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Not missing the boat...as in how to


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Not missing the boat...as in how to

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  #1 (permalink)
TemporarySanity
Philadelphia, PA
 
 
Posts: 7 since Aug 2014
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I'm new to daytrading (obviously) but have been paper trading for quite some time. I've got a good handle on my style, personality, patterns, timing, etc. One thing i cannot figure out is how to spot good stocks to watch prior to the trading day?

I read the news releases, follow big days of earnings and that good stuff. but it still just seems like throwing darts as to whether my watch list has any worthwhile picks on any given day

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  #3 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014


This is a major skill that a day trader needs to learn and it is not easy for a newbie as if you accept any hot tip from chat sites you can be lead down a garden path.

I am not saying that chat sites are not viable I have been on several though I am not a daytrader I have been exposed to them a lot. You rarely get a heads up on those sites....usually they are places where those that can find the plays ahead of the rise, pump their finds so that others join in to raise the price so that the pumpers can bail out.

Not all those posters are bad though...some are pretty good and so If I were inclined I would sit back with a level 2 charting software and see if the plays were good or bad and note the "good guys"

If you don't already have a L2 service...this is not a bad free service

Level2StockQuotes.com - Stock Charts

Another source of tips could be Twitter...but again once you find these people test them out before believing in their pitch.

BEST of all though is to do the digging yourself.

Find stocks that look to be turning around and play them just before their financial quarterly reports come out....
Find Pharmaceutical Bio research stocks that have a drug in for FDA testing...preferably Phase 3 testing and play it BEFORE the results are to be released (the last month before)....
Find stocks that are looking to be in a merger or buyout again before the event...

The above is called....Buy on rumour....Sell on fact ..... during those times there should be a fair bit of action as Investors want in on the potential good news but just as often sell when it is announced. Often when you find a good one you can play its ups/downs for several days.

Remember look for stocks with LOTS of volume....like 1 million shares+ per day....the last thing you want is to get in but cannot sell at the time you want.

I am a chartist and I do have charts that help once you identify prospective companies. I don't know if you believe in charting many daytraders don't so I won't go through it here because it takes a while to explain but I do have a journal (red chart icon in bottom left of this post) and if you ask how to use charting in daytrading...I would be happy to talk about it there.

anyway I hope this helps a little.

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  #4 (permalink)
TemporarySanity
Philadelphia, PA
 
 
Posts: 7 since Aug 2014
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Thanks UEX, i'm definitely more interested in learning how to do it myself instead of relying on rumors, tips, and anyone with motives outside of my best interest. And I have no problem relying heavily on charts and analysis. I just seem to find most of this after the fact, after the move occurred and my play should have happened.

I guess my question is this: Are there tools out there that can help identify stocks in real time based on criteria specific to day traders? Things like avg volume, price, opening gaps, movement outside a predefined range at open, etc. And then possibly even add in factors for earnings announcements and other less numerical indicators?

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  #5 (permalink)
 Underexposed 
Calgary Alberta/Canada
 
 
Posts: 934 since Feb 2014


TemporarySanity View Post
Thanks UEX, i'm definitely more interested in learning how to do it myself instead of relying on rumors, tips, and anyone with motives outside of my best interest. And I have no problem relying heavily on charts and analysis. I just seem to find most of this after the fact, after the move occurred and my play should have happened.

I guess my question is this: Are there tools out there that can help identify stocks in real time based on criteria specific to day traders? Things like avg volume, price, opening gaps, movement outside a predefined range at open, etc. And then possibly even add in factors for earnings announcements and other less numerical indicators?

there may be some sites on some of that stuff but I doubt it would be for free.

If you feel dangerous you can type "Pump and Dump alerts" into google and you will find websites that are devoted to identifying them as stocks to avoid ...

As far as daytrader alerts with limited info on the alert you might try StockTwits at the following address

Day Trading Alerts (AlertTrade) on StockTwits

what I would do is have that Level 2 charting service...or one of your own set up in multiple instances as test an alert in each one (strip off the $)

Here is one example from that list

Blonder Tongue Laboratories [AMEX:BDR] {yuck!!! the name alone is a red flag to me}



it fits the perfect chart profile I have for a pumped stock....zero volume to 5million in a heart beat....must be a great story...it is miles above the upper bollinger band but there may be some life in it for a day trade...I doubt you could short it...but if you could I doubt when it falls you could find shares to cover the short....just saying



Here is the last 2 days trading...looks like all the action is in the morning...but I would not trust this on Monday ...the chart looks definitely bearish at the end of this day....I think the dump will begin Monday.

