Learn how to master day trading by downloading two of Trading EveryDay’s FREE products: Tools of the Trade eBook and a Trading Plan Planner. Dedicated to helping people become profitable traders, Leroy Rushing, a professional day trader, trading coach, and author, is the CEO of Trading EveryDay, a distinguished provider of educational trading products and services.
Stock scanning is a vital tool used by professional traders to find symbols that fit their criteria. There are thousands of programs and resources that scan the stock market based upon investor criteria, locating stocks that fit your trading system. Are you seeking stocks with a price between $5 and $50 with a PEG ratio of .4? A stock scanner will search through piles of data and return with hundreds of names that match the criteria. Why do all the initial searching when automated programs can do it for you?
Stock scanning saves time
Looking through thousands of stocks listed on trading exchanges takes time – when your most valuable resource as a trader is the time you can spend trading rather than searching.
Finding stocks does not make money for you; it’s the trading that does. Planning to use a stock scanner or manual scanning in a trading plan is a good way to lay down the rules for your trading systems.
What to consider when adding stock scanning tips
Consider what kind of trader you are in creating the parameters for your stock scanning. For example, if you find yourself making money shorting stocks and losing on buying, scan only for stocks that have a fundamental problem.
Inherently, when you trade with the market, the odds are in your favor. Creative techniques, such as only selling stocks short if they are largely unprofitable, are a good way to increase your odds. Likewise, buying companies with huge year over year growth makes much more sense than selling the stock at a top. If you flow with the uptrends, downtrends and sideways trends, you’ll produce bigger profits and smaller losses. That’s a combination that can’t be beat.
Trading plan planner
Profitable traders know that a good trading plan planner creates the foundation of successful profits. A trading plan planner will allow you to organize your thoughts and system into one comprehensive trading plan.
Outline your stock scanning tips and proven strategies in a step by step plan. Start with the most simple but also definitive indicator. For example, if only 10% of stocks qualify for a certain criteria, it would be smart to start off the steps with that specific criteria set. Weeding out the bad stocks as quickly as you can will speed up the scanning process and leave you only with quality stocks you would want to hold.
Philosophy of stock scanning
Stock scanning is done to save time and money, while allowing you to place quality trades. It isn’t the number of trades that count, but the quality and what each stock brings to the table. In many respects, stock scanning is the best way to count through thousands of shares and find the best company for your trading plan. When trading plan and quality stocks meet, you’ll become a profitable trader.
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