1 Feb

Small Cap Stocks – How To Beat the Market


The Dow is trending higher today, followed by strong job numbers. In fact, U.S. hiring in January topped all forecasts, with more Americans jumping into the labor market.

Makes for great headlines… but let’s get real. If you want to create your own destiny, it doesn’t get much better than being a stock trader.

The beauty of the stock market is it allows you to get paid your worth. There is no lousy commute, no boss, no corporate politics… or any of that he-said, she-said B.S.

All you have to do is give yourself permission to make money… I’m not kidding.

Last month, I made nearly $200,000 in trading profits. As a former gym teacher, it would have taken me four years of hard work to get that income.

But here’s the thing… Wall Street didn’t find me… I didn’t come from money… nor did I have a rich uncle who got me a job in finance.

I’m just a family man who was tired of being broke and saw the stock market as my way out of the rat race.

And you know what?

Give yourself permission to make money and you’ll be amazed at fast it can grow.  

Now, my trading performance in January was solid. But I assure you, it’s possible for you to achieve similar or even better results.

In fact, some of my former students like Kyle Dennis, have taken the knowledge I’ve taught them and have gone on to raise the bar (He’s been averaging over $1M in trading profits the last four years!)  

As for me, I was able to crush the month of January by doing one thing well– Execute My Game Plan

What does it entail?

I primarily trade three stock chart patterns, while combining catalysts and finding value – which I teach to all Millionaire Roadmap clients. I prefer swing trading (holding onto positions for 1-4 days ideally) penny stocks to make my profits.

Now, that February is here, it’s time to do it all over again. And it starts by setting goals and getting a trading plan.

A Lot of Opportunities in Small Cap Stocks…

How can you hit a target you can’t see?

A lot of traders will just wing it, thinking the market will just hand them money once they get into a trade… well, that’s the wrong mentality.

You see, I was able to nearly double my account size in January just by reviewing my trades and executing my game plan.

That said, let’s look at some of the patterns I focused on for the month of January.

Back in late December into 2019, what worked well was the fish hook pattern.

small cap stocks

Well, if you look at the chart above, the iShares Russell 2000 ETF (IWM) suffered a nasty sell off for four months. However, as shown by the blue curved line that looks like a fish hook, this was when that pattern was prominent – contributing to my ~$194K month in January.

When IWM caught a bounce, the fish hook patterns were out of the picture, but we saw more Fibonacci retracement setups, rockets, and breakouts.

Since I primarily trade small cap stocks, it pays to keep this exchange-traded fund (ETF) up on my screen. You see, I monitor IWM because I trade differently depending on the market environment. When IWM is plummeting, I’ll look for fish hook patterns. On the other hand, when IWM is raging, I’ll look for breakouts or rockets.

For example, here’s a look at a fish hook trade that I want to highlight:

small cap stocks

Now, IWM was already showing signs of a bounce, and Veritone (VERI) was now showing the same pattern. If you look closely at the chart, there was the same fish hook pattern in VERI… I actually nailed that trade (pulling $30K from it).

You see, my patterns are scalable and repeatable, so once I saw it again, I knew I had to press it.

Here’s what I sent out to Millionaire Roadmap members:

small cap stocks

Now, the very next day (no pun intended), I was locking in $14K on the stock.

small cap stocks

The pattern got me into the trade, and the catalyst pushed the stock higher – allowing me to take profits at my target.

Moving on.

Recall, when IWM is raging, I’m looking for breakouts, Fibonacci retracement, and rockets. You see, when the small-cap index is heating up, it tends to spread like wildfire… consequently, we see a lot of the same patterns coming up.

For example, here’s a look at a breakout trade in Blue Apron Holdings (APRN) when IWM was catching a bounce.

small cap stocks

Now, here’s a closer look at the pattern.

small cap stocks

This is an ascending triangle or breakout pattern.

The same deal here, the pattern was what got me into the trade… I’ve seen these setups thousands of times, and chances are there will be bullish catalysts that send the stock higher. All you really need to do is understand the setup.

I’m going to give you a taste of another pattern that I like to use – the Fibonacci retracement (or the rest and retest).

Take a look at the daily chart on China Ceramics Co. (CCCL).

small cap stocks

Well, with the Fibonacci retracement pattern, we typically see the stock double or more, then pull back into a Fibonacci area (in this case it was around the $1.35 level). Thereafter, it tends to retest the highs.

Here’s a look at this pattern more closely.

small cap stocks

You see, once the Fibonacci retracement level held, all I had to do was play a buy order, stop-loss order (pretty simple, if it broke below $1.35), and have a target.

Here’s what happened with that trade:

small cap stocks

Now that I’ve gone through what’s been working, it’s time to set some goals.

February 2019 Goals

In January, one of the biggest proponents that allowed me to nearly DOUBLE my trading account and only have 1 losing day was due to the fact I stuck to what I know.

For February, my goal is to continue with only trading my three patterns, while focusing on catalysts and finding value. That means not trying to do anything fancy or experiment with different asset classes.

I’ll also be focusing on trades in which I have an edge. That means sticking with small cap stocks, as well as penny stocks. As for my profit goals, I’m looking to average around $5K per day. This was the same goal I had for January, and I was really proud of myself for surpassing that.

It’s always great to have goals because you’re able to keep your eyes on the prize.

If you’re looking for some weekend inspiration, make sure to read Making of A Millionaire,  it will get you on the right foot for the month of February.


Submit a Comment

Your email address will not be published. Required fields are marked *

Choose From The Topics Below To Receive Jason Bond’s Market Insights & Alerts:

[adzerk adTypes=”162″ utm_source=”wrbrbwad” utm_medium=”w” utm_campaign=”wadproductweb” utm_term=”JRDE” utm_content=”wwjbpnormsbar_jbp_sidebar” keywords=”jason-bond”]

[adzerk adTypes=”3834″ popup=”true” delay=”3″ cookie=”1″ keywords=”jason-bond”]