Transcription
Lowfloat stocks can move 100%, 200%, even 600% or a,000% in a single day. And frankly, that's why I think they're great for day traders with small accounts. You can really grow a small account fast. Trading lowfloats is a big reason how I've made nearly $8 million. This is how I create millionaires from scratch.
So, I want to show you how to trade lowfloat stocks, why their volatility can create massive upside potential, even if you do have to be careful. [Music] And I'll show you some trading examples of my best lowfloat stock trades.
So, first of all, what are lowfloat stocks? Um, let me give you a simple definition of what a lowfloat stock is. You have to know what you're trading. The float is how many shares can trade, uh, freely. Okay? Their shares outstanding, which includes restricted stock. Restricted shares cannot trade. They're owned by insiders. They're owned by big funds. They're restricted from trading. They usually expire and they become free trading over six months, 12 months, 18 months. But right now, when we're trading them, restricted stock is unable to trade. So the float is specifically what can trade. A lowfloat stock is what I like when there's one, two, three, maybe four million shares that are free trading. Sometimes even less. Sometimes there's only 500,000 shares out there. So this is the supply of a stock. And when a stock can trade, you know, millions of shares in a day, 3 million, 5 million, 10 million, 30 million shares in a day, there's not a lot of supply, but there's a lot of demand that forces the stock price to go up. This is simple econ 101.
So what is the difference between a lowfloat and a regular float stock? For me, I don't like regular float stocks. These are stocks that have floats, or you know, the supply of 10 million, 20 million, 50 million. Sometimes there's even a billion shares out there. Okay, there's too much supply out there because the companies have sold a lot of stock over time. That's how they raise money. They need that money to stay in business. But there's just a lot of supply. So anytime the stock spikes 1%, 2%, 5%, there's going to be some sellers because there's just a huge moat of sellers. There's a huge moat of supply. So these stocks are not going to spike 200%, 500%, a,000% in a day like lowfloats because there's too much supply. There's going to be sellers at every single price.
I like lowfloats because they are more volatile. Obviously, lowfloats can go up or down. It's a double-edged sword. So, you have to be very careful. But at the same time, if you have a small account, you need that volatility. You need the stock to be able to spike big. You're not going to grow your small account by investing in a company or trading a stock that goes up one, two, three, five percent. This is how I got into penny stocks in the first place because I needed volatility. So for me, I'm looking for these lowfloat stocks, the stocks that have the huge upside potential. And what I look for is called supernovas. I came up with this term. You know, a supernova is like when a star explodes and it's a beautiful, um, you know, thing that's happening in space. I'm not a scientist, but this is what happens with these stocks. The stocks go supernova. I know it sounds crazy for a stock to go up 100%, which is, you know, the stock price doubling in a day, but you get these crazy supernovas where a stock can spike 200%, 500%, even a thousand, sometimes even 2,000% in a day. So, even if you have only a few thousand dollars in your trading account, and even if you sell too soon on any of these supernovas, like I usually do, you can still grow your account dramatically.
So, I want to show you some examples of some lowfloat stocks. Take a look at this. So, here are some examples of some lowfloat stocks that have really taken off in the past few days. I have to start with SMX because this was just insane as I'm filming this. This was basically a month ago where the stock went from the single digits. Okay, mind you, this is a lowly single-digit stock in the threes, fours, fives. It spikes up here very fast up to the 60s, which already seems insane. You know, 3 to 60, it's gone up 20 times. If you look at what the float is right here, it's only 7 million shares. So, it's not, you know, hugely, hugely low float. I like it actually lower. But at the same time, some stocks even with higher floats can trade like a lowfloat stock. The stock can spike 100%, 200%, 300%, a,000%. So when a stock goes from, you know, $3 a share up to 60 or 70, that's pretty crazy. But that was just the beginning of the craziness. Look at this giant supernova. Because a lot of short sellers like to bet against these stocks. They think that it's going to come down. Most of the time it does come down, but this time it did not come down. And look at this spike here on December 4th. The stock started its breakout around $60 a share. And in just one trading day, it went all the way up to $450 a share. So we're talking about a stock that goes from $3 to $400. Now, obviously, no one is going to hold it that whole time. I wouldn't have even expected it to get to, you know, triple digits, let alone $400 plus per share. But this is what's possible with lowfloat stocks, especially when there's too many short sellers and they short too aggressively and they create these great short squeezes. Mind you, the short sellers aren't wrong because the stock actually did fade even though it's still over $100 a share, which is crazy. That's what's possible.
