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You
need a brokerage site that will give you both charts and some way to
manage, review, scan for potential trades. I'll show you the best sites
to use for scanning, and they're free.
Using the Scan Results**
Scanning for
stocks is easy, deciding which to trade is the hard part. There is
plenty of software and/or websites available to you to help find trade
candidates.
What is a scan? It is software or a website searching
thousands of stocks once you've given it specific parameters.
Pretty helpful, unless you like looking at thousands of charts.
MarketWatch
or StockCharts
are very good, as well as
Launch Yahoo! and FinanceStock Screener
Most online brokers and web sites provide their own scanning abilities:
These vary in
sophistication but the purpose of scanning is just too find a stock that
is moving or setting up for a move. In
fact, this type of trading, i.e., when you find a stock this way is
called Bottom Up. This is the opposite
of Top Down where we follow a huge sector
inside the broader economy. In Bottom Up
the stock may be moving independently of sectors, it may be what's
called a 'story stock' in that there is news associated with it.
Try this one for free scanning:
www.stockcharts.com. Pretty good, isn't it?
"Probably the most important thing to keep in mind is that scans find
stocks that are in
potentially
promising positions. As with most forms of
financial analysis, nothing is guaranteed. While a well-designed
scan can filter out lots of stocks in unpromising positions, that
doesn't mean that all of the stocks it does find will be useful to you.
potentially
promising positions.
Here are the steps we recommend you follow in order to get the most out
of scan results:
-
Determine your trading philosophy - Are you looking for short-term
or long-term opportunities? Are you looking for strong stocks that
may get stronger or weaker stocks that may be turning around? Do you
care about the price of the stock? What about average daily volume?
And so on...
-
Understand the scan's indicators - Are the strengths of the
indicators in the scan compatible with your trading philosophy? Are
the time periods used to calculate the results similar to your time
horizons?
-
Review charts of stocks selected by the scan - What percentage of
the stocks selected by the scan have charts that look promising to
you? How many false results were generated?
-
Track the results for several trading periods - How many of the
"promising" stocks actually moved in profitable ways? Would any of
the unprofitable stocks have caused you to lose more than you are
willing to risk in the market? Did the stocks move primarily due to
technical or fundamental factors?
After a while, you will begin to see patterns in the behavior of the
stocks that a particular scan selects. You will develop a sense for the
stocks that may repeat those patterns and that can help you trade or
invest with more confidence. While risk and uncertainty can never
be eliminated, taking the time to become familiar with the results of a
particular scan will usually reduce both."
Manage & Track Markets, Stocks & Options
Your online broker will give you a way of tracking
your trades. But to manage your watchlists, scan for stocks, and
analyze with charts, you need something more:
I
like
www.thinkorwism.com
or
Worden
or
www.interactivebrokers.com
There are endless sources online available for tracking
your trades, your watchlist, and following the markets. The first
thing to be aware of is that tracking your trades, keeping a watch list,
and charting are features that come with most of your online
brokers...it's a matter of degree of detail they provide that makes the
difference. Why do you need to buy expensive software?
You don't.
You
could pay thousands of dollars for some of these software packages.
Some good, some very bad. If it's just profit/loss tracking you
want, your online broker does that for you or you can create your own
spreadsheet.
Market and company data can come from an endless supply of
sites, see the Useful Sites. I
find Yahoo finance and
Google finance incredibly useful.
My point is that software is only a tool.
I can use a handsaw, but in the hands of a master carpenter his product
will somehow look very different from mine. It is NOT software that
determines your trading success.
Although what you will learn is generally for swing
or position trading, if you insist
on day trading be warned:
Risk in Day
Trading
Recommend this site to a friend.
**Source:
stockcharts
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