There are hundreds of great trading opportunities every day. The role of a trader is to filter through the noise of the markets and narrow in on the best setups. This may feel like trying to find a needle in a haystack, but the process is painless once you know how to start. We’re going to show you exactly how you can start uncovering golden trading opportunities by harnessing the power of advanced market scanners.

Every good scan starts with the proper scanning criteria. There is no “one-size-fits-all” scan, as all traders have different styles and strategies. That said, once you understand which filters are available and how they work, you can begin creating a scan that works for you.

If you are brand new to the scanning process, review this post first so you can get a better understanding of the scanning process.

In this post, we are going to discuss some unique scanning filters that can help you consistently find great trade setups.

Dollar Volume

First things first, it’s important to understand the concept of volume. Volume refers to the amount of shares traded in a particular time period. The dollar volume metric takes this a step further by accounting for a stock’s price. To calculate a stock’s dollar volume, simply multiply the volume by the stock price.

The dollar volume filter is powerful because it can help equalize stocks across a broad price range. For example, if you simply scanned for stocks under $50 with 1,000,000 in volume, you would get a wide range of results. A stock trading 1,000,000 in share volume at $1 per share would only be trading $1,000,000 dollar volume, which isn’t too significant. A stock trading 1,000,000 in share volume at $50 a share would be trading $50,000,000 dollar volume, which is far more significant. In this particular example, you could remove your 1,000,000 volume filter and replace it with a $10,000,000 dollar volume filter. This will allow you to find better trading candidates.

Number of Trades

Liquidity is one of the most important components of day trading. Liquidity can be defined as the ease with which you can get in and out of positions in an equity. This is particularly important for momentum traders and scalpers who rely on precise entries and exits.

The “number of trades” filter helps traders measure the liquidity of a stock. This metric calculates the number of buy and sell orders for a given time period. Once again, this can be far more powerful than a simple volume indicator. For example, a stock may have traded 1,000,000 shares, of which 400,000 came from four block trades. In this aspect, the volume indicator can be misleading. Contrarily, the “number of trades” metric would help you gauge the true interest in a stock.

Moving Averages

Moving averages are used to smooth a stock’s price action by calculating the average closing prices of a stock over a given period. For example, the 50-period simple moving average would take the sum of the past 50 closing prices and divide it by 50.

Moving averages can be great when you want to account for the trend of a stock. Unfortunately, there is no simple way to scan for a stock that is in an uptrend. That said, you can incorporate moving averages into your scans. For example, if you were looking for a short-term uptrend, you may look for stocks trading above their 10-day moving average. If you were looking for a longer term uptrend, you may look for stocks trading above their 50 and 200-day moving averages.

Moving averages can be particularly beneficial for swing traders who plan to hold their positions for long periods of time. They can also be beneficial for traders who are interested in trading reversals.

Average Volume

Traders always want to follow the action. In the market, “action” can be quantified by measuring volatility and liquidity. Simply put, traders want to find stocks making big moves that they can get in and out of with ease.

Average volume can be a great comparative metric when looking for breakout stocks. When a stock experiences higher levels of volatility, it is usually fueled by above average volume. You can incorporate average volume filters into your scan to find stocks making big moves. For example, you may look for stocks with daily volume that is at least 50% higher than the 60-day average trading volume. These filters will generally help you find stocks with higher volatility and liquidity, making for prime trading opportunities.

Day Highs and Lows

One of the challenging parts about creating a good scan is finding a way to quantify what you are looking for. For example, most traders would love to catch breakouts before they happen, but there is no “easy button” that uncovers these setups. That said, if you get clever with your scans, you can have a big advantage in trading.

Incorporating day highs and day lows into your scanning process can help you find stocks that are breaking out or breaking down. For example, if you want to find shorter-term breakouts, you may look for stocks that are trading above or below their 30-day highs by 1% or less.

Average Daily Range

The average daily range is a great metric for measuring volatility. Traders want to find stocks that have a broad price range, making for more trading opportunities. For example, if a stock is stuck in a $0.10 range every day, it would be difficult to place profitable trades (without large sums of money). That said, a stock trading in a $5 daily range would provide plenty of opportunities.

The daily range is calculated by taking the difference between the stock’s daily high and daily low. If you are measuring this data over a period of time, you would add up these daily ranges and divide them by the time period.

Here’s an example:

If we were to calculate the 3-day average daily range, it would be $4 ((5+4+3)/3).

A $4 range on a stock price in the mid/high $20 range would provide plenty of great intraday trading opportunities.

Float

A stock’s float is defined as the number of shares available for trading. This is one of the few fundamental indicators that can have a significant impact on technical trading. Low float stocks are generally more volatile because they require less share volume to make big moves. It’s not uncommon to see a low float stock run a few hundred percent in a few days.