Another tip I would make is stay away from pumped stocks under $1.... or at least $0.50...the ones below that are risk to the extreme.

that Stocktwits website looks like a decent place.....

I will give you group that you might like...I used to be on the site quite often as a handle "Naamplao". They are on Twitter as shown on the link below.

https://twitter.com/StockGoodies

they were pretty decent guys who helped others out when I did know them.

BUT BEWARE of these alerting services/websites...90% of the time they are PAID for promotion of the company. Usually not in money...they are usually paid in free shares in that company. That gives them incentive to promote the heck out of the companies they tout...both of the above sources I gave are probably paid to do what they do.

So if you are going to play these stocks...don't believe the pitch (any P&D has plausible but unverifiable news) .... don't listen to the pumpers talking one, two, three baggers...if they say they are "backing up the truck to load up"... laugh at they. They are like barkers at a carnival game...they want your money.

If you do play... get in early....get out at the smallest hint of a down turn....repeat with another P&D....these stocks are like roman candles...pretty on the way up...then nothing!!!


BTW: why don't I daytrade???........too much work

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  #6 (permalink)
TemporarySanity
Philadelphia, PA
 
 
Posts: 7 since Aug 2014
Thanks: 2 given, 0 received

Would you say these pumped up stocks make up the majority of what daytraders chase?

All the materials i've read promote sound research and independent decision making. I'm definitely not interested in looking at roman candles all day.

Do the core chart patterns still work? In other words, if I spend all morning identifying 10-20 stocks to watch and then 3-5 of them develop into a strong early pattern, can i still do well trading those patterns?

Or do HFTs et al turn these into fakeouts and traps to a degree that it makes it impossible for the "little guys" to turn any real profits?

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  #7 (permalink)
 Massive l 
Legendary Market Wizard
Portland, OR
 
Experience: None
 
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Posts: 2,012 since Mar 2011
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Everyone is different but I would pick 5 sectors and 4 major stocks from each sector to watch.
Then you wait for your pattern that's showed a positive expectancy over time. Of course,
past results are not indicative of future results but that's a starting point. You continue to mold
your strategy, maybe even change strategies as you learn more about the markets.
Then you don't have to scan through 1000s of stocks. You just watch, wait, and tweak.
I'm not trying to find the home run stock. I just hit base hits, doubles and the occasional triple
over and over. I also strike out but not as often as I get a hit.
The patterns are the same in nearly every sector. Each one is just in a different cycle.
Sometimes there's correlations between sectors where they are in the same/similar cycle
on that time frame. Good luck!

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  #8 (permalink)
TemporarySanity
Philadelphia, PA
 
 
Posts: 7 since Aug 2014
Thanks: 2 given, 0 received

Ah ok, I am typically a singles hitter but most of the reading i've done says to limit losses and swing for the fence when a big juicy meatball shows up. I can see value in accepting smaller gains, and just finding a lot more of them

I can also see how this is going to take a lot of practice and analysis to find the patterns and cycles work for me.

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  #9 (permalink)
 Massive l 
Legendary Market Wizard
Portland, OR
 
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TemporarySanity View Post
Ah ok, I am typically a singles hitter but most of the reading i've done says to limit losses and swing for the fence when a big juicy meatball shows up. I can see value in accepting smaller gains, and just finding a lot more of them

I can also see how this is going to take a lot of practice and analysis to find the patterns and cycles work for me.

By base hits, I mean 1hr - 5 day holds. I'll trade anywhere from 1-6 contracts.
The pattern I look for always looks like a big juicy meatball when it shows up.
Sometimes it goes and sometimes it doesn't. When it doesn't, I exit on the broken
pattern. When it goes, I hold until it reaches my 1st target, where I scale out 1-3 contracts.
So, I'm not accepting smaller gains. These are relatively large gains at nearly 2 x my average loss.
Sometimes, it's much higher and sometimes it's 1:1. I usually only have 1 trade on at a time but
if my pattern shows up in 3 instruments, I'll put all 3 on. I prefer to average less than a trade per
day, albeit I've traded more than that over the years. The longer I trade, the less I trade.

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  #10 (permalink)
wonkietonk
New York, NY
 
 
Posts: 16 since Jun 2013
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You're going to have to figure out your own strategy, lol. That's the bottom line. I do swing trading of small caps, and I still look through charts manually to build a watchlist, which takes me 2-3 hours/week. For day-trading ETFs and futures, I don't need to do that since I just follow the particular index charts.

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