When I’m talking with family, friends and even some newbie traders about looking at charts to find stocks to trade, they get very confused on how to look at 8,000 charts every day (even more if your looking at pink sheet and OTC stocks). I tell them I don’t. I first create my own “trading universe” before going through the charts.
Using TCnet, I first tell the program I want to look only at stocks priced between $1 and $15 dollars. All of a sudden those 8,000 stocks have been reduced to 3,300. Cut more than half, but still too many. So, I need to check volume. Since my universe is in lower priced stocks, I need to make sure that there is enough volume to get out whenever I want. Getting in is easy no matter what the volume, but if you need to get out in a hurry, low volume stocks can be rough. So I look for stocks that have averaged at least a quarter-million shares a day over the last month. Now my list of 3,300 stocks has been shaved to 872. Approaching manageable but still too many.
Using those 872 stocks, I now scan for particular chart patterns or indicators. I can look for a bullish engulfing candlestick pattern and now I only have 43 charts to look at. If I add stochastics to be in the oversold area, I’ve reduced that to 26 stock charts to review….not bad. Or lets look for bullish harami patterns from the previous day that were confirmed today….only 4 charts to look at. (BIOS FINL PMI BKT in case you wanted to know)
Here’s a neat one….let’s find stocks whose 20 day moving average is greater than the 50ma and the 50ma is greater than the 200ma…uptrending stocks for sure. I came up with 5: MFA AIQ VIV COIN and TIVO
So you see, scanning the stock market looking for charts that you want to trade is neither time consuming nor difficult. There are several stock scanning programs and websites out there. I have to pay for TCnet, but I feel it pays me back more than what I paid for it
If you’d like a copy of my scans, let me know.