Now that you understand the characteristics of the best stocks to put on your watch list, you need to know how to find these stocks. We typically run very simple scans to find the stocks to put on our watch list.
A lot of services out there charge money for their “special scans”. It’s all BS. There are no magic scans that will automatically make you a profitable trader. Scanners and screeners are useful tools, but buying someone else’s scans will not make you money from the stocks you find. We will show you how we run our scans in this article for free:
End of Day Scans
Many of the stocks that you trade the next trading today were “in play” the day before. This is why we always run nightly scans to get a full analysis of all the stocks that made significant moves that day. The type of scans you run will depend on your trading style.
A good basic scan to get you started is what we call a “Liquid Gainers/Losers” scan. You don’t even have to use a paid scanner to run this. All you do is filter by average daily volume and percentage gainers/losers. The change should be +/- 4%, and the average daily volume should be over 500k. It is also useful to filter by stock’s float size and relative volume. As we discussed in yesterday’s article, low float stocks on high relative volume are the most explosive. You can do all of this using Finviz's screener.
This will give you a good 50-100 stocks to sift through from the trading day. You want to run these scans at 8 PM when after-hours trading has concluded.
This is something new traders often miss: You should be running scans twice before the trading day starts. In addition to running scans the night before, you need to do it in pre-market also. Stocks will often have press releases and news come out during pre-market trading.
You can use free sites like https://marketchameleon.com/ or thestockmarketwatch.com to see a list of stocks gapping up and down during pre-market trading (you can use them for after-hours scans also). All you have to do is select the pre-market tab on those sites and you will see most (not all) of the stocks gapping up and down during pre-market.
Paid vs Free Scanners
Do you need to pay for a scanner? If you are an active day trader, the answer is definitely yes. Free scanners like Finviz are great, but they have delayed quotes so you will often not find big movers fast enough to get in early in the move before it turns into a chase. Trade ideas is a paid scanner that when configured correctly will alert you to stocks making big moves intraday. If you’re interested in getting our ideas for our Trade-Ideas scans, check out this article here.
Good Scans Do Not Mean You Will Make Money
Many new traders believe that stock scanners are the secret sauce to successful trading. The reality is just one of many different components of a successful trader’s strategy. It is important, but it does not mean you will make money from the stocks that come from your scanner. You actually need to learn how to evaluate and TRADE the stock correctly.
Now that you know how to run scans to find the best stocks to trade, you need to know how to narrow down what your scans spit out. You cannot have 50-100 tickers on your watch list. You will likely miss a big mover because you are watching too many names. In tomorrow’s article, we will talk about how to narrow down to make your watch list successful.
Free Live Workshop
We are doing a free webinar on Sunday, March 31st to show you step-by-step how to build your own trading watch list before every trading day. You will get see exactly the process I use to make my trading watch list every day, and get actionable advice about how to build a successful watch list yourself.