How to Trade Stock Alerts
There are so many stock alert services out there today. The first step is choosing one that meets your needs. Be diligent in your research, as this can make or break your success. Some things you will want to focus on are:
- Does the person sending the alerts trade the same kinds of stocks as you (penny stocks, small cap, large cap, etc)?
- How big is the subscriber base? (This can affect how a stock moves on alerts)
- Are there any reviews of the service? (Check out Investimonials and other sites for reviews)
- What were some of their last picks?
- Does the person sending the alerts get paid for their alerts?
- What is the trading style of the person sending the alerts (day trading, swing trading, long term, short selling, etc)?
After asking these questions, you should be able to find a few quality alerts services that fit your trading style. This is just the first step. You cannot just blindly follow alerts or you will get burned. First of all, make sure the alert fits your trading style. Make sure the stock is one that you feel comfortable trading. Do some of your own research, follow your trading rules, and plan an entry and exit accordingly. Know the potential risk and reward. Also, make sure the alert is still relevant.
A service may send an alert for a stock at $3, with plans to sell at $3.50. If you get in at $3.25 and the stock doesn’t move as the promoter planned, you are exposing yourself to unnecessary risk. I’ve noticed that a lot of penny stock alert services will alert a stock at a low point when they have loaded up, and sell after the first surge of buyers. They will later claim that the stock ran xx%-xxx% on their alert, when in reality that opportunity was only available for a few people. Other people may end up losing xx%. You can avoid this by respecting your trading rules. You do not need to play every alert, and you do not need to play the alerts the same way the promoter plans to. Stock alerts should be used alongside your strategy, and not as a replacement.
