So far, we’ve gone over how to find stocks with news and how to find stocks with EquityFeed. Both of those strategies are intended to be used more for penny stocks. I use this next strategy mostly for NASDAQ’s, however, it can be used for a variety of different stocks.
If you don’t have a stock scanning tool by now, you need one. Stock scanning tools add a whole new dimension to your trading. They let you find the hottest stocks and filter out the junk. I’m sure there are a lot of great scanners out there. I use 2 main ones, and I will discuss them both.
FinViz: The Free Option
FinViz is a completely free stock scanner, so you have no reason not to use it. They have a wide variety of ways you can filter stocks, from fundamental statistics to technical indicators. Don’t let the “free” part deter you – this is a top-notch service. I will mostly use this tool after hours when I don’t feel like using my multi-monitor setup for other scanners.
Mess around with different scans and see what works for you. I don’t have many saved scans for this tool. I like to try different things. The goal is to create filters that align with your strategy. Experiment with different inputs until you get the right outputs.
My favorite part about this tool is that it displays a lot of charts all at once. This makes it easy to go through hundreds of charts and quickly spot the ones you like. Additionally, their technical charts include some trend lines and patterns that may help you spot nice charts faster.
E*TRADE Pro: The Paid Option
E*TRADE Pro Strategy Scanner is my main scanning tool. I use it during market hours and after hours as well. This tool is crucial to the success of my day trading strategies.
I believe that E*TRADE Pro charges $99, however, if you make at least 30 trades/quarter, the software is free.
The strategy scanner module allows you to set criteria for stocks you want to find. You can run real-time scans or scans from previous days.
I have four main scanners setup during trading hours.
This scanner is the most active. It is intended to find hot stocks for scalp trades or breakout plays. A lot of the alerts are useless, but I have a good feel for which ones are the best, and I am constantly refining the scanner’s criteria.
I filter stocks by price, # of trades, dollar volume, and total share volume.
I receive alerts for stocks setting new highs, breaking above or below 20/50/200 day moving averages, forming symmetrical triangles, breaking out of consolidation ranges, forming bullish candlestick patterns, and more.
During the day, I keep an eye on a stock’s relative volume and the number of alerts it has had in order to better assess the quality of the alert quickly.
This scanner tracks increased StockTwits activity for stocks. Remember, stocks are considered “in play” when they have a large audience and high volume. This increased social activity indicates that there is a large audience. You’ll also notice that there is high relative volume for most of these alerts. This scanner is nice because it only delivers a few alerts each day, so I’ll just glance at it a few times each day.
I only filter these stocks by price (under $10)
The only alert is increased StockTwits activity.
Penny Stock Scanner
This is another scanner that only delivers a few alerts each day. I use it to find good penny stocks for swing trades.
I filter stocks by price, dollar volume, and share volume.
I receive alerts for stocks setting new highs or lows, or breaking above the 50 or 200 day moving averages.
Watch List Scanner
I have hundreds of symbols on different watch lists, but I like to keep my main watch list small in order to stay focused. That being said, I don’t want to miss a move on a stock I am familiar with. So, I set up a scanner that scans all of my watchlists and alerts important activity.
I filter stocks by their dollar volume only.
I receive alerts for high relative volume, new highs/lows, and 20/50/200 day moving average crosses.
Scanners are a crucial tool for active traders. They allow you to be aware of what is going on in the market at all times. Additionally, they allow you to find stocks that are moving before other traders do. The point of showing my scans was just to give an idea of what you can do with these tools. When you create scans, they should align with your trading strategy. Otherwise, you will get a bunch of alerts that you can’t act on and the scanner is useless. Creating a good scanner takes time. I refine my scans on a regular basis. The more you use the scanner, the better you understand it. This allows you to filter out bad alerts and better refine your scanner inputs.
If you have any questions, feel free to contact me through the contact page on my site.
Check back tomorrow for the final post in this series, How to Find Stocks Using Social Tools.