During my beginning days as an equity daytrader there were many things I did to get trading ideas which I detailed in a previous blog post here. With almost two decades of real professional trading experience under my belt now, my daily routine on how I scan for stocks to trade has evolved quite a bit.
As subscribers in my chatroom have noticed by now I don't publish watchlists for the next day's trading. Why? Because watchlists change all the time and from experience you usually don't trade what you plan to watch.
I am not saying that preparing for next day's trading is a waste of time. But what I'm saying is that telling other people what you are going to watch tomorrow on Twitter or StockTwits with your 20 symbol watchlist is like me listening to what you are going to do when you win the $500 million lottery jackpot, you won't win so it's a waste of time. I could care less what you are watching because stocks hardly trade the way you envision the next day.
An experienced daytrader only needs to watch the stocks the market gives him that day. How is that possible?: by having custom detailed stock screeners. I cannot stress the importance of using stock filter programs. My screeners provide me 95% of all my day trading alerts and trade ideas. The other 5% are stocks that I have kept an eye on from the previous days. So instead of spending hours looking at charts after the market closes, invest in a stock screener to save you time. Or better yet, simply join MookTrader.com and we will alert you real-time in our chatroom to stocks moving on breaking news and more importantly how we trade them. Before starting the chatroom, I would always be the first or one of the first to alert on Twitter regarding a major intraday pop or drop in a stock. These days I only alert them in my chatroom to my subscribers.
There are many free stock screener websites out there like Finviz from what people have told me and there are third party software providers that offer such services. I would recommend all full-time traders to write their own stock screening filters to have hired eyes watching the entire market for you. The worst trade is not knowing about it because you just weren't alerted to it.
For contrarian and trend traders, I would recommend all to program a DYNAMIC stock filter that spits out stocks making new intraday highs and intraday lows (dynamic meaning it is updated real-time). This is the easiest screener to program and probably the one that provides me the most trading ideas throughout the day. Another great one is finding stocks that make for example 5 consecutive upticks or downticks in a row in less than 10 seconds.
The key to any stock screener is weeding out the garbage that it spits out. Be sure to include volume restrictions such as avoiding stocks that trade only 10,000 shares a day and those that have very small intraday price ranges like 20 or 30 cent ranges. As a daytrader, you do not want to get stuck in thin stocks and ones that usually don't have much intraday price range swings.
Stocks that are moving TODAY are way more important than stocks that moved yesterday. Out with watchlists, In with dynamic stock screeners!
- Hubert Tsai