Hey, it's Clay at ClayTrader.
In this video I wanna walkyou through and show you how to make money trading stocks below $5.
This is the price rangethat's very popular, and rightfully so, the stocks, because they're lower in price, people can afford them a little easier.
They don't require some sort of massive account or anything like that.
So when people are newand just getting started in the stock market and trading in general then I fully get it, I understand that thesestocks are very popular.
So I wanna walk you through anexample that just played out and walk you through what I would consider four key lessons, four key, you know, bits of understanding, tips, whatever you wanna call 'em that you're gonna need to understand in order to put yourselfin the best possible spot to succeed with stocksin this price range.
Now, right out the get-goI'm gonna be focusing on a situation that recently happened, and this is (laughs) a situationwhere a company decided, you know what, we're just gonna fabricatecertain transactions.
We're gonna just sit there and say that we made sales thatdidn't actually happen.
I mean, flat out lied, lied to the public.
So I bring this up just toset a little bit of a backdrop and let you know that what I'mgonna be talking about here as we walk through, you know, how to trade these stock is that none of this is theory.
This literally just happened, and assuming you'rewatching this, you know, after I release it relatively soon, then I'm sure you heard ofthis event that occurred, I mean, it's all over the place right now, everybody's talking about it.
But I also wanna address, even if, let's just say you're watchingthis video a year from now the lessons that I gothrough still do pertain, so nothing changes in that regard.
I just want you to know thatI'm not talking in theory here.
This is not, well, I thinkthis is how things work or I think this is how you trade stocks.
No, this is all based on real-life events, and you're gonna see some real-life results that came from it.
So yeah, when you do lie, when you do fabricate yournumbers, you cook the books, literally, this is whathappens to your stock.
This thing went from 27.
50to $4 in under 30 minutes, (laughs) less than 30 minutes.
That is crazy.
Cooking the books and then getting caught and admitting that you cooked the books, not a good situation.
So what is this gonna teach us? How is this gonna teachus about how to make money when stocks get in this pricerange down below that $5 mark, or I mean, down below, you know, the $10 mark, that general ballpark, where yeah, the stock becomes “cheaper” and that way more people can trade it.
So lesson number one thatyou need to understand if you wanna give yourself achance to make money trading these sorts of stocks isthis–volume matters most.
What do I mean by that? Well, you can always buy a stock, always.
Buying a stock is never a problem in this price range, in any price range.
Never a problem, not a big deal at all, but, and this is a huge but, and this is why this is lessonnumber one, tip number one, strategy number one, I don'tknow what you wanna call it, but this is why I'mtalkin' about this first.
When it's time to sell, will there be any buyers? Just because you can buy something doesn't mean you'regonna be able to sell it.
When you're down in this price range you put yourself in a very real, you know, not an opportunity, but you put yourself ina very risky position where you aren't gonna be able to sell or if you do wanna sell it's gonna be for some sort of priceway, way less or not nearly as efficiently as youwould want to sell it for.
One of the things that I seemost often with newer traders and those just getting started is, and like I said, I was the same way, so I don't say this froma judgment standpoint, but they just, hey, you know what, I could buy it easily, soselling will be the same way.
But remember, somebody's gotta be willing to buy those shares.
You gotta be very careful out there, especially on social mediaand in certain chat rooms and, you know, communities, whatever you wanna call them, where people will find stockswith not that much volume, they'll buy them first, they then alert them, and then, everybody rushesin to buy, and well, that's easy for that personthat alerted it first to sell because they're alerting it, they're telling people to buyafter they've already bought, so they just sell, and theyjust give it to everybody, and you know, these are calledpump and dumps, and you know, situations where you justgotta be very, very careful.
If a stock down in this price range doesn't have that much volume, you're potentially puttin' yourself into one of these situationswhere it's literally, hey, yeah, you're lookin' around, I need somebody to buy my shares, and it can become a veryunpleasant experience.
So volume matters most.
On this one, like I said, you don't wanna putyourself in that situation, but in this situation here, you look down there and you can see, look at all that volume.
Not only is there a lot of volume, but it's growing and growing and growing, seen by those volume bars.
So volume matters by far the most when you're down in this price range.
Lesson number two, playwhen it's safe, okay? You gotta play when it's safe.
