Every year, innovative small companies create new business models, new innovations, and new product breakthroughs that attract millions of customers and send their market values soaring. As a result, their shareholders grow rich.

Unfortunately, almost all of the market’s “mega winners” fly under the radar of most traders during their early days… the days when you can invest before the masses and make truly life-changing returns.

The market’s smallest, most innovative companies don’t advertise on big cable networks. They don’t appear on the front page of The Wall Street Journal, and talking heads on CNBC and Bloomberg don’t talk about them. So, most people never learn about stocks with the potential to grow 10 times or more until it’s way too late.

We are not talking about low float stocks that get pumped and dumped on FinTwit, but genuinely disruptive small caps that have a credible offering with paying customers. It's these small caps that make waves in the market as they have tons of momentum behind them. It is that mo-mo-momentum that we want.

We find these small caps and once a week shine a light on one of them through our Spot Light offering. However, behind the scenes we got a much larger master list of them, and continually scan them to find those that are getting sudden spikes in volume, unusual options activity or release breaking news.

All those signals can be precursors to break-outs.

Tick-tock, tick-tock

We apply the same rigour not just to the "what", but also to the "when" and have set ourselves a number of criteria before we enter a trade. The problem with small cap is that whilst they can make explosive moves to the upside, they can also simmer for a while before they make those moves.

Timing our entry is therefore crucial, as there is an opportunity cost associated with having your money tied up in stocks that meander.

What we need to see before we enter a trade:

  • Volume Accumulation: A big increase in volume traded as the stock ramps up, with low volume on down days.
  • Bullish Price Action: increasing momentum in the stock with a clearly defined move to our entry zone.
  • Relative Strength: We want a stock that is up when the market is down. They will provide us with a tremendous trading edge.
  • Risk Reward Ratio: a risk reward ratio of at least 1:2, so we can even be profitable if we're only right 50% of the time.

What we'd like to see before we enter a trade:

  • Unusual Options Activity: Stocks don’t move, somebody moves them. We follow in the footsteps of giant institutions.
  • Nice Orderly Price Action: Stocks that have orderly price movement in clearly defined trends can be reasonably predicted.
  • Bullish Sector Rotation: Stocks often move in sympathy if they are part of a sector that exhibits relative strength.
  • Short Interest: We seek out stocks with a short interest of >10%, as they will be the most aggressive upside movers.

A winning formula

Such a structured approach may fly in the face of what intuitively feels like a chaotic market place. However, there are signals hidden amongst the noise, and by combining Market View, Trade Ideas, Watch Lists and Spot Light together, we find these patterns for you and translate them into high probability trades.

Facts and data, no emotions.