Certus Trading Review: A Boring But Predictable Stock – Dollar General (DG)
Everyday CNBC is telling us how exciting AMZN is, or how ABC company is about to find a cure for a super virus, or how XYZ startup will take down Google. Sure they are exciting news, but they are impossible to trade because these stocks have already spiked by the time they talk about them on TV or online.
I prefer stocks that are boring but predictable. After all, trading is about making money … we don’t trade for fun, do we? Sorry to be a party pooper 🙂
While most traders have their favorite software search for trending and explosive stocks, I look for stocks that are moving sideways. And because these stocks are not moving much, they are not news worthy to financial networks and therefore attract much less impulsive trading. Often times this makes the stock much more predictable to trade.
Dollar General (DG) has been a VERY boring stock for the past year, meandering between 70 and 80 being stuck in a range. Buying at 70 and selling at 80 has been achieved multiple times this year. Not fun, but profitable. I am ok with that.
Imagine finding 10 to 12 of these boring stocks (there are many more than that) each year and how simple trading can be. And not only is it easy to find these setups, it is also very easy to manage risks for these trades because of their well-defined trading range.
Instead of buying and shorting the stock, options is a very effective way to trade range-bound stocks. The Iron Condor comes to mind for many traders, but most pros use the butterfly spread to trade this kind of opportunities. Watch today’s video (see below) to see how best to trade this setup with the right time frame and strike prices.
Cheers!
Matt Choi CMT
Co-Author: The Winning Way
Certus Trading Review: A Boring But Predictable Stock – Dollar General (DG)
Picking winning stocks doesn’t have to be a daunting task. There are plenty of boring businesses to choose from, and like Matt said, offer a nice change of pace for investors because of their steady and predictable path to growth.
Good advice. I have yet to make a dime out of a “trending” stock. A more stable stock, for instance, is utilities- safer bet and they usually enjoy monopolies in their market area. long-term, you see utilities grow revenues and earnings in the mid-single digit range, yearly.