Mike Tyson.
He’s well-known as a fearsome fighter, re-writing records since he was young.
As with every other human (like you and I), he has undergone several dark moments. His tenacity and resilience helped him to rebound and emerge as one of the most fascinating sportsmen.
What can we learn from Mike Tyson?
Discipline, strategy, and frequent self-reflections.
These lessons are highly applicable to stock traders, including you and I.
As I review my previous stock pick, United Airlines (UAL), you’ll discover that practicing trade discipline, having a solid strategy, and frequent reflections are ingredients for success.
Review Of Last Week’s Pick Of The Week
United Airlines (UAL), was my previous stock pick.
It belongs to the Industrials sector and has performed exceptionally well against the S&P 500.
After flying high, I had expected its share price to return to around $73 before rising higher.
This was not to be the case.
Its share price dropped from $80 to $77.30 before soaring into the sky when the Presidential Election result was clear.
Having seen lives destroyed by greed in the stock market, I’d emphasized the need for trade discipline by not chasing its stock in my Telegram Channel.
With this review and reflection portion completed, let’s find out why PayPal’s stock is my pick of the week.
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Why Is Swing Trading PayPal (PYPL) Worth It?
Source: investor.pypl.com/home
Being an online payment platform simplifying commerce experiences, PayPal belongs to the Financials sector.
As we enter the season of increased consumer spending, PayPal stands to be a huge beneficiary.
Its share price has risen by more than 26% in the last 3 months, beating the performance of the S&P 500 by 4.5x!
Here’s the best part.
After a rally of 13.5%, its share price is pulling back, presenting you and I a potential explosive swing trading opportunity.
So, what’s the strategy and game plan?
Continue reading to get the details.
P.S. What if I told you that you could drastically gain control over your emotions of fear and greed, and master the stock market in a short amount of time?
My team and I have worked tirelessly to help you achieve results fast.
Click on the banner below to claim your stock course for free (limited time) now!
Performance Of US Stock Market vs PayPal (PYPL)
Before comparing the performance of the US stock market (ie. S&P 500) against PayPal’s, you’ll want to identify the trend of both.
Can you tell that the S&P 500 is on a mild uptrend while PayPal’s share price is on a strong uptrend?
Because the share price of PayPal is in a strong uptrend, you’ll want to look for buying opportunities.
Furthermore, PayPal’s shares have outperformed the S&P 500 in the past 3 months.
While the S&P 500 rose by a mere 5.7%, the share price of PayPal rose by a staggering 26.2%!
That’s a 4.5x outperformance!
Yes, PayPal’s shares qualify for a deeper analysis.
How Explosive Is PayPal (PYPL)?
Let’s examine whether PayPal’s shares have been explosive enough to maximize your trading capital.
In the past 11 months, its share price has jumped 17 times.
Each of these upmoves measures between 4.7% and 21%!
For a company that enjoys a massive market capitalization of $86b, these upmoves are highly impressive!
Buying its shares for an explosive swing trade is worth your time and money.
In addition, trading the shares of companies with a massive capitalization lowers your exposure to market manipulation, thereby increasing your chances of success.
However, is it the time to buy its shares?
Key Price Levels
How do you know the optimal time to buy the shares of PayPal for an explosive swing trade?
Enter key price levels.
Yes, key price levels act as support and resistance where prices are likely to turn.
After seeing a 13.5% rally, PayPal’s share price is pulling back.
With a support area of around $83, you can reasonably expect its share price to drop to around $83 before rising again.
There are no prizes for guessing where I’ll be waiting to pick up this stock for an explosive swing trade.
Here’s a pro tip: Instead of staring at your screen, you may want to set a price alert on your broker’s platform to be notified so that you can spend precious time with your loved ones.
Which Instrument Should You Consider Using?
Do you ever wonder about the instrument used to trade explosive stocks?
With 3 main trading instruments available – stocks, contract-for-difference (CFD), and options, you wonder which suits you best.
Since stocks (as an instrument) is easy to understand, I shall focus on CFD and options.
Here are the main similarities and differences:
CFD works like a mirror to stocks. When a stock rises $1, its CFD rises $1.
However, due to its unique pricing mechanism, your options price doesn’t rise by the same amount. In fact, the price of your options contract may even drop, depending on the market condition!
Your CFD broker will charge you a finance charge for lending you money for your trade. There’s no lending required for options, hence there’s no finance charge.
Because there’s a finance charge by your CFD broker, CFD is not the ideal instrument for mid to long-term trades. On the other hand, options allow you to implement different strategies across time horizons.
Both CFD and options are leveraged instruments because they allow you to control a larger position in the market with a smaller amount of capital.
While there isn’t an expiration date for CFD, options traders must pay attention to the expiration date of their options contract.
You must be thinking, “What’s the beauty of options trading?”
Options are like smartphones. You can choose to use a smartphone for its basic or advanced functions.
In the same way, you can implement basic and/or highly advanced strategies depending on your level of comfort.
Options allow you to be versatile in adapting to the shifting market conditions and capturing opportunities in the process.
Are you a CFD or options trader?
I’m glad to be fluent in both.
Finally, this is for educational purposes. Please perform your due diligence.
All images are taken from pexels.com, pixabay.com, sectorspdrs.com, tradingview.com, and unsplash.com, unless otherwise mentioned.
Claim Your Free (Limited Time) Stock Course Right Now:
The stock market is full of traps laid out by professional traders.
Many new traders are often left confused by conflicting signs and signals.
Worse still, ~80% of traders lose money.
This is because trading isn’t just about skill alone.
It includes the mastery of your emotions.
But what if I told you that you could quickly gain control over your emotions of fear and greed and master the stock market?
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