Last week was another fine week in the world of micro-caps. I have been reading on various forums for some time now that AIM is dead and the days of making large returns on micro-caps is over, never to return.
As a full-time trader, I think that is a load of old hogwash. The data doesn’t lie, there have been a plethora of companies making gains of over 50% this year, whether that’s been bouncing off of lows or breaking out to new highs. The folk who are complaining are either not looking in the right place or they’re stuck in long term plays and not taking advantage of these big movers.
Back in October, the FTSE AIM All-Share double-bottomed on the Daily chart at 852. Since then it has steadily risen, breaking resistance at 888, and today sits at 895. This is still some way off the year’s high of 974, but with Christmas and the infamous Santa rally fast approaching, there is plenty of life in the junior market should you be willing to look for it.
You can’t be in all the hot plays at the same time, but in my opinion, you should be in at least some of them if you want to make a regular income from trading micro caps. All too often I read folk complaining about the manipulation and the hype, hence they avoid certain companies which certain traders are pushing on social media.
My opinion is, don’t waste energy hating it, focus on profiting from it, we are all here to make money after all. You may think that is somewhat controversial, but as long as I am not the one being paid to promote these micro caps, then I will continue to sleep easy at night.
I trade from two accounts, an ISA which I use for short-term plays and to fund my Tinder lifestyle, and a SIPP which I use for longer-term plays and to fund my early retirement (i.e. when certain things have fallen off and dating apps are no longer of any use to me). For the purpose of this blog, I will be focusing on short-term opportunities, shares that is, not dating apps.
With that in mind, last week’s movers and shakers produced some fantastic returns for those who spotted the opportunities early enough. If none of these companies hit your radar, or you aren’t profitable and you’re stuck in a rut, then maybe it’s time to revisit your strategy and work out a new plan of action. As a trader I am always trying to educate myself, refine my skills, and ultimately stay away from that boring 9-5 job which I left four years ago. Trading the hot plays certainly helps with that.
Inspirit Energy Holdings plc +700%
Inspirit Energy Holdings plc (Ticker: INSP) is engaged in developing and commercialising the micro combined heat and power (mCHP) boiler for commercial applications.
This week its share price soared from 0.035p to a peak of 0.28p, a whopping 700% increase, following an update on a new product application.
Volume speaks volume, and the below chart shows a clear break-out from its 3-month average of 31m (173m volume on Wednesday, 59m on Thursday and 837m on Friday). This is one of the major indicators I screen for when selecting a short-term trade…a breakout in volume.
The below candlestick chart also shows a clear breakout. Recent resistance of 0.043p was smashed past on Wednesday and longer-term resistance of 0.069p on Thursday. Major Support and Resistance levels are fundamental when I calculate my Risk/Reward and my Entry/Exit levels.
Well done to all traders who played this one.
Author: Tosh Lines
I am a full-time trader who focuses on micro-caps, a freelance writer, and when I am not staring at the screens I am most likely climbing 3 mountains in 1 day for charity
Tosh Lines has not been paid to produce this article by the company or companies mentioned above. A donation has instead been made on his behalf to charity.
This article is for educational purposes only. Information contained within this article does not constitute any form of advice or recommendation and is not intended to be relied upon by readers for investment decision-making purposes.
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