What I Look for in a Stock Before Entering a Trade
When I first started trading, I used to jump into stocks based on hype, alerts, or just because they were moving. Most of the time, it ended in a loss. Over time, I learned that the key to trading consistently isn’t just picking the right stocks — it’s knowing what to look for before you click buy.
In this post, I’ll break down exactly what I look for in a stock before I enter a trade, how I make my decisions without complicated indicators, and how this checklist has helped me build a simple system to pay my bills with trading.
If you want to go deeper and learn how I built my pre-market watchlist and trade plan,
👉 Get my full ebook here — it’s the same process I use to stay consistent.
Table of Contents
I Start with Volume
The first thing I check is volume. If there’s no volume, there’s no trade. I want to see unusual volume or at least 1 million shares traded pre-market. That tells me something is happening — and people are watching.
Volume is what fuels momentum. Without it, you’re just stuck in a slow-moving chart with no real interest.
I Look for a Catalyst
Next, I ask: Why is this stock moving? A news catalyst gives me a reason to believe the move has legs. That could be earnings, FDA news, a partnership, or even sector momentum.
If there’s no news, I’m cautious. Random spikes without context often fade just as fast as they appear.
I Check the Float
I like low float stocks because they tend to move faster with volume. But I also make sure they’re not being manipulated or pumped. I check the float size and compare it to the volume — if it’s too thin or already extended, I usually skip it.
My goal is to trade stocks that move clean, not stocks that trap you.
I Identify Key Levels
Before entering any trade, I map out the pre-market high, previous day’s levels, and obvious areas of support and resistance. These levels give me targets, entries, and stop zones. I don’t like guessing — I like structure.
I want the trade to make sense technically, even if I’m not using fancy indicators.
I Watch the Price Range
I usually stay away from stocks that are too expensive. I focus on stocks under $30 — they’re easier to scale into and better for small accounts. The price range also affects how the stock moves. I don’t want something too slow or too wild.
The sweet spot is liquidity + volatility, but in control.
I Use the 6-Stock Rule
This is something I talk about in my ebook. Each morning, I narrow my watchlist down to no more than 6 stocks. That keeps me focused. I don’t want to be scattered across 15 tickers and miss the real move.
This habit changed everything for me. Clarity = better trades.
I Ask Myself: Would I Take This 10 Times?
This is a personal filter I use. If I wouldn’t take this setup 10 times in a row and expect it to work at least 6, I skip it. I only want high-probability trades — not random plays.
That simple question saves me from overtrading and helps me stay consistent.
I Have an Exit Plan Before Entering
Before I hit buy, I already know where I’m cutting it and where I want to sell. This keeps me in control and removes emotion. I don’t trade just to trade — I trade to execute a plan.
I Avoid FOMO Moves
If a stock has already run 50% before I even find it, I stay away. I don’t chase green candles. I want to anticipate, not react. I’d rather wait for the next setup than get trapped buying the top.
I Let the Chart Speak
I don’t use indicators like RSI or MACD. I let price action, volume, and structure guide my trades. If it’s clean, I go for it. If it’s messy, I move on.
This clean approach is what I teach in my ebook because most beginners get lost in too many tools. You don’t need them.
Why This Checklist Works
Trading is not about being right — it’s about being consistent. By using this exact checklist, I’ve been able to find quality trades that actually work. I don’t take 20 trades a week. I take a few strong ones. And they help me pay my bills.
If you want a real plan that shows you how to pick your watchlist, when to trade, and what to avoid,
👉 Grab my ebook here
Another thing I watch is how the stock moves intraday. Some stocks move clean and respect levels. Others are choppy, unpredictable, and full of fakeouts. I like to see a history of clean price action — especially around breakouts or trend lines.
I also like to look at the overall market conditions. If SPY or QQQ is choppy or bearish, I tighten up. I might even sit out for the day. Even the best setups can fail if the market is unstable. I always factor in the bigger picture.
Sometimes I’ll see a stock that checks all the boxes — news, volume, setup — but the spread is wide or liquidity is thin. That’s a red flag. I don’t enter unless I can get in and out quickly with tight execution. I want stocks with good volume and clean fills.
I’ve learned to trust my gut over time. If something feels off — if the move feels forced or if I’m unsure — I pass. One of the biggest lessons I learned is that sitting out is a valid trade. Cash is a position. I don’t need to be in just to feel busy.
I avoid overcrowded trades. If everyone on social media is watching the same ticker, I take a step back. I’m not looking for hype — I’m looking for edge. Too much attention often creates traps and unpredictable moves.
Gaps are another signal I watch. If a stock is gapping up with news and volume, that’s a good sign. But I don’t chase it blindly. I want to see if the stock holds the gap, breaks premarket highs, and creates a clear continuation setup.
Another filter I use is relative strength to the market. If the market is red but a stock is holding green and building higher lows, that shows strength. That’s the kind of behavior I like to see — a stock that moves independent of noise.
I also consider sector momentum. If AI stocks are hot, and one has a catalyst, I’m more confident in that trade. Riding the wave of a trending sector can give me extra conviction. It’s something I talk about in my ebook because beginners often overlook it.
A lot of traders make the mistake of only focusing on entries. I think the exit plan is more important. I always define my risk and reward before entering. I ask: is this worth it? If the answer is no — I skip it.
Some days I find zero setups worth trading. And that’s okay. I’d rather protect my account than force a bad trade. Patience and discipline are the real edge. That mindset took me from random wins to consistent income.
One of the biggest improvements I made was tracking the stocks I didn’t trade. I look back and ask: would this have worked? Why did I pass? This helped me sharpen my edge and recognize patterns I used to miss.