One of the biggest ways to gain a massive return on your investment (ROI) is by positioning yourself before a stock explodes upwards. If done properly then you can double your investment or even more overnight.
The simple secret to finding stocks before they explode is to build a screener that will find unusual volume on low float stocks. This is easier said than done but I am going to show you how to do this perfectly.
By performing this simple trick you will always catch a stock acting in an unusual manner. Then you simply need to figure out why the volume on the stock is different. Once you do that the last step is to figure out what you are going to invest.
I perform this all the time to figure out what is happening and how the market is reacting. This article is going to show you the steps I take to consistently find stocks that gain 100-200%. Once you have perfected this strategy then you can start earning an insane ROI on those huge gains.
Here at ChronoHistoria I teach people how to invest properly to consistently make above average market returns. I regularly publish articles on investment strategies, tips, and stock research so that you can best be prepared to make huge returns.
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Without further ado, let’s jump into The Simple Secret to Finding Stocks Before They Explode.
What is a Screener?
Before we even start to build a scanner we must first define what one is. If you already are familiar with scanners then feel free to skip this section to save time.
A stock market scanner is a program that will scan the entire stock market for a set of user defined variables. You set these variables, and the program will go through each stock to see if that stock is a match.
For example, I can build a screener that will scan the entire market for stocks exhibiting unusual volume outside of their normal 30 day historic volume average. When built properly the computer program will ‘scan’ the entire stock market for stocks where the average 30 day volume is different then the preceding 30 day volume.
The result of this theoretical scanner will show me stocks that are ‘acting weird.’ These weird stocks might be having unusual volume because of an earnings report or any other reason.
How to Build a Screeners
Building a stock scanner is relatively easy. Nowadays you don’t need any complex coding knowledge. This is because there are numerous free tools on the internet.
Some of the free online stock screeners are as follows.
For all of my stock screeners I use Td Ameritrade’s free professional trading platform, Think or Swim. I prefer to use ToS because its intuitive for me but any of the above screeners would be fine for you to learn on. They all show the same stock data.
Source for Think or Swim (Source)
Building The Stock Explosion Screener-Logic Design Phase
Ok, so the first thing we are going to have to do is conceptualize what happens when a stock explodes. We need to think logically here so that we can build our screener program to capture potential stock movers.
So take a second and ask yourself what happens when a stock explodes? Does it happen instantly or does it take time to build up? What are the signs of a potential ‘breakout’ or explosion?
There is no correct answer to these questions, this is because the answers change depending upon the stock. However there are 3 core ‘laws’ of stock explosions.
These 3 laws always come true no matter what. I teach them at the graduate level capital market development classes at Universities. Here they are.
- When a stock explodes, volume will increase exponentially.
- When a stock explodes, implied volatility will explode exponentially.
- When a stock explodes, a percentage of retail traders will FOMO into buying the stock. (FOMO stands for Fear of Missing Out)
Now that you know these three rules of stock explosions we can start to build a stock screener program that will search the stock market for potential explosions.
This phase of the stock screener building process is the most important. You need to think about what parameters you are searching for in the stock market. Once you understand this phase the next step is to build the actual program itself.
Building the Stock Explosion Screener-Program Build Phase
Ok, so we know that there are three laws for predicting stock market explosions. Now we need to build the program to scan the market for these explosions.
Since the core 3 laws of stock explosions revolve around increasing volume on an exploding asset we can build a scanner that will look for the ‘perfect setup.’
For example, if we were building a penny stock screener to find penny stocks before they explode we would need to search for the following four variables.
- Low Float Stock (First law, allows rapid upwards momentum)
- Ask Price between $0.25-$10.00 (Third Law, Retail Traders prefer lower priced stocks)
- A daily gain of at least 4% (Third Law, A high percentage gain will cause retail traders to FOMO)
- Unusual average 30 day volume of at least 25% greater than the preceding 30 day average. (First and Second Law, unusually higher volume will lead to more volatility and higher explosion)
This is what this scanner would look like when done properly.
I went ahead and scanned the U.S market on Saturday the 11th of September,2021. Let’s look more into the top 3 stocks that this scanner program gave back.
5 Example Explosion Stocks From Our Built Screener
The screener that we built in the previous section of this article scanned the entire U.S stock market and gave me 105 companies that have a potential to explode.
Here we are going to be looking at 5 of these companies to figure out if they are worth investing in to make money.
Screener Example Stock 1: $ALID
ALID is a biopharmaceutical company called Allied Corp Company. On September 10th, 2021 ALID announced that they had begun manufacturing of their new FDA approved medicine. As a result they shot up 63% in one day. That’s a huge one day gain that far outstrips the average return of the SPY.
On the far right of the above chart we can see the volume spike, this was a huge increase in volume well above the average 30 day average. However, since their announcement has not changed the underlying value of the ALID itself (they only started manufacturing, this is not a good reason for the 63% increase) I would short this company.
The reason behind this short is because ALID has a history of exploding upwards and then plummeting downwards. If played properly then you can expect to make around a 30-40% gain an investment within a week or two by shorting.