Trade when it's safe.
Just because there's a lotof volume doesn't mean that it's always just gonna be safe, okay? Don't get me wrong, volume, very, very important.
Hopefully I've driven that home.
But just because there is a lotof volume doesn't mean that, okay, therefore, it's automatically safe.
So how do I identify when it's safe, and I wanna make a disclosure here, am I saying that this is the only way you can identify when something's safe? No, that would be misleading.
That's the great thing aboutthe markets, though, too.
There's many ways to go about it.
There's many tools that exist out there.
There's many strategies and approaches.
But how do I personally, becausethis is all based off of, as you'll see, something that, you know, I alerted, but, you know, these are the reasonswhy I alerted it was, again, first off, thereis a lot of volume, but then, I needed a wayfor when it was safe, so how do I identify when stocks are safe? I personally use technical analysis, which is just the use of charts.
Maybe you've heard ofthem, technical charts, you've heard of technicalanalysis, but that's what I use.
Am I saying that that'swhat you have to use? Am I saying this is the only way? No, that, like I said, would be misleading, but this is how I personallyidentify when things are safe.
So right down there asthe chart played out I made the alert rightthere to my community, and I do offer a community, and part of that communityis a live chatroom.
So this is where this is coming from.
I made the alert to the live community, and this was made at 8:55AM and that is Eastern time, and the times do matteras we'll see throughout the course of the rest of the video here.
But right there I decided, you know what? It's much safer at that point.
I arrived to that conclusion using the technical chart itself.
I made the comment about, you know what, it looks respectable, and this leads us intolesson number three, you need to know how todefine “safe” or respectable.
I get it, right nowyou're like, okay, Clay, you gotta be able to findwhen something's safe, okay, but how are you defining safe? What do you mean by safe? That's a fair question, that's a very wise question.
So right there theother part of that alert was that the RvR longside, and when I say long, if you're new, that justmeans buying the stock.
From a buying this stock perspective the RvR from that point of view, and RvR standing forthe risk versus reward, so from a risk versus reward situation it looked respectable, right? It looked safe.
Now, okay, we still gottaget to the question, though, about how exactly areyou defining safe, okay? The risk versus reward, what does that have to do with being safe? Well, safe is defined as being able to answer yes to the following question.
And really, if you only takeone thing away from this video, actually, take two things away, volume matters a whole lot, okay, and then the secondthing to take away is this, safe, you define that, respectable, you define that is when you cananswer yes to this question: is the risk logical and controlled when compared with a potential reward? That is the ultimatequestion that matters.
That is the ultimatequestion that all traders that stay in the game for the long time that have consistent success that, you know, truly make aconsistent income from all this, that's a question they'realways focused on.
I'm not asking you totrust me or believe me.
All I would say is thatif you have somebody that you know is very successful, that you know is consistent, that you know has had, you know, long-term successas a trader in the market, ask them like hey, you know what, does this question sound goodthat I should be focused on? Is the risk logical and controlled when compared with the potential reward? See what that person says.
I'm very, very confidentthey're gonna say, well, yeah, you gotta focus on that.
Things need to be respectable, right? A trade needs to be safe, and if you're definingsafe as is the risk logical and controlled when comparedto the potential reward, that's a good definition.
So lesson number four becomesmanage the trade properly.
Now, to best kinda illustratethis what I wanna do here, so there's the chart right there, but let's see how things played out here, and to do this the best I wanna take a member of the community that, you know, traded it andjust kinda kept everybody filled in as time went on and, you know, in hindsight has now led to avery great teaching example.
So Austin, thank you verymuch for doing what you did 'cause now others are gonnabe able to learn from it, but Austin decided to make thetrade and he bought at $4.
This all took place at 8:59AM, again, that time matters.
So that's the context.
Here is a fellow memberthat was in the chat room, in part of the chat room, you know, you can post stuff, so he was letting us know that he got in at the trade and he bought at 4.
And then, after that time played out, and the price eventually went to $5.
So at this point, I mean, that's a nice gain, right? You buy at 4.
03, now all of thesudden the stock's at $5.
62, I mean, that's well over $1.
50 per share.
But how do you manage totrade properly, actually? Well, you have two choices.
Choice number one, and a lotof people don't realize this, sell a portion of the position.
