My Gappers watch list on August 19, 2016 at 9 a.m. EST.
As you can see, I have highlighted the Gap% and Float columns on my watch list. From over
4,000 stocks, I now have only nine candidates. I will go over each of them before the market
opens at 9:30 a.m. I will check the news on each of them to learn why they gapped up or down.
Is there a fundamental catalyst for that stock? Has there been any news coverage or extreme
events for the company?
From these nine, I usually select three or four stocks to watch closely. You cannot watch nine
stocks, and regardless, there are usually no more than two or three good candidates. I watch
them closely on my screen, looking for potential setups. I plan my trades before the market
opens and then wait for the market bell. I then trade my plan.
Real Time Intraday Scans
For some strategies, you cannot find stocks in the pre-market. The Momentum, Top, and
Bottom Reversal Strategies explained in Chapter 7 are the types of strategies applicable for
when a setup suitable for trading happens, and that is usually during trading hours. It is hard to
find these stocks during a pre-market scan watch list. For these strategies, I have specific
scanners that look for these stocks and I will explain these scanners in detail in Chapter 7.
Real Time Volume Radar
During the day, there may be some Alpha Predators in the market that I did not catch in my
morning watch list. Therefore, I have a scanner on my Trade Ideas software (see Chapter 5) that
is set to find real time stocks for me that:
My intraday Volume Radar scanner looking for real time Alpha Predators.
1.
Have gapped up or down at least $1
2. Have ATR of more than 50 cents
3. Have average relative volume of at least 1.5
4. Have average daily trading volume of at least 500,000 shares
These are my requirements for an Alpha Predator. Having ATR of more than 50 cents is
important because you want stock to move during the day so you can make profit out of its
volatility. There is no point in trading a stock that is moving only 5 cents on average in a day.
I will also take a look at the sector of stocks. If I have a few stocks in one sector, there is a good
chance that these stocks are not Alpha Predators. They have high relative volume because their
sector is under heavy trading by institutional traders. It is important to know that stocks usually
trade with their sector. For example, when oil stocks are selling off, almost all of the oil
companies sell off. Therefore, it is important to recognize your real Alpha Predators from the
herd.
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