Recently I posted about and talked about channeling RIOT. Channeling a stock can be very tricky and you need to be available to watch it constantly. There is a myriad of things that can come and change what was to be a 100% for certain movement. I do not recommend it for someone who panics easily and is looking for something to put their money and leave it for a few weeks or so. I will cover as briefly as possible what I saw and see in RIOT that helps me to channel it. Hopefully you can take from this and apply it to other stocks you find.
Last fall several my friends all started to trade cryptocurrencies, not just daily, but hourly. They became obsessed almost with finding a way to watch the charts and news and guess when a crypto will drop and pop. And to their credit they did very well and succeeded a lot of the time. By them doing that it led me to look for crypto stocks that follow the same pattern. The first one I found was RIOT. What I saw was a stock that directly follows the path of Bitcoin. Now the movements were larger and more exaggerated but followed Bitcoin none the less.
What I had to do first was figure out what exactly RIOT did. I started with the basic Fidelity quote page and read up on news and insider information and a summary of the company. I took time to view charts for the past few years on RIOT and get a good idea of how it moves. Lastly, I went to the company’s website and read up on the board and founders. Also looked at their views and future guidance. All of this gave me a good idea of what RIOT was and how they make money. It was pretty clear of the relationship with Bitcoin.
Now I started to paper trade. As Bitcoin moved, I would paper trade what I would do and at what price. It became clear to me that I was right an awful lot more than wrong when it came to the direction and movement of RIOT. I was convinced I could channel it properly very quickly. Next, I would start with 70% of what I planned on using as principle (always saving some for lower cost basis later). Wait for the movement I was looking for and then sell my positions and take profit.
I would like to give an example of this to show how much and when. There was one time I bought at 58.20 and it quickly rose to 60 and I quickly sold. That does not sound like a huge return but when you are getting returns like that multiple times a week with different stocks the compound interests add up very quickly. You do not need 10% plus returns on investment every single trade. It is completely okay taking a 1-2% return. The number one reason and this is especially true with channeling is that the stock you are trading can always drop very quickly on you without warning. When attempting to consistently trade a stock within a channel you need to set up alerts and/or stop losses to ensure you are available to exit if you need to.
Always take your time to research and I never go 100% in at first. I leave a portion for a stock to drop further, and I can lower my cost basis. I still love RIOT for channeling you just have to keep an eye on the news about Bitcoin and Bitcoin itself.