A lot of new traders, a lot of traders that arebeginners and getting started, they think that when you say sell that means you have to sell everything.
If I bought, just for example, a hundred shares of something, when you say sell that means, well, I sell 100 shares.
No, that's not required.
You can sell a portion of your position because as of right nowthe stock's at 5.
Sure, maybe that's the high, maybe the price goes back down, and if that's the case, well then, that would be good tosell all of your shares, but there's a, that's a two-sided coin.
On the other side ofthe coin, I don't know, maybe this thing's just gettin' warmed up.
Maybe this thing's gonnabe going even higher.
In that case, it would be terrible tosell all of your shares.
So that's why you manage a trade properly by either the first thing, just sell a portion of the position or your second choicewould be, you know what, I'm gonna hang on to everything, but I'm gonna start toadjust my stop loss up.
Adjust the stop loss upas it goes in your favor.
Clay, what's a stop loss? Okay, I guess that's a littleminiature hidden lesson, you gotta learn what a stop loss is.
There's lots of videosand such on stop losses, but stop loss is a vitalpart of risk management.
So again, like I said, I guess a mini lesson, if you have no idea what I mean when I say adjust the stop loss, meaning what's a stoploss order, then you know, that's okay, we allstart out as new traders, but realize, hopefully, you're not trading withreal money right now because that's a massive red flag, but that's how youmanage a trade properly.
You need to decide whatyou feel comfortable with.
Do I sell a portion of the position or do I hang on toeverything, but you know what, let me just adjust the stop loss up.
So those are the two choices.
That's how you actuallymanage a trade properly.
So how did this continue to play out? Well, we left off whenthe price was at the, so this was at 9:33 AM, so things have gone on a littlebit while, and like I said, when we just left off therethe price was at 5.
So at this point in timeAustin had a couple situations.
He had, as I said, theentry point at 4.
03, and his position was 450 shares, but he originally bought 500, meaning, well, he had 500, but he now has 450, and I'm not trying to insult anybody's math or anything like that, but because he had 500 and now he has 450, what does that mean that he did? What did he choose? He chose to sell aportion of the position.
He didn't sell all 500, he just sold 50 of 'em.
Selling 50, it gave him peace of mind, it let him put someprofits into his pocket, and that's what you wanna do.
Now of course, as you'reseeing in hindsight, he probably shouldn't havesold those 50 when he did, but of course, that's hindsight for ya.
But at this time he made the decision, he chose choice number one.
You know, I'm just gonna sella portion of my position.
That's great trade management.
That is how you trade not juststocks at $5, but any stocks.
Manage the trade by letting the trade potentially work for you.
One of the biggest lies out there is, well, you can't go broke takin' a profit.
That's one of the biggest lies out there.
Yes, you can go broke because you can cost yourself so much opportunity.
So the next time someone says, well, you can't go broke, green is green.
No, green is not green, okay? Green is not green.
You can't go broke takin' a profit.
Both of those are garbage, and maybe as you can tell, they're kinda pet peevesof mine when I say that because it's just not true, spoiler alert, as you're about to see.
The number I want you to keepin mind now is 715 or 714, whatever you wanna callit, because that is, had he just decided to say, you know what, I'm gettin' all out right now, I'm selling all 500 shares right now, that is what his profit woulda been.
I mean, that's still great $715.
See Clay, green is green.
Okay, just stick with me here.
So just keep that number in mind, though.
So how did things continue to play out? Well, that was theremainder of the morning, and this thing ultimately went from 5.
62, which we were just looking at where he coulda locked in the 715, it hit a high of $10.
58 in not that long.
This was all happening very, very quickly.
So there is the kinda offinal recap of things.
So this is now at 10:46 AM andturned into a $2, 137 profit, which you can see right there.
So the math on all of this.
Like we just talked about, if he woulda just went allout that'd have been $715, but because he decided tomanage the trade properly, so the managed profit was 2, 137, meaning that's a difference of 1, 422.
Think about it, youcan't go broke takin' a, well, I mean, he just became 1, 422 broker by taking theprofit too soon, right? 'Cause I mean, he lost outon the opportunity to make that more by just bymanaging the trade properly.
So yeah, he woulda been $1, 422 broker had he just taken the $715 because he removed the opportunity to make that much more money.