The supply on these stocks is lower, so any buying pressure (demand) can push the stock much higher.

While a stock’s float is not a great standalone indicator, it can be combined with other indicators to find prime trading setups. For example, you may look for stocks under $10 that are up 20% or more with a float of 10,000,000 or less.

Short Percent of Float

We just discussed how the float is the number of shares available for trading. The short percent of float measures how many of those shares are held by short sellers. Stocks with high percentage of short sellers can be prone to a short squeeze. This occurs when a bunch of short sellers all cover their positions in a close time period.

Similar to the float metric, the short % of float should be used alongside other indicators. When using this indicator, you want to find stocks that are prone to an upcoming short squeeze. You may do this by looking for stocks that are breaking above their 10-day high with 20% or more of the float short.

Conclusion

There’s an endless amount of different filters and filter combinations you can use when creating your scans. Think of these filters as tools in your toolkit. The goal isn’t to use as many filters as possible. Just like tools in a toolkit, you want to understand how each of these filters works so you can use them at an appropriate time. Choose a goal for your scans and use your filters to help you find better trading opportunities.

If you want to be a successful day trader, you need to trade the right stocks at the right time. Every day, there are thousands of stocks being traded, but only a few that are worth your attention. Your goal is to follow the action and find stocks that are exceptionally volatile. Day traders and swing traders aim to spot momentum before it happens. One of the best ways to do this is by using stock scanners to find specific chart patterns that will lead to the best trading opportunities.

In EquityFeed, you can use the “Filter Builder” module to input a variety of criteria, including price, volume, and technical data. These inputs can be used to filter through thousands of stocks so you can focus on the best trading opportunities.

We’ll be discussing a few Filter Builder settings to get you started. Keep in mind that scanning is just the first step – you still need to review each stock before formulating a game plan.

If you want to follow along, feel free to start your 14-day free trial of EquityFeed.

The first step towards any successful trade is finding the RIGHT stock to trade. Your goal is to focus solely on the stocks that provide the best trading opportunities. In order to do this, you need to wade your way through a sea of thousands of stocks. While this may seem like a substantial task, it’s actually quite simple if you’re familiar with the process. That’s where we come in.

Tools like EquityFeed are designed to help you find the right stocks at the right times. Managing your trades is still up to you, but we’re here to give you a head start on other traders.

So, how exactly do you find the best stocks to trade? First things first, you need to define your goals.

What are you looking for?

Defining your trading strategy is another topic for another day. That said, before you find the best stocks to trade, you need to know what you are looking for. This will ensure that your trading tools are customized to your personal needs. Your goal is to find trading setups that fit your trading style. For example, if you swing trade breakouts, you may want to find stocks setting new 30-day highs. If you trade momentum, you may want to find the most active stocks.

A few considerations include:

• What price stocks are you looking to trade?
• Are you looking for bullish or bearish setups?
• Are you planning to swing trade or day trade?

The list goes on and on. For now, create some broad specifications. You can always return later to narrow your focus.

EquityFeed Market View

EquityFeed Market View is an incredibly powerful tool that gives you a bird’s eye view of the entire stock market. You can choose which markets you’d like to analyze and filter the stocks using a variety of criteria.

Market View is best for generating broad trading ideas and getting a better understanding of the day’s trading environment. You can see which stocks have the most volume, the most trades, the biggest percent changes, etc. This is particularly beneficial for intraday traders who want to be where the action is.

For example, on June 20, 2017, there were only 6 OTC stocks priced under $0.10/share with over $500,000 trading volume. If you were interested in these types of stocks, you could narrow your focus from an entire market down to 6 stocks.

Here are a few ways to make the most of the Market View module.

Market View Pro Tips

Sorting Penny Stocks – When searching for penny stocks (or cheaper stocks), sort the Market View module by “$ Volume.”

Sorting Momentum Stocks – When looking for momentum plays, sort the Market View module by “Trades.”

News – Pay attention to stocks with news. News catalysts can help fuel a stock’s volatility.

Understand the Phase of the Move – Compare the “% Chg 5 Day” column to the “% Chg” column to see which phase of the move a stock is in. For example, if the “% Chg 5 Day” is +300% and the “% Chg” is -30%, the stock is probably in the backside of the move.

Use Filters Sparingly – In the Market View module, you are better off sorting stocks by column than filtering them. For example, you don’t need to filter stocks based on volume if you are going to use the “$ Volume” column to sort the stocks.

Market View Video Guide

Trading Alerts

The Trading Alerts module is one of the most powerful tools for intraday traders. This tool gives traders intraday alerts when stocks are making significant moves. Unlike other intraday scanners, EquityFeed’s Trading Alerts module is incredibly easy to set up and focuses solely on actionable trading alerts.

