Slow Trader

Tag: Low float

  • All we can do is show up daily and wait for the right trades.

    Why be a reactive day trader in uncertain times? Because I thrive on it.

    This is when experience as a reactive day trader really shines.

    Even though my trades last only minutes, understanding the bigger picture is always beneficial.

    To help keep perspective, I recommend Mohamed A. El-Erian’s free Substack for a regular global overview. Each week, he reviews the broader economy and markets.

    Since I trade low float U.S. stocks, I also track major indices like the S&P and monitor IWM in real time, typically on 4-hour and 15-minute charts. IWM covers about 2,000 small-cap U.S. companies.

    I also consider stock fundamentals, such as float size relative to daily volume. But mismatches aren’t always red flags; market context and news matter for interpreting float and volume.

    Ownership structure is a go/no-go. I prefer mostly private shares. If a large institutional or single-name presence exists, I usually avoid the trade.

    For companies with unclear ownership, I only trade after thorough research.

    A company’s work influences me, but this bias isn’t always reliable—I have favourites like biotech, pharma, and AI.

    Still, I assess most opportunities that hit my scanner.

    I consider a company’s location, though I try not to. If I trade a more exotic name, it’s later in the move, with smaller size and shorter hold.

    I now track my location caution in my Tradervue journal to gauge if it’s justified.

    Market sentiment matters. Recently, the IWM hovered near its 200-day moving average, dipped, and retested. For me, that signals scalp-only trades.

    I act reactively: enter as a stock climbs, exit when momentum weakens—before any pullback.

    The market may be bullish, but it is fickle. Few stocks see persistent buying. All we can do is show up daily and wait for the right trades.

  • Why is trading difficult?

    We make trading difficult for ourselves, often by trying too hard. Trading is an odd skill to learn. It’s not like anything we’ve come across before. It really isn’t “The Wolf of Wall Street” stuff. Proper trading—the skills that mark a competent trader and that can generate lots of money come with extended periods of boredom.

    In cold markets, such as most recently, we can sit for nearly a week without a setup to take. But then, one comes along—it’s not perfect, but maybe good enough—and we have to go with it—trade it, let it move, take profit, and enter again and again if the stock has room to run.

    When suitable trades are not available, and we have the presence of mind to sit on the sidelines, watching and waiting for the best part of a week, it is, I think, quite a mature accomplishment. Something I have not managed previously until this week.

    A justified wait, too. When I reviewed each trading period, I was correct to hold; there had been no trades for me. Yes, some weak opportunities showed themselves, and others might have been available for the bigger account. But for me, looking for low float moves with some catalyst, there was nothing of note. Not just stubbornly waiting for “A” grade trades, but “B” grade or, at a pinch, a “C+”.

    The trade that became available at the end of the week was a “B”. At best, a “B” to my eyes, as the stock price already stood at nearly $9. Blue sky above, no resistance of note once price steadied above $9, all the way to $12.50. I gained a few cents on the trade up to the $9 level. Another setup appeared above $9, and a full-dollar trade was taken as the price eventually reached the $12.50 resistance and pulled back quickly.

    Why was it a “B” trade? At nearly $9, the price was a little high for my small account. Between $2 and $5 is ideal. The float was particularly small. A share float of less than 10 million but more than 1 million is about right—this stock had a float of only 500,000 with a wide bid/offer spread. Yes, volume was high, but liquidity was, as expected, reasonably weak. That made the exit a struggle, even as the price shot up.

    So why do we make trading more difficult than it needs to be? Simply because, when the market goes quiet for an extended period, we try to trade something anyway. Inactivity, boredom, and a general feeling that we ought to do something to justify our time. But, of course, when things do move—and it can happen in moments in the low float world—we have to pounce and not hesitate. A difficult balance to learn.

    We make things too difficult because most of us get those two scenarios the wrong way round. We trade when we should be patient, and on the sidelines, and when something does take off, we freeze or over-analyse.