Meme Stock Bounce Strategy – Low Risk Meme Stock Strategy

Meme trading stocks are all about opportunity. If you play them right, you can make a massive amount of money in a short period of time. Play them wrong; however, then you are left holding a big loss.

Most of the time, when you hear about meme stocks, you get the impression that trading them involves high risk. While this could be the case, with the right strategy, you can trade meme stocks the right way with this low-risk strategy we created! It is all about getting in at the right time and getting out with laser-sharp accuracy.

After some testing, we formulated the best trading meme stock that showed the most consistent results.

Before we go into anything at all, we need to clear things up about meme trading.

What are meme stocks?

This type of stock typically skyrockets in price because of interest circulated all around the web. They have gone viral! Most of the time it will come from a popular social media site like Reddit, YouTube, or Twitter. We saw this happen in January 2021 with GameStop (GME) and many other popular stocks like AMC and Blackberry that surged.

This type of trading also attracts younger investors who believe the stock will continue to go up over time. They also refer to holding their shares as “diamond hands,” meaning they will never sell no matter what the price is.

You cannot talk about meme stocks without talking about one of the first to popularize them. On his YouTube channel, Keith Gill, also known as Roaring Kitty, made a massive bet on GME when the price was low and ended up cashing in what some claim was a nearly 20 million dollar.

Meme Trading Stock List

Because of the rapid increase of interest in meme stocks, there are many places to find a list of meme trading stocks. One great source we found is swaggystocks.com 

This site allows you to see what is “trending” currently and the overall sentiment of that particular stock. So if you are looking for the top meme stocks right now, that would be a great source to reference. Finding the most popular meme stocks today will help you target the best meme stocks for our meme stocks bounce strategy.

Meme Trading Stock ETF

Is there a Meme stock ETF? Yes. The ticker is ($BUZZ)

What is $BUZZ ETF? This was launched in March 2021 and it attempts to track public sentiment on blog posts and online news media outlets by using artificial intelligence. It’s actually very interesting and something to keep an eye on to see how these types of stocks are performing over time.

5 of the Best Meme stocks

As stated above, we like to track the current meme stocks with the tool we linked but what are some of the “best” meme stocks?

The 5 best meme stocks are: AMC, GME, CLF, SPCE, and BB. All of these stocks have seen their fair share of massive growth in short period of time which is why we consider these to be the 5 top meme stocks.

Meme stock controversy

There is a lot of controversy with these types of stocks. There have been a few sad stories circulating the web showing people losing it all in hopes that they will hit a massive payday with the meme stock that they invested in. You also will hear the term “short-squeeze” thrown around as well. Without going too much into if you want to learn what a short squeeze is this is a great resource to reference. It is basically a heavily shorted stock that goes up, and the short sellers may have to buy at a higher price to limit their losses.

Are meme stocks a good investment?

Most traditional investors stay away from trading these types of stocks. But when an opportunity presents itself, don’t be afraid to go after it. With the right strategy and the right mindset, you will be able to profit from trading meme stocks the right way.

How to profit from trading meme stocks

This is the big question that many of you would like to know! How can you time it just right to get in and make a profit on these meme stocks? Keep reading because we developed a low-risk strategy for trading meme stocks effectively that we called meme stock bounce strategy!

Many believe that only a fool would trade these stocks. The traditional “meme stock” investor would buy into the hype and hold it hoping that the price will climb rapidly.

For our example today, we will use AMC.

AMC is considered one of the most popular meme stocks.

So this would be a good reference stock to use for new upcoming meme stocks.

Lets get right into the strategy!

Meme Stock Strategy Step #1: Find the meme stock

It is pretty obvious, but you need to find the right meme stock. Find one that already made a huge run. If the meme stock you are looking at is still hitting all-time highs, this is not one you should be looking at for this strategy. This strategy we will be attempting to get in at a much lower price when all the “hype” is gone. This is why we are using AMC as an example. Many of the top five meme stocks we mention above would fine as well.

Like we said, AMC will be on our radar for this strategy. AMC already made a massive move to the upside which is exactly what we want to see.