Let me show you another one. TWWG. This stock went from $5 a share. This was right around the same time when one giant supernova spikes, other supernovas tend to pop off. This one went from $5 a share up to $25 a share. And this is all in just a few hours of trading. And again, you see it comes down. So you have to learn to take profits into strength. And if you scroll down here, you can see here on Stocks to Trade in the bottom left-hand corner, the float is a little over a million shares. So this is a very lowfloat company. And this is why the stock can basically go from $5 to $25 a share in just a few hours of trading. Okay, normally if a stock, big company, goes from $5 to $25, or let's say it's a bigger company and the stock goes from $100 to $500, so five times that, usually takes months if not years, not hours. So this is another good example after SMX.
Um, OCG is another great example. You can see here this stock was trading in the twos. This is again early December. This is all happening in the last few weeks as I'm filming this. You can see here the float is actually 25 million shares. So, it's a bigger float, but this one traded like a lowfloat stock. And how do you tell if it trades like a lowfloat stock? Because it just cuts through prices like warm butter. On this day on December 9th, this stock is going from two up to $12 a share. This is not normal. I don't care what the news is. I don't care what the market is doing. A stock should not be able to go up six times in a few hours. And yet it does. And then it comes down from the twelves all the way down to the sevens. So this is scary. It doesn't look like much on the chart, but this is a 40% drop off the high again in just a few hours. But then you get another giant short squeeze here from 8 to nearly 20. So you're looking for these kinds of runups. And again, if you have a small account, just buy 500 shares. Buy a,000 shares. Try to make $500, $2,000. You'll be shocked. But I will warn you because once the momentum fades, once all the shorts get basically, you know, screwed and squeezed out of the play, these come crashing down. And OCG, just a few trading days later, I mean, this thing is trading at 9.85 cents per share. So, just a few trading days ago, as I'm filming this, this was basically two weeks ago, the stock was hitting nearly $20 a share. Now, it's not at, you know, $15 a share, $10 a share, $5 a share, even a dollar a share. It's trading at roughly 10 cents. Okay? So, it's what? We're not talking about 12th. We're talking about 200th the price that it was just two weeks ago. So, understand lowfloat stocks are great on the way up. They can grow really fast. They can spike very fast, but they're very ugly on the way down.
Um, even right now as I'm filming this, these are some examples from a few days ago. TGL is another one that went crazy. This one went from basically $6 a share up to $80 a share and now back down to $6 a share. You can see here, you need to focus on it when it's spiking. And this was specifically an after-hours play. Um, if you actually click the link below, you can watch a video how I trade pre-market in after-hours and how I use different time frames. In one after-hours session, this stock went from $27 up to $87. And mind you, this is all in one hour. Okay, this is absolutely insane. And if you scroll down, you want to see what the float is, look at this. This was just a million share float. So, this is fantastic. But again, a few weeks ago, live, real-time, as I'm filming this, ASPC is today's lowfloat, um, play. And you can see here in just the past few hours, it went from 11 up to 30 and now back down to 15. Yesterday, FJET was the lowfloat runner of the day. It went from 7 to 30 and now it's back down to 14. I actually traded FJET yesterday. I was very proud that I bought it in the 10s and I sold it in the 11s. Understand the way that I've made my money is nowhere near best-case scenario. I know how to trade these, but because I'm a teacher, I'm always going to try to teach the safe and conservative way. Also, I didn't expect FJET to go up, you know, to $30 a share for my buy at $10. But that is the upside potential with these lowfloat stocks, and that's why I love them. Don't feel bad if you sell too soon. Just try to lock in profits along the way and try to ride these lowfloat plays. That's how you grow a small account. So always look on the left-hand side in Stocks to Trade on any stock so that you can see the float. But understand it's also about how the stock trades and you can kind of tell what is happening based on how fast a stock can move. Long story short, you want fast-moving stocks. You want big percent gainers. This is why I think beginners should be attracted to lowfloat stocks. But again, it is a double-edged sword because these stocks can drop very fast as you saw on those charts. So, it is dangerous if you overstay, if you just hold and hope.
I didn't start with trading penny stocks. When I actually made my first $100,000 trading penny stocks in my dorm room, it was on a lowfloat stock that was spiking big. I actually shared that story in this video that I think that you should watch because I want to give you example after example of trading lowfloat stocks successfully. That is how you can grow your account. And this is why it's infinitely better than the blue-chip stocks that 99% of traders and investors focus on that CNBC non-stop talks about. Okay? Focus on the plays that matter. Focus on the plays that can grow your account while understanding the risks. These companies are small, they're speculative, they're less established, like you saw with OCG. They move very fast, they're very shady, but at the same time, they move very fast in your direction. And the beautiful thing is that lowfloat stocks don't just spike once or twice, they can keep spiking. Former runners run again. So remember these lowfloat stocks. Even if you miss one of these runs, keep it on a watch list somewhere and remember it because a few days, a few weeks later, it might just spike again. You know, this is how I traded FJET the other day. I actually had a loss the first time. I was a little scared. I was chopped out. The second time, just a few days later, I made a dollar a share. Still, the stock went from 10 to 30, so I played it too safely. But even if you sell too soon, you can always do better. And you're trying to learn from every single trade, okay? You're trying to do better. It's not about making perfect trades. It's not about always hitting home runs. You need to just try to take the meat of the move.
