Biotech stocks are becoming an important part of the Nasdaq market with big growth potential. There are good opportunities for traders, although price movements are at sometimes quite wild. Biotechnology stocks are generally used for short-term trading strategies. These stocks can have huge movements in a single day, which makes them excellent stocks for day traders. However, biotechnology stocks also have week trends which make them good vehicle for swing traders.
Active investors who implement analysis techniques could use the biotechnology sector for their investment strategies. Good market research is required for using fundamentals for biotech stock investment strategies. Biotechnology companies tend not generate profits before discovery of some significant issue in the biotechnology area.
Biotech ETF Index Fund
There are two ways to find a list of biotech stocks that can be traded using short term swing and day trading strategies. One can use a list of stocks included in indexes like the Nasdaq biotechnology index and checking the portfolio of any biotechETF. iShares is the most known and popular biotech fund and holds lots of biotech stocks in its portfolio. One can select these popular biotech stocks for your trades or check a list of iShares Nasdaq biotechnology index fund.
Biotech stocks screener
One can good biotechnology sector stock for online trading, is to use some screener like Fin Viz website that could look for these titles. One can set up three major parameters to find liquid biotechnology tickers.
Rules for trading biotech stocks
There are many strategies for trades with biotechnology shares and three common issues are listed below.
Check market situation
Biotechnology stocks are listed on the Nasdaq stock exchange. Therefore, use the Nasdaq composite index to check the situation. Is the market bullish or bearish? Is there a trend or is it moving in a range?
Check Nasdaq biotechnology index
This is an important biotech sector index to use for analysis of the situation in this sector. There are two issues the first one is what is the general situation in this sector. Is it bullish or bearish and define relative strengths of this stock market sector to the Nasdaq composite index chart.
Select biotech stock that complies with selected strategy
You will need to decide what biotechnology stock is suitable for the strategy selected in the previous steps. The idea is to select the strongest stock for a bullish strategy or the weakest for a bearish strategy.