When you are looking for a meme stock, it has to have had a massive move take place because this is critical for our next step.

 Step #2: Wait for a pull-back to a key level

This step could take a while but it is important to get it right. You might be waiting for days or weeks but find a level you like and wait for the price to hit this.

With this strategy, we are not interested in the hype. Instead, we are interested after all the hype and for the stock to come back down to a reasonable price.

Buying the stock when it recently just surged 50-100% is very dangerous and could leave you holding the stock long terms with a massive loss.

Depending on what broker you use, you can simply set an alert at a price you are looking at.

We use Webull, in this example. Webull is a great trading platform which can trade any meme stock that is out there right now. If you are interested in getting setup on Webull, feel free to click the image below and get setup today! They have get price alert features so this would have been perfect to use for this particular task.

With AMC, we had our alert set at this prior high.

The price came back down and bounced at this level, so this is a great price to look at for an entry.

 Step #3: Take the trade when it hits your level and bounces

Once the price hits your level, now it is time to take the trade if it respects this price.

In this case, AMC bounced hard and moved quickly to the upside.

For our entry here, take a trade on the bounce of the level. We recommend you do not take the trade on the exact day it hits the level. Give it a day or two to see if it will stay at this price or break it and move to the downside. For our entry, we would have got in the next day. We drew an arrow to where we would recommend to get in at.

Keep in mind that we are looking at the daily chart. This is recommend that you use the daily chart to find these previous levels.

Meme Stock Bounce Strategy Step #4: Stop Loss and Take Profit

We recommend placing your stop loss 10% lower than your entry price.

This gives it room to move. However, if it goes below 10%, it most likely will end up continuing its move to the downside, so you don’t want to hold this.

You can set your take profit at +20% from your entry for a 2:1 Risk to reward ratio.

This strategy aims to get in and out of this meme stock quickly with a nice gain.

Once you capture a quick 20% gain, you are not done with that trade.

If the price comes back down to the level and bounces again you take an additional trade and continue to do this as long as it continues to bounce.

So for the next entry, this is where it would be and as of writing this article, we would still be in this trade.

Do not take an additional trade until the Take profit or stop loss it hit on any trade.

So in the case above, we will now hold this trade until either of the criteria are met.

It makes it simple since you will only be in one trade at a time.

This formed a nice double bottom here and if you want to learn more about the importance of double bottoms we have a great strategy here in this article.

The more it respects this level the stronger this support level becomes. Support levels are very important in trading and can be a big difference maker when you learn how to spot them consistently.

Below is a good example of what support and resistance would look like on a chart.

Keep trading the bounce of this support level as long as it keeps bouncing. You may anywhere from 1-4 great entries.

Obviously, trade #3 and #4 are speculative here but as long as it will continue to bounce you keep trading it! Just remember you only have 1 trade on at a time.

Also, risk is very important. Please reference our risk management post of if you want to see the best way to manage your risk.

The reason we love trading meme stocks this way is that we find this has a lot less risk than trading them when they are going up exponentially. When they are doing that, if you were to have a stop loss, you most likely will get taken out quickly due to the stock being so volatile. Since we wait until all the “hype” is gone, it can lead to many profitable gains as traders will always be watching these meme stocks especially when they hit massive support levels.

If you liked this strategy, you will LOVE our Forex Master Trader Community You can learn more about Forex Master Trader here!

We developed this trading community for traders like you! We use our unique trading strategy to find excellent entries and post trades in our live trading room.

Conclusion — Meme Trading

This meme trading stock bounce strategy is a great way to capture quick profits with small risks. We showed you how to find the U.S. meme stocks and how we recommend you trade them. AMC stock is a great example of a meme stock. This is one we will continue to trade with this strategy as long as it continues to surge and falls back down to key levels.

Now it is your chance to try this meme stock strategy out! Trading meme stocks can be exciting, and by following the rules of this meme stock bounce strategy, we think you can hit nice gains with little risk.

If you like the strategy or have questions, feel free to comment below because we love hearing from you.

You may also enjoy reading about our one stock trading strategy.

Thanks for reading!