Finding Stocks To Trade Shouldn't Be That Hard
Every morning the trader sits down at his computer to begin the
day, and the dilemma faced is always the same - finding a stock
or two or three to make a buck on for that day. This really
shouldn't be that hard, but for some traders it is. Let's see if
we can break it down and maybe make it a little easier.
First let's start with a few basics about your work habits. The
markets open at 9:30 EST, right? WRONG! Trading these days
starts at 7 A.M.! That's the very early morning action. Then you
have what some traders call the official pre-market trading that
starts at 8 A.M. following that is the official market opening
at 9:30 A.M. EST. This means that if you have been sleeping in,
you could be missing some very interesting early morning trades.
However, a word of caution here - pre marketing trading also has
a higher element of risk attached to it because of a lack of
liquidity.
Okay, so now that I have gotten you out of bed, you can start
scanning the pages of Wall-Street Journal, Independent Business
Daily and... WRONG again! Oh sure, you may find a trade or two
in one of these publications, but in all too many cases that
news is going be too old to trade. In addition, the news in
those publications, or the reaction by the stock, is going to
show up in other places.
The first thing you may want to do in the morning is check the
after hours action from the day before. This information can be
found a number of places. I use the NASDAQ home page under the
Extended Hours Trading link found on the left side of the page.
This will give you a list of the stocks that were most active in
after hours for the day before. In most cases these stocks are
moving on news released after the close. These links as well as
others can be found at www.TraderAide.com.
While you are on the NASDAQ page make sure you take note of the
Pre-Market Most Active list. This is going to be another great
source of potential stocks for you to consider. An additional
source on the NASDAQ page is the NASDAQ-100 Pre-Market Heat Map.
This is especially useful right at the beginning and for the
first hour of so after the beginning of the 5 A.M. premarket
trading action. In both cases, after-hours movers and pre-market
movers, the action is usually news related.
An excellent source of this news is MarketWatch. You can find it
in a hundred other locations on the net, but I find the
MarketWatch site easy to use and even more important, easier to
search. It is also less likely to be full of non-trading" news
that you really don't need to trade.
A few of the things you want to be looking for include events on
stocks that take place nearly every day, such as: analyst
up/downgrades; earnings reports' and FDA actions which could
include approval, disapprovals or merely making comments on
application.
I also suggest you watch Bloomberg TV early in the morning,
before the 5 A.M. premarket trading begins. I prefer Bloomberg
to CNBC at this time in the morning because of their
presentation of the futures and the news streamer on the bottom
of the screen. Once the pre market opens I suggest you change
over to CNBC simply because they have, what appears to be, a
much larger audience. On CNBC the stocks reported on or
mentioned are often sent up or down, offering excellent trading
opportunities in many cases.
Once the markets opens, almost all real-time quote systems have
an element built into them that will give you at least the top
ten most active on the three main exchanges, both gainers and
losers. Also, they may have a more advanced "screener" of some
sort. With RealTick by Townsend Analytics, Ltd, it's called
Hottrend Realtime Radar. You can leave this running throughout
the day. Stocks that show unusual volume compared to their
historic volume patterns will show up automatically on the
Radar. It is available for both NASDAQ and NYSE traded stocks.
Check with your supplier to see if this feature, or something
like it, is offered.
Last but not least, you want to be checking your Dow Jones news
feed for the latest breaking news starting at about 6:30 A.M.,
New York time. Sorry "West Coasters, but as the bank robber said
when asked why he robbed banks, "Because that is where the money
is".
Happy trading!
No permission is needed to reproduce an unedited copy of this
article as long the About The Author tag is left in tact and hot
links included. Questions and comments can be sent to Floyd at
floyd@TraderAide.com.
About the author:
Floyd Snyder has been trading and investing in the stock market
for three decades. He was on the forefront of the day trading
craze that swept the nation back in the late 1990's, both as a
trader and as the moderator of one of the Internet's largest
real time trading rooms, http://Daytraders.com. He is the owner
of http://www.TraderAide.com and Strictly Business Magazine at
http://www.sbmag.org
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