Also, with lowfloat stocks, you have to be careful with brokers. Um, certain brokers don't allow lowfloat stocks because they're very dangerous. So, for me, I like E*TRADE. I like Interactive Brokers, but even then, some of these lowfloat stocks are off-limits. Um, you just have to try. If your broker doesn't allow you to trade it, I would encourage you to change brokers. If you actually click this link, I made a video about different brokers and different platforms, you should watch this because if you can't execute any lowfloat stock, then it doesn't matter how fast they go up if you can't partake in it. And understand, it's a process, okay? It takes a little while to get good at trading lowfloat stocks. It doesn't happen overnight. I'm still frankly getting better because they're so scary and especially in the beginning of your journey when you're, you know, kind of a new trader and you're like this babe in the woods, like you don't know what's going to happen and you don't want to get caught overstaying on any of these plays. So this is why I teach students to trade small in the beginning. You can paper trade. Um, but for me, I want to still try to take advantage of these lowfloats and learn from them.
And understand, it's not about the news specifically. It's anything that attracts traders. Anything that gets the volume up. This could be an FDA approval. It could be a reverse split. It could be, uh, a chat room mentioning it. Any news whatsoever. The key is getting enough volume to take advantage of the lowfloats. That's the key where people are buying it. And then if a stock is up too much, short sellers come in and they try to push it down. All of the buyers, all of the short sellers, it creates a powder keg for maximum volatility, maximum opportunity. And you look at the float rotation. How many shares are traded versus the supply? If a stock is trading, let's say, 30 million shares on the day and the float is only three million, that's 10 times float rotation. That's a lot more demand than supply. That creates an order imbalance and that creates volatility. It also creates trading halts and order imbalances. You have to be very careful. A lot of these lowfloat stocks will halt for five or 10 minutes when there are some order imbalances. That makes it extra scary, um, because you can't place any trades when a stock is halted. That's another risk.
And I think that the best time to trade these lowfloat stocks, frankly, is pre-market. Um, that's when a lot of short sellers are kind of on their back foot. They're a little scared. They don't know how high these things can go. At the market open, these stocks can really spike fast. I like trading them right around 9:30, 9:40 a.m. Eastern. When many people are scared to trade them, that's when, especially with a small account, you take a small position, you lean into the volatility, and you can literally make 50%, 100%, 200% on some of your trades, even if you trade them conservatively like me. I'll also trade them after hours because there's a lot of volatility as you saw, uh, with, you know, TWWG going from the 20s to the 80s in one hour after hours. It's crazy. Look at my eyes. Zoom in. Okay, I have bags under my eyes because there is volatility [snorts] at all times lately. There is a 16-hour trading day. Okay, so for me, I'm always looking for stocks in play. I'm looking for the lowfloats, but I'm avoiding lowfloats that are not in play. I don't care if there's a lowfloat play and it's only trading 20, 30, 50,000 shares on the day. There's no news, nobody's interested. I want that volatility. I want that liquidity.
I really think that the key to making the most money on these lowfloats is buying the high of the day. Ideally, early in the day, like I said, when shorts are most scared, whether that's 4:00 a.m. Eastern, whether that's 7:00 a.m. Eastern, whether it's 8:00 a.m. or 9:30 a.m. Eastern, I don't discriminate. It's whenever the stock hits the new high and it hits it convincingly. I don't want to see a lowfloat stock just break out by one or two cents. You need to scare the shorts. If the shorts are scared, they will cover their positions. And that's when you get these giant run-ups with these short squeezes. So, for me, I want that maximum volatility. I want a broker with pre-market access. Again, this is Interactive Brokers, uh, E*TRADE, uh, after 7:00 a.m. You need to have the right tools. Okay. So, I'm always looking for the right filters, which includes lowfloat stocks. I'm looking for stocks that are big percent gainers. I'm using Stocks to Trade and I'm using Stocks to Trade breaking news. I want to see that there's a news catalyst that traders can share in different chat rooms and on social media. I'm also plugging in these stocks into XGPT, which is our AI software program, and that gives basically a second opinion. I use every single tool to give me better odds of success. I want to understand these plays inside and out while understanding that many of these companies are not good companies. You don't want to overstay. You want to take profits along the way.
