Stock Picks, Scans, Sorts Training
Once you have your parameters for picking stocks set, the next step is to create a custom scan in your charting software. (TechniTrader provides scans for our students in each of our courses designed for specific trading styles, which aids our students in learning to trade the market sooner with higher profits.)
Your charting software should have sufficient flexibility to customize it precisely to what you need and want in a scan with additional sorts that can be applied easily to make finding stocks faster. If your charting software doesn’t have such customization, find software that does. The time you save will be worth the cost.
A scan should take thousands of potential stock picks and drill that list down to a much smaller number. This may be 100 charts, or it may be 40. Just remember that if your parameters are set too tight, you will not get sufficient stocks to find the best.
Once you have a smaller list of stocks, picking the stock to trade is dependent upon:
- Using Ideal Buy Entry Signals that are the most reliable entry signals for your trading style AND the Market Conditions present at that time.
- Using a set of indicators that is a complete analysis of the stock price action using all 3 pieces of market data in the indicator analysis. All indicators need to confirm the strength of price AND buyer interest.
- Analyzing your risk. A stock pick may have an excellent Buy Entry signal, but the support level for a stop loss increases the risk factor. This is crucial as oftentimes high-risk stop losses warn you that the stock pick is too speculative and at risk of profit-taking.
- Once you have done the buy signal, indicator, risk, and stop loss analysis, the next step would be deciding which of the stock picks is the lowest risk with the highest profit potential.
Tip: Stock picks are only as strong as the market at that time. Picking stocks that have weaker buyer interest only will increase the risk of whipsaw action on swing, momentum, and day trades.
Stock picks that are strong but the order is sent on a down market day may whipsaw also.
Choosing stock picks is not just about finding a stock to trade; it is also about being aware of the market bias, strength, and conditions for short-term trading.
Best Indicators for Trading Stocks
What are the Best Indicators for Trading Stocks is an excellent question.
First, you need to decide what Trading Style you intend to use, then you can select the best indicators for your trading goals and needs.
The Best Indicators for Swing Trading include:
- Momentum Indicators. These indicators are usually Price and Time indicators that place emphasis on the near-term price action.
- Volume Indicators. Many Swing Traders are taught not to use volume indicators, which is a big mistake. Adding volume indicators to your analysis gives you the analysis of Quality of the price action and Interest. The more quality and interest, the faster the stock will move.
- Volume Oscillators. By switching from price oscillators to volume oscillators, you can improve your success and raise profits immediately. With Dark Pools dominating the pre-momentum price runs, using a volume oscillator shows you when Dark Pools are quietly accumulating before the momentum run. This is a huge advantage since High Frequency Traders (HFTs) do gap stocks often.
- Relational Indicators that reveal whether price is moving faster than volume is rising or the opposite. When volume leads or is rising faster than price, this means a velocity or momentum run is imminent.
- Dark Pool Indicators which reveal where the Giant Institutions are buying or selling. This is very important because their activity is off-exchange and hidden from you without these indicators.
These indicators are the best indicators for swing traders. There are many you can choose from in each category. You will also need to check your charting software to see which indicators you have available. But all of these are usually in the best charting software. Profit improvements will keep you using these indicators, and they are easy to learn to interpret and simple to incorporate into your stock analysis.
The Best Indicators for Day Trading include:
- Accumulation/Distribution/Rotation indicators are a must. Day Traders need to be in a stock before the HFTs drive up price. If you are using the professional-style End of Day (EOD) to First of Day (FOD) day trading strategy, this is even more imperative and will increase profitability with a better entry and exit.
- Volume Bars are essential now for Day Trading. Volume bars show quickly whether the intraday run is gaining or losing momentum and are very easy to use. Volume also shows the HFT volume exhaustion pattern for better exits.
- Price relational indicators which help you recognize exit signals before a stock reverses on the intraday timeframe due to intraday profit-taking by professional traders.
- Range Indicators are also useful for finding compression patterns easily to take advantage of sudden breakout patterns during the trading day.
A combination of these indicators are best for day trading and provide information that will make this fast-paced trading style easier and more enjoyable. By incorporating these indicators into your analysis and charts, patterns will be easier to spot before price suddenly reverses or runs with velocity.