A 30-40% gain in around 2 weeks is pretty good if you ask me. However, shorting is not without its risks. Here if the stock went above $2 I would cover my position. This would result in around a max loss of 10-20% per trade, that is too high for me so I will move on.
Screener Example Stock 2: $ADXS
ADXS is a biotechnology stock. On September 10th, 2021 they announced a better than expected earnings report. This resulted in the company shooting up around 26% off the good news.
Here you can clearly see how retail traders started FOMOing (3rd law) into the stock around 11:00 am (EST) the day after the earnings report. This pushed the stock up to a high of $0.645 a share.
That being said, If I was going to invest in this company then I would short ADXS because I can clearly tell that what is driving this stock is retailer support. Retail support will eventually wade and this stock should come down to the range of $0.45-$0.5 a share.
That would be around a 14% gain I would expect for a week or two. That’s a pretty good ROI in such a short time. The SPY only returns (on average) 10% per year.
Screener Example Stock 3: $FUNFF
Ok, so this is interesting. $FUNFF is a sports betting stock that has announced anything. However, over the past two days the stock has exploded up around 21% for now reason.
Whenever you see this chances are there are insider traders who are trying to get in before a stock jumps up. These stocks are worth putting a little bit of money into just to see what happens.
If you look at the volume in the chart (blue lines) then you can see the most recent trading day had a huge spike in volume for no reason. This is abnormal and indicates something is going on.
I have bought some no name stocks just because of weird volume jumps like this and made 100% gains in a couple of days. Just don’t put too much money into it because of liquidity concerns.
If you buy too many shares you won’t be able to sell fast enough without tanking the stock. Always buy less than 10% of the 30 day average stock volume. (you can find the 30 day average volume for FUNFF here)
Screener Example Stock 4: $IO
$IO stands for Ion Geophysical Corporation and they are in the oil/natural gas extraction sector. On September 10th, 2021 they announced that they are buying out more natural energy reserves.
This directly increased the bottom line price of their stock and as such they shot up 16% within one trading day.
If I had to trade this stock I would buy it as there is a good chance that at some point in the future $IO is going to shoot up and until then it more than likely is going to trend upwards for a bit.
That being said, right now it’s too risky for me to place any large scale trade. However I might just throw a couple hundred dollars into it to see what happens and to see if my underlying investment thesis holds true.
The point is I would have not been able to find this explosion stock without a good screener.
Screener Example Stock 5: $CYRN
Wow, talk about an explosion.
$CYRN is a software company that specializes in providing cybersecurity to big firms. On Thursday (September 8th, 2021) $CYRN announced that they are doubling down on working with Microsoft to provide cyber security for MSFT products.
Whether or not that is true does not matter. What matters is that the screener would have picked up on the unusual volume Thursday. A whole day before the huge explosion you see in the above chart.
Had you invested at the right time off the screener then you would have doubled your money within 48 hours. Talk about a good ROI on your capital.
Does this Work for Other Stocks Besides Penny Stocks?
The answer to this question is yes. The above screener methodology will work for any stock on the stock market. You just simply have to edit the variables a little bit to get what you want.
For example, if I wanted to search the whole market for stocks that are not in the penny stock category I could simply edit the “ask price” variable from $0.25-$10.00 to $20-$300.
One of the top results from the screener then is $ABIT, a bitcoin holding company.
As you can see the screener picked up on this stock before it exploded. If you were looking at this stock on Thursday, September 9th, 2021 then you would have been able to position an investment to gain a huge 66% return.
The screener will work for any priced stock. The most important part is that you remember the 3 laws of exploding stocks. Once you understand them perfectly then you can edit a screener’s parameters/variables to find the stocks you are comfortable with.
If it’s so Simple, Why Doesn’t Everyone Do This?
I have taught stock screeners and other methodologies at the university level. The reason why most people build a scanner is they don’t want to learn how.
Trust me, if you can understand just a little of how the overall stock market works you can edit one of these stock screeners to discover stocks before they explode.
However, most people don’t want to spend the time to learn how to do this because it takes time and effort. You are going to fail a couple times before you hone down this skillset. It’s just like riding a bike or playing a sport. It is going to take time to pick it up, but once you have it the skill stays with you for life.
Spending just an hour a day learning how to invest can net you thousands of dollars a month. At the end of the day however like anything else you get out of it what you put into it.
Here at Chronohistoria I am here to teach others how to generate wealth in the market using repeatable and consistent investment methodologies. If you’re interested I highly suggest you check out some of the other posts.
There you have it, the simple secret to finding stocks before they explode is all in the stock screeners. By understanding the 3 core laws of exploding stocks you can then position a screener to find them before an explosion happens.
Once you understand the methodology and steps that you need to take it becomes simple. Just stick with it and practice and I am sure that before you know it you will be finding stunning potential investments that will net you massive returns.
As always if you like content like this then feel free to subscribe to the free newsletter (top right of the screen) and share around social media. Every share helps me help others, so it’s much appreciated!
Further, you can check out some of the other articles below.
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Until next time, I wish you the best of luck on your investment journey.