Start with using the best tools to help you find the best opportunities, then use my tips to help you make the most of them.
Use Pre-Built Scanners
First things first, let's talk about scanners...
Now, I might be a little biased because I work with StocksToTrade, but our scanners are top-notch, especially those designed by the legendary Tim Sykes himself.
These scanners are pre-built with criteria that work...
They help you filter through the thousands of stocks and narrow them down to a manageable watchlist.
You want your watchlist each morning to only be a handful of stocks that are worth your attention. I'll share three criteria you can focus on shortly…
But the next step to take in premarket is to…
Gauge Market Sentiment
Understanding market sentiment is crucial.
You don't need to be a market expert, but having a basic idea of what the overall market is doing can be a game-changer.
You can follow market indices like the S&P 500 or the SPY ETF, which tracks the S&P 500.
If they're in the green, it often means we're looking at a bullish day.
Keep in mind that around three out of four stocks tend to follow the market's lead.
But because penny stocks can run on their own catalyst or short squeezes, you can often find big gainers even when the market is red.
A safe approach if it's a red day, is to be more cautious with entries and position size on each trade.
Once you have a watchlist and you know what the overall market looks like, you can start to narrow down your criteria to focus on the best stocks…
Look for Breakouts
One of the most significant criteria I want you to focus on is seeking out breakouts. It's as simple as that.
Look for stocks that are hitting multi-week, multi-month, or even multi-year highs.
Why?
Well, it's a strong indicator of a stock's potential. Stocks that break out often continue to do so, especially during bull markets.
Don't waste your time trying to spot undiscovered stocks or take a position in a stock that's stuck in consolidation.
Instead, aim for strong stocks breaking out on volume that aligns with the market's overall trend.
Next, look for…
Former Runners
Remember this: "History doesn't repeat, but it often rhymes."
If you're looking at a stock with a one-year, three-year, or five-year chart, and it has never made significant moves in the past, chances are it won't today.
Instead, look for former runners — stocks that have shown massive moves in the past.
Day traders often remember these stocks, and when they see them in play again, they're eager to jump in…
Because stocks that have run in the past often run again.
So, keep an eye out for those tickers that have run in the past — it could be your ticket to stocks with the most spike potential.
Also…
Focus on Multi-Day Runners
Many traders get excited by big gainers, especially those with intriguing news.
However, a significant number of these stocks are what I call "one and done" charts — they spike and fall on the same day.
While they can be traded, they require speed and precision. For those of us trading from work or with other distractions, they can be challenging.
Instead, look for multi-day runners.
I use a rolling watchlist methodology, where I track stocks over five days. If a stock from the previous day didn't perform well, it's out.
But if it's still trending and holding its highs, it's on today's watch list.
This technique helps me spot confirmation of multi-day moves and is particularly useful for identifying Friday squeezers at the end of the week.
Post a Comment
Post a Comment