Sunday, March 18, 2007

How I prepare for the trading day?

I usually run my scan around 10:00PM using a Ameritrade Analyzer based on the following criteria:

  1. Last price > 5.00
  2. Daily Range Average > 0.75
  3. Average Volume > 350,000
  4. EPS %TTM change > 35%
This criteria should return around 400-600 charts every night. I then sort the result by INDUSTRY so that when I go through each chart, I can get a feel of what sectors are moving and which one are basing.

As I go through each chart, I look for candidates for the following setups:

Price expansion setups - stocks that are currently printing NARROW RANGE cstick, INSIDE cstick etc.

Pullback/Retracement setups - stocks that pulled back to support areas, fib rectracement areas, moving averages

Price Momentum/breakout setups - stocks that are currently in basing, channeling, price pattern forming phase and might move in a day or two.

High volume price actions - stocks that moved with above average volume.

Based on these criteria, I compile a list of stock candidates each night. Some of these would also make my LEADING STOCKS list which consists of stocks that I think are leading the move in the current market cycle. These leading stocks are my top priority for day trading and trend-following because they would tend to be volatile and more liquid than the rest of my compiled list. The stocks that did not make it into the leading stocks ends up in my DAILY LONG/SHORT watchlist.

Here is a screenshot of the Ameritrade Analyzer.


These watchlists are also loaded into prophet.net so that I can easily access these lists from anywhere.

One feature of Prophet.net that I found very usefull is the ability to display all the mini-charts into a single page.


The last part of my preparation is entering the TRADE TRIGGER conditions for the stocks that I want to trade the next day. These triggers generates buy/sell orders when triggered.

After the market closes, I also go through my trades and record them in my journal. Early this year, I started using this blogsite for journaling but due to some unavoidable issues I have decided early this month to go back to my old way of keeping my journal. I am also looking at STOCKTICKR as a possible tool to journal my trades. I hear a lot of good things/review about it from other traders in the blogging community.

18 comments:

Jeff said...

Very good info - thanks for the post with your stock fishing methods

Anonymous said...

This is fantastic stuff thanks a lot for taking the time to prepare this!!!

Anonymous said...

What's a "NARROW RANGE" cstick -- is that just a small candle stick compared to the average candlestick height?

And is an INSIDE cstick just one that is being engulfed by the previous candlestick?

Thanks!

Anonymous said...

i too am a momo trader- you have a very simple and intelligent/logical method for complining your candidates and your money management is textbook. makes me laugh reading your previous post where 'anonymous' was 'educating' you on why zumz was going to bankrupt you. keep up the great posts
paul

Babak said...

the trade trigger, do you mean an alert or do you actually enter the trades automatically?
are you saying that you're going to discontinue this blog? :o(

Anonymous said...

thanks for the step by step MC. I slao use Prohpet and I love those little mini charts. saves a lot of time.

Alex G.

mc said...

@jeff, you're welcome.

@anon, your are both right on those descriptions.

@paul, thanks for your kind words.

@babak, trade trigger will create an actual buy/sell order. I will still post but not in the old format where I have the daily journal.

@Alex G., you're welcome.

Anonymous said...

Hi MC,

If you would kindly share what inputs you put into the trade triggers.

I dont have Ameritrade and just want to get a good idea. Can you give us one good example?

Thank you for your time.

Anonymous said...

trade trigger puts you into the trade but once you're do you track it or use another trade trigger to get out. the problem is you have to choose one side the stop loss or the target upside. which one do you do?

mc said...

@Anon 6:39PM,

I usually just use 'LAST PRICE > 999' or 'VOLUME > ????', and the trigger will create a STOP MARKET order.

@Anon 2:14AM,

I don't put target price for my positions, I just trail it with stops

Anonymous said...

so what % or money amount do you usually trail your stops at? thanks

Anonymous said...

This is impressive that you are able to trade without sitting in front of a bunch of monitors.

If I may ask one personal question, why bother with IT job? IT probably pays pretty well, but it appears that you could make much more money focusing on trading.

Honestly, if I could make it work like you then I would say goodbye to the regular job.

mc said...

Anon 1:41PM,

My stop is based on some chart signals such as breakdown below latest low, trendline, ma

Anon 10:52am,

Working in IT brings out the best in me...and I don't look at it as a job. I'm getting paid very well for doing what I like to do. The office interaction also helps a lot. But I do that long vacations once in a while.

Anonymous said...

Hi MC,

How long would it take you to finish analyzing 400 plus stocks? Do you do this every night? Or you take your best list and that will serve as your watchlist for the week? Thank you for sharing your routine.

RR

Prospectus said...

MC,

Thanks for the post! As a blog author myself, sometimes I wonder if anybody really reads my stuff. Rest assured that your posts are read and studied.

mc said...

@RR, My whole routine usually takes around 2 hours everynight. It used to be longer but I've got better/faster at spotting opportunities after many years of doing it.

@prospectus, thanks for visiting my blogsite. I we can save even just one soul from blowing up his/her lifesavings, then it's worth all the effort. Thanks for your very informative post as well.

Anonymous said...

Hi Mc,

I was attempting to use the MSN stockscreener, but I cant find anywhere to enter in the "average true range" and it only limits me to 200 matches.

I was wondering if there are any other scanners that might work well. What about the prophet.net scanners?

Thank you for your time and response.

Anonymous said...

I just opened an Ameritrade account and was trying to duplicate your screen however I only received 291 results. You mentioned that you got 400 to 600 results normally so perhaps something is wrong with my screen and was wondering if you could verify something for me? When you say "Average Volume > 350,000" do you use "Average Volume 1 Month" or some other time period?

Here is the export from my saved screen, perhaps you can spot what I did wrong? (I had to remove the tags because the blogger comment box didn't allow them)

firstitem="close" oper="gt" secitem="5.00"

| firstitem="hl" oper="gt" secitem="0.75"

| firstitem="vol_ave2" oper="gt" secitem="350000"

| firstitem="epsChg12" oper="gt" secitem="35" |

Also, one more request if you have the time, I was trying to mimic the columns you have displayed for the search results and wasn't able to read the right part of the columns that got cut off -- could you list those columns as well?

Thanks a lot for any help!