Liquidity — what the heck is it and why should it matter to you? Tune in for Tim Bohen’s explanation of this key indicator. Plus, learn why it’s important and which criteria you should look for ... And, of course, find out how to plug it into your scanners and screeners.
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When it comes to trading — day trading especially — you mostly want to look at stocks that trade at least a million shares a day or are projected to trade a million shares a day.
So let’s say you find a stock in pre-market hours ... It’s up big, it has news, and you're interested in it. But there’s a problem: It's only traded a few thousand shares.
It's highly unlikely that this stock will hit your volume forecast of a million shares a day. That million-share mark may sound high, but you want to trade stocks that have the biggest potential to move. Especially if you’re a newer or intermediate trader.
If you have a small account, you wanna grow it, right? But if you're trading illiquid stocks, you can end up in a tough spot — stuck in a trade and losing BIG.
Some days, there are no big movers that hit your liquidity target. That’s OK! That’s a great day to take care of other priorities, focus on your strategies, build your trading plan, or even just take the day off.
So why is liquidity so important? The biggest reason is that liquidity makes stocks move. It's because there are more buyers than sellers. You want that mania. More eyes, more buyers, more traders — all that heightens the potential that the stock will move and maybe even spike.
But if the volume isn’t there to support that spiker, you can end up in a trade that fails. That's why liquidity and volume are so important.
If you're in an illiquid stock, it can be super hard to get out. That’s called slippage. If you have a wide spread on an illiquid stock, you might want to sell on the ask ... but you can't. No bidders are willing to take your offer.
You could be up on this position nicely, but if you can't sell, you have to start dropping your price. That can obliterate your profits. Don’t put yourself in that position!

#StocksToTrade #StockMarket #LiquidStocks

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*Tim Bohen teaches skills others have used to make money. Most who receive free or paid content will make little or no money because they will not apply the skills being taught. Any results displayed may be exceptional. We do not guarantee any outcome regarding your earnings or income as the factors that impact such results are numerous and uncontrollable.
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