Meme Stocks & Momentum Trading

Meme stocks. The biggest influence that has happened to the world of financial trading. So for the very basic. Meme stocks are stocks that have garnered big momentum that stems from message boards like Reddit or social media as a whole (twitter for example). You may have seen this on the news media on how some people have made (and lost) thousands of dollars by using free stock trading applications. There was even a congressional hearing about the company Gamestop and how its stock traded wildly. 

The very basic steps behind meme stocks is momentum based trading. So within these social media outlets, traders from all walks of life come together and discover stocks that maybe are undervalued. And buy it. This monster buying causes some big momentum moves to the upside. A great example is what happened with Gamestop earlier this year. 

People on social media realized this was a stock with a lot of “short interest”...and decided to buy it for various reasons. It caused the stock to pop massively and then of course we all saw it become a dominant news story. 

The key to momentum trading is understanding the “flow” of the market. Especially, in the world of options trading. If you go on shiftsearch.com, you can see the perfect layout of all calls and puts trading on the market as a whole or an individual stock. When it comes to momentum trading or understanding meme stocks. It pays to know the know the pulse of the market. Even better, shiftsearch tells you the dollar amount coming into a stock or the market as a whole. That is also a great indicator of how the consensus is shaping up for a stock. Now the flow is not always correct (otherwise everyone would always win in the stock market and thats not the case). But checking on the flow is a good “pulse indicator” of the market. 

There is even a “meme stock” button on shiftsearch.com. This way all one has to do is click and instantly see the latest trending stocks from social media. And immediately, one can see the pulse of the market. For example, if there are a ton of buyers coming in on the call side (which are designated as blue), one can infer that the consensus is building for a bullish case. The opposite is also true for puts (designated as red). Now this is not a sure fire indicator of the how the stock is going to move …. But again it is a pulse of the market. Just to get a feel for it.