To get started, select a few stock filters (i.e. price, # of trades, etc.) and choose which types of alerts you’d like to receive. Alerts are color-coded so they are easily recognizable during the trading day. Here are some of the alerts you can set up:

• New Highs (Intraday, 5 Day, 10 Day, 20 Day, 40 Days, 26, Days, 52 Weeks)
• New Lows (Intraday, 5 Day, 10 Day, 20 Day, 40 Days, 26, Days, 52 Weeks)
• Price Breakouts (5, 10, 15, 20, 30, or 60 days)
• Volume Breakouts (5, 10, 15, 20, 30, or 60 days)
• Block Trades

These alerts will be streamed in real-time during the trading day. You can also run the scanner after hours to tweak your filters or find stocks to trade the next day.

Trading Alerts Pro Tips

Balance Your Filters – You want to be alerted to significant moves, but you don’t want to overwhelm yourself with alerts.

Avoid Redundant Alerts – Clean up your alerts feed by eliminating similar alerts. For example, a 5-Day Avg. volume breakout and 10-Day Avg. volume breakout may be similar. Eliminate whichever one is delivering lower quality alerts.

Eliminate Irrelevant Alerts – You only want alerts that actually help you generate trade ideas. For example, if block trades don’t affect your trading style, there’s no need to be alerted about them. Keep your alerts relevant to your personal trading style.

Scan Your Watch Lists – Use the Trading Alerts module to scan your watch lists. This can help you keep identify significant moves in stocks that you follow. You can take this a step further by creating special watch lists just for the Trading Alerts window. You can sort these watch lists by sector, stock type, etc.

Use Multiple Windows – You can have multiple trading alerts windows open at once. Consider segmenting your alerts by market, stock price, trading style, etc.

Keep Track of Stocks with Multiple Alerts – Add the “Count” column. This will tell you how many alerts a stock has triggered. Pay close attention to stocks with a higher amount of alerts.

Trading Alerts Video

News Streamer

Stocks can experience higher volatility when there is a catalyst in the mix. Often times, this catalyst comes in the form of a press release, SEC filing, or promotion. The EquityFeed News Streamer will alert you to these potential catalysts in real-time.

You can filter news results by markets, stock prices, stock volume, and more. This allows you to find news from stocks that are relevant to your trading style.

The News Streamer is straightforward and easy to use. Simply specify a few filters and the scanner will do the rest for you.

News Streamer Pro Tips:

Use Filters Sparingly – Avoid “over-filtering” stocks. For example, if you filter out stocks with less than 100 trades, you may filter out news that can bring in more volume. Remember, the right catalyst can bring more volume to a stock.

Keep it Relevant – Only stream news types that are relevant to your trading style. If you don’t read through filings, you don’t need real-time alerts for them. Similarly, if you don’t understand the implications of NASDAQ news, avoid scanning that market.

Check a Company’s History – See how a stock reacts to previous news. Here’s how:

1. Click on the ticker to open the Chart Montage window.
2. Load the news for the past month and select “News on Chart.”

First, it will show you how a stock reacts to news. You may find that the market shows no interest in news surrounding a particular stock. Secondly, it helps you gauge the significance of the news. For example, you may get a news alert for a company that is expecting to close a $100 million deal, yet the stock isn’t moving. If you check on the stock’s previous news, you may find that the company has been talking about this deal for months without any follow through.

News Streamer Video

Filter Builder

Filter Builder is by far the most powerful scanning tool within the EquityFeed platform. Filter Builder allows you to create scans using almost any filter you can think of. You can include price data, volume data, technical indicators, fundamentals, and more.

The Filter Builder can be used both intraday and after market hours. Intraday scans help you find momentum trading candidates, whereas after hours scans help you build a watch list.

The main benefit of the Filter Builder is that it allows you to find stocks that fit your own personal trading strategy.

Here are some examples of scans you can set up using the Filter Builder:

• Stock breaking out above their 52-week highs
• Stocks crossing over their 200-Day moving averages
• Stocks trading above VWAP with above average volume
• Stocks up over 10% on the day with over 1000 trades
• Stocks reversing out of a long-term downtrend
• Stocks going red after a multi-day price run

The list is endless. Decide what types of stocks you are looking to trade and start building your filter! You can get some tips on building a great scan with the Filter Builder over here.

Filter Builder Pro Tips

Focus on Relevant Filters – Don’t add filters for the sake of adding filters. Focus on filters that are actually relevant to your scan. For example, if a stock’s 5-day avg. volume isn’t important, don’t include it. This seems like a simple concept, but many traders muddy up their scanning criteria by getting too specific.

Get Creative – Certain scans are easy to build while others require some creative thinking. For example, if you wanted to find a stock that is coming out of a short term downtrend, there’s not a simple “reversal” criteria you can use. Instead, you may look for stock’s breaking above their 5-day high with a 10-day moving average that is higher than the 50-day moving average.

