Float
Price Range
My Favorite Strategy (Chapter 7)
Low float
(less than 5 million)
Under $10
Only Momentum (Long)
Medium float
(5-500 million)
$10-$100
All, mostly VWAP and Support or Resistance
Large floats
(+500 million)
Any
(usually +$20)
All, mostly Moving Average and Reversal
Finding Trades
Trades can be found in two ways:
pre-market morning watch list
real time intraday scans
Let me explain how each day I find Alpha Predators for trading.
I use my scanner every morning and program it to find stocks suitable for my day trading based
on the following criteria:
Stocks that in the pre-market gapped up or down at least $1
Stocks that have traded at least 50,000 shares in the pre-market
Stocks that have an average daily volume of over 1 million shares
Stocks that have Average True Range of over 50 cents
There is a fundamental catalyst for the stock
Why these criteria?
When there are some fundamental catalysts, there will be unusual pre-market activity. Stocks
gap up or down before the market opens with a significant number of shares being traded (such
as 50,000 shares). I look for highly traded stocks, so that buying and selling 1,000 shares won’t
be a problem. That is why I am looking at stocks with an average daily volume of over 1 million
shares. I also am looking for stocks that usually move in a good range for trading. That is why I
look at Average True Range (ATR). ATR means how large of a range a stock has on average
every day. If ATR is $1, then you can expect the stock to move around $1 daily. That is a good
number. If you have 1,000 shares, you may profit $1,000 from the trade. But if ATR is only 10
cents, then the trading range is not attractive for me.
Let’s look at an example of how my watch list will form. On August 19, 2016 at 9 a.m. (Eastern
time), my scanner showed these stocks:
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