This is a Guest Post by AK of Fallible
AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.
AK speaks with Tyler of Macro Ops all about the original growth stock strategy he traded markets with. This is a great video for any beginner’s in the market or anyone who is just starting to trade stocks. We cover everything from entries, to risk points, position sizes, and more! Make sure you watch the video above for the full conversation.
They start out talking about how to find initial setups. This is simply done through technical screens. But these screens don’t have to be complicated. The goal is to just find what’s moving. So you can use a very simple screen such as the 50 day new highs list. Once you have that, you can quickly go through them, looking for which ones have broken out of a basing pattern.
Once you find something that meets your technical standards, the next step is to go over the fundamentals. This again doesn’t have to be too complicated. When it comes to growth stocks you obviously want to see growth. The first metric to look at is earnings. AK would just look for double digit growth there. And then that same type of growth should be seen in the revenue. You don’t want to see all the earnings growth coming strictly from cost cutting. Just looking at those two metrics in combination with a technical set up and good trend will put you leagues ahead of others. After this you can continue on to looking into the company for new products, margins, management and other factors. But earnings and revenue growth are normally most important.