I know many "experts" are writing on this very subject, but how many of them won one of the prizes last year? My guess is none. Well, except me. I won the very first week of the challenge last year, churning out a solid 73% gain in the week. Here's how you should play this challenge, and it's how I won last year. It's important to note that last year was slightly different; you could go "all-in" on one stock in your portfolio. This year, you cannot put more than 25% of your money in a single stock. This makes it a little bit more difficult, but still not impossible. What many players don't understand about this game is that it has absolutely nothing to do with investing, and everything to do with trading. For those of you who don't understand the difference, let me try to explain. Investing is buying a portion of a company because you believe that it is currently undervalued, based on its prospects in the next few years/decades. Trading, however, has a much shorter time-frame associated with it and it has nothing to do with future prospects. The market is a fickle mistress, and stocks can fluctuate wildly in the short-term. This is what traders look for - volatility. Since the CNBC Million Dollar Portfolio Challenge awards winners based on highest returns in a weeks time, 5 trading days, you cannot possibly win without picking stocks with significant volatility. That's why a trader's frame of mind is how you need to approach this challenge. If you take the investing route, you will lose, because thousands are taking the trading route and one will outperform you. So, how does one look for volatility? To understand the answer to this question, you must understand what creates volatility in a stock. There are two things that create volatility in a stock, but one stands head and shoulders above the other: news. When a stock is listed in the news, whether it's just released earnings, or just had a major development, significant volatility is almost assured. The other, which is somewhat related to news is short interest. To maximize the volatility, stocks should be both all over the news and have a high short interest. This creates a hyper-volatile stock. So how do you find these? Great question. To provide a real-world example, let me discuss the trades I made last year to win the contest. It was the beginning of the subprime debacle and the weaker players were reeling from bad bets. Both New Century and Fremont Mortgage, now shadows of their former selves, were being hammered by investors on Wall Street. It was the hottest topic on the Street, and the volatility was staggering. These were my targets. I alternated going "all-in" between the two during the first few days of the week, and that alone netted around 50% gain. After a solid start, I initiated phase two of my plan. Since I wanted to keep the gains and not bet anymore on either of these, I decided to find volatile stocks, but not quite that volatile. See, the thing with trading is that you can never be sure that your pick will go up. It's nearly all luck. So how do you find stocks that will most certainly be volatile, but not unsafely volatile as New Century and Fremont were? That part requires a bit more work. As I said earlier, volatility is news driven, and there is a list of stocks that are 100% assured to generate news on any given day. That list is the list of companies that report their earnings. You can find it on Yahoo! Finance and other sites. I'm feeling generous, so I'll even provide you with the site you can find this information on (1). These stocks are sure to generate at least some news when they report. It might go up after the news, it might go down. You simply have to rely on luck (unless you are adept at estimating which will do well and which probably won't, as some are). So, get a list of all companies reporting earnings during the week you want to win. Develop a schedule for which you'll buy at the beginning of the week and which you'll buy for each day. What, you didn't think you could win this without some work, did you? To bring this all together, this should be your strategy, in steps: Find ultra-volatile stocks that are heavily covered in the news (for example, bond insurers such as Ambac (ABK (2)), MBI (MBI (3)) etc...) Use these ultra-volatile stocks for the first day or two If you hit it big with any of these, and your portfolio has more than 10% gain after the first two days, proceed to step 4, otherwise just wait until the next week Scan the earnings list and choose your next targets for the remaining days, selecting only stocks that are under $10 per share and fall within the $500 million to $1 billion market capitalization range If you can, choose high profile stocks for step 4, especially if you can find an alternative energy or biotechnology stock - those are especially volatile Buy and pray, rinse and repeat until the week is over If you lose, try it again the next week To have the highest chance of winning, never ever choose more than 4 stocks. Diversification is NOT the name of the game here, remember we're trading. For proof that this strategy works, check out Candadian Solar (CSIQ (4)). It was up nearly 20% today because it is both an alternative energy company, it released earnings today, and it's market capitalization fell within the defined range. That's a recipe for extreme volatility.  Getting back to my prior statement that short interest enhances volatility, if you can find a company with high short interest (CSIQ also filled that requirement, with short interest at nearly 36%), you will do well. Granted it will either skyrocket or fall heavily. Roll the dice. Good luck. (1) http://biz.yahoo.com/research/earncal/today.html (2) /fundamental/fundamental.aspx?stksymbol=abk (3) /fundamental/fundamental.aspx?stksymbol=mbi (4) /fundamental/fundamental.aspx?stksymbol=csiq