Understand before I get to the risk management mistakes to avoid, I actually have two optional tools that you will see here, uh, to help. One is, uh, you know, my Supernova, and this is a detailed training for catching these supernovas. And also my cheat sheet. Uh, this basically breaks everything down, um, on how to maximize, uh, these supernovas. And it's literally just $7. So, it's very cheap, but I want you to invest in your education. I want to show you that I can teach you for a very small amount of money, but you also have to show me that you're dedicated. Many people make excuses. They don't actually want to study. They are not willing to invest $7 into your education. They're not willing to do the homework. This is not just about hot stock picks. This is about preparation. So, I have the tool that I use to find these lowfloats. XGPT is the AI tool that analyzes and sends me the best lowfloat stocks every afternoon. You still have to do your own research. You still have to look at the stocks yourself, but this tool does a lot of the legwork, a lot of the grunt work for me. So, I'm always trying to help you with the right tools, with the right preparation. I encourage you to click the link below, uh, to get my Supernova training and access XGPT, um, so that you can see that and use this AI tool to really just crunch the numbers.
I need to be very clear here. Expect insane volatility on these lowfloat stocks. So you can never bet too big. Risk only a small percentage of your account per trade. Ideally less than 10% of your total account if you're new. Maybe even 5%, maybe even 2%. It's not about how much money you can make, especially in the beginning. It's getting that experience, learning how to even take singles, okay? You know, you saw me on FJET, I made a dollar a share. The stock actually spiked $20 a share. So, I took like 5% of the potential profits. That was a little too conservative, but that's fine. You're still learning. I'm still learning 20 plus years in. Stop losses are non-negotiable. Whether you use mental stops like me where I like to cut losses when I'm hitting like 3% or 5%, or even hard stops. You can plug in hard stops with your broker so if you're down 1%, 2%, 3%, you automatically get out. I know some people don't want to use stops because you get out for a 1%, 2%, 3% loss then the stock goes right back up. I don't care. I'd rather you be safe than sorry.
When trading lowfloat stocks you have to understand you're basically playing with dynamite. Most people avoid lowfloat stocks because they're so scary. I think that if you trade stocks very scared, then trading isn't so scary anymore. But you need to keep that mindset, especially holding overnight. I don't trust a lot of these companies overnight. They can report some negative news. They can get delisted. A lot of these companies are getting delisted lately. When they do reopen on a different exchange, a lower exchange, they're down 70%, 80%, 90%. If you're betting small, then it's not really going to matter. But if you bet too big, that can really hurt. Never forget rule number one is cut losses quickly. I have so many 1%, 2%, 3%, 4% losses. Sometimes I look like an absolute idiot, but I would rather look like an idiot with a small loss than actually be an idiot with a big loss. Okay? I don't mind small losses. Every great trader that I know has small losses. That's okay. You don't want to make these common beginner mistakes where they risk too much just so that they don't have a loss. It's for their own ego. Also, beginners can chase too high. When a stock is already doubled, tripled, quadrupled, octupled, they feel left out. Also, you don't want to ignore the volume. Okay? I don't want to trade lowfloat stocks, low volume plays because they have big spreads. I'm always looking for actively traded stocks, ideally with small spreads. I also will not average down on these lowfloat stocks. As you saw with some of these charts, it's beautiful on the way up, but on the way down, it can be terrible. So, you don't want to keep trying to dip buy, dip buy, dip buy. You're trying to catch a falling knife. That's when you get stubborn. That's when, frankly, you blow up. This is what happens to newbies. They hold too long. They get stubborn. They chase. And sometimes they even have too many stocks. For me, I'm only focused on one or two stocks at a time. I don't take positions in three, four, five stocks like a lot of people like to do. Um, usually I'm focused on only the most predictable setups of which there's usually only one or two in the market.
I also don't want you following any chat rooms. Okay? Never follow alerts from anybody. The only reason why I give trading alerts is because I want you to see my mindset in real time. And I actually write out like a whole paragraph, sometimes even two paragraphs with my alerts. While many chat rooms, they just say buy this ticker, everyone piles in. They say sell this ticker, everyone piles out. You don't learn anything. You also usually won't earn anything by following anybody else. If you look at my 50 plus millionaire students, they're all self-sufficient. I'll teach you the patterns. I'll teach you the rules, but you have to make the trades yourself and you find what works best for you.
Lowfloat stocks, I think, are great for people with small accounts if you trade them properly. But you must be meticulous. Do not gamble. Do not hold. If you're trading these lowfloat stocks, there is huge upside, but there's huge downside risk if you get sloppy. Thank you for watching. I'll see you in the next video. Leave a comment below. Let me know what you think about this. Let me know if you like lowfloat stocks and if you're going to trade them meticulously and in a disciplined manner.