He let the trade work for him.
So if you've ever heard that saying, you gotta let the trade workfor you, this is what he did.
He pulled some profit off the table, but he let it work for himand wow, it worked for him, and literally, crazy, it literally put $1, 400more into his pocket.
That is some good stuff.
Now, I get it, this isjust one data point, and I took some statisticsin college, so I get it, but let's just go through a couple other examples from the community.
So here is one from Marty.
Just in case, this was literallyposted on my Facebook page, but, you know, just makingnote that I alerted it in the pre-marketsession, it being the LK, and you can see right there, pulled in a profit of 338.
Another member righthere, $2, 085, and then, down below you see that he makes a comment about it was his day off.
So I mean, not bad at all.
$2, 000 on your day off, pretty good.
And then, another member, and I love this one because notice what he says here.
Stopped out, meaning he wasletting the trade work for him.
He was, think about the two choices about managing the trade properly.
You can sell a portion orjust adjust the stop up.
So he went with the second one, and he was just adjusting the stop up, so did he ever sell at the peak> No, you're never gonna nail the top when you're adjusting yourstop loss up, but that's okay, you're still lettingthe trade work for you, so much so that in thiscase he walked away with $3, 800 by lettingthe trade work for him.
Now, in hindsight, could he have gotten more thanthat had he sold at the top? Well, yeah, had he not letit come down and stop him out he coulda made even more than that, but the risk of that is, well, he coulda sold way toosoon and had the price kept going and going and going, and then, he coulda hadone of these situations that I talked about earlier where, hey, I still had 1, 500 bucks.
I thought I was nailing thetop, I thought this was the top, so I just sold and I made 1, 500.
You can't go broke taking a profit.
Oh yeah? Tell that to this person.
I mean, he woulda beenbroke by over another $1, 500 by removing himself toosoon from the trade.
So trade management matters, but remember, it's very, very hard to manage a trade if you are into a tradewith a very low volume because all this trade management, everything that followedafter that first lesson, volume matters most, butif the volume's there, then all the other pieces fall into place, but again, this is why I'm notsaying that trade management is the most important thingbecause trade management doesn't matter whenyou have nobody that's, or you have very little few people that are out there topotentially buy your shares when you're looking to sell themselves.
So that's why they areall in sequential order, but these are the thingsthat matter when it comes to making money from thesestocks in the price range of, you know, $5 and below, $10 and below, but definitely any price range as far as the trademanagement is concerned.
So hopefully you gotsome value outta this.
Hopefully you can, youknow, now have a better idea of what sort of things you wanna judge and what sort of thingsyou need to be focused on as you go out there and tryto make money as a trader.
If you did enjoy the video, please hit that like button.
Also, check out the channel as a whole, and if you like what you see, hopefully you decide to become a member of the channel and a subscriber, so hit that subscribe button.
Now, I did talk quite abit about my community and, you know, the members and how I made the alert to the community, so if you're interested inlearning more about that, just go to ClayTrader.
com/teamand you can get all of the details and, you know, the community's open to anybody, so just go to ClayTrader.
com, like I said, /team and you can check all of that out.
So thank you again for watching.
Like I said, if you enjoyedthe video hit that like button, check out the channel, hopefully decide to subscribe, and I will see you backfor the next video.
First off, thanks so much forwatching the entire video.
Real quick before yougo I wanna invite you to a live webinar, webclass, training, workshop, online event, whatever you wanna call it, but it will be me live revealing to you what I've discovered thathas allowed me to transform myself from being an employeeto being my own boss, including how I had only one losing day out of 73 days in total.
I'm going to cover threekeys that have helped me unlock profitable consistencywithin the markets.
The first key is super weird, but in a productive type of way.
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I'll explain it all, though, including how to avoid thepitfall that it creates for some.
And yeah, the third key, when you hear it soundsway too good to be true, but it's not, and I'llshow you how it all works.
Then at the end I openit up for a question and answer session thatis, again, totally live.
Even if you can't make the live session, please still sign up as itwill be recorded and you can go back and watch thereplay that I will send you.
Click the image on thescreen or click the link down in the description box so you can get the date and time and claim your spot, which I should note islimited due to the fact that this truly is a live event.
If you have any questions, let me know.
If not, I'll be seeing you soon.