Create Multiple Scans – One scan isn’t enough to find all of the top trading setups. If you value simplicity, you may prefer using the Trading Alerts module. If you want to find different types of hidden gems in the stock market, you may need to create multiple scans. Each scan should have a basic goal. For example, one scan may be used to find 52-week price breakouts while another may be used to find parabolic moves.

Use Preset Filters – If you are looking for a quick scanning option, consider using the preset filters available in the Filter Builder.

Incorporate News Into Your Scans – We mentioned above that news can act as a catalyst that fuels higher volatility. Why not incorporate this into your scans? The Filter Builder allows you to scan for stocks that had news during the day or during the past 3 days. For example, you could look for stocks that are up over 10% on the day with news.

Filter Builder Video

A great scanner is one of the most powerful tools in a trader’s toolkit. Scanners help traders filter through the noise of the markets and find the best trading opportunities. Of course, a scanner is only as valuable as the filters inputted. So, how do you create a great scanner?

When you’re getting started, it can be overwhelming to build a scanner from scratch. There are hundreds of different filters you can use and you want to make sure you you’re able to find the best trading opportunities. One of the most efficient ways to build a scan that delivers the results you want is to reverse engineer the process.

“Reverse engineer? Do I need to be a scientist for this?” Don’t worry – you can put your lab coat away. This process is simpler than it sounds. When you reverse engineer the scanning process, you simply analyze your favorite trading setups and build a scanner to find similar setups.

For example, let’s say you place a profitable trade on a stock that was breaking out above its 52-week high. Naturally, you’d want to find more stocks that are about to break out above their 52-week highs. The best way to find these stocks is by creating a scan.

This process is best explained by example.

Step 1: Find Your Ideal Chart Setup

Before we look for stocks to trade, we need to know what we are looking for. If you have an ideal setup in mind, start there. If you’re unsure about which setups you’d like to find, you can analyze your recent trades and see which ones were most profitable.

For this tutorial, we will look at $HMNY. The stock closed at $2.45/share on May 22, 2017 and opened at $4.40 on May 23, 2017. From there, it grinded back down to it’s previous range ($2.50’s), making for a great short opportunity.

Of course, you don’t want to find stocks like $HMNY once the move is already over; you want to catch them when they are still hot. So, we will be looking for stocks that gap up and close red. Let’s get started.

Step 2: Analyze the Chart

In this step, we will work on creating the filters we need to create a quality scan. We want to focus on relevant data that makes this setup unique.

Here are some considerations:

• Price
• Volume
• % Gain/Loss
• Trend

Remember, you only want to focus on relevant filters. For example, $HMNY is well below its 52-week high, but that’s not very significant in this situation. Contrarily, the fact that $HMNY gapped up from it’s previous close is very significant.

Step 2: Build Your Scan

Building a scan to find similar setups will require some trial and error. We will tweak and optimize our filters to ensure we get the results we want.

First things first, let’s account for the stock’s price range. On the day of the move, $HMNY was priced in the $4-$5 range. We’ll expand the price range a bit and look for stocks under $15 and above $0.10 (to filter out penny stocks).

Filters:

• Last Price is less than $15 and greater than $0.10

We also want to account for the liquidity of the stock. In our example, $HMNY traded 27 million shares. Moves of this magnitude don’t happen everyday, so we will set the volume restriction a bit lower while still accounting for liquidity.

Filters:

• Day’s Volume is greater than 1,000,000 shares

Next, we want to create a filter to find stocks that have gapped up. We will also specify that we want the gap to be at least 5% to ensure that we find significant gaps.

Filters:

• Day Open is greater than Previous Day’s Close by at least 5%

Now, we have a list of stocks in our price range that gapped up with significant trading volume. Because we are looking for short opportunities, we want to isolate the stocks that gapped up but closed red on the day. The red close indicates weakness, making for a better short opportunity. We are also going to add a filter to remove results where the gap has already filled.

Filters:

• Last Price is less than Day’s Open.
• Last Price is greater than Previous Day’s Close

Let’s save this scan as “Gap Up/Close Red” and run it so we can analyze the results.

Step 3: Analyze the Results

It’s important to note that the goal of creating this scan is NOT to get tons of results. We don’t want to have to comb through 50+ charts. Instead, we want to focus on finding the most relevant chart setups that will provide great trading opportunities in the coming days.

In this case, we are looking for stocks that gapped up but closed red. If we find any stocks that do not meet those criteria, we need to go back and adjust our filters.

Our “Gap Up/Close Red” scan returned 3 stocks that met our criteria. Now, we will check the charts to make sure we found what we were looking for.

EGLT – Gapped from $2.35 to $3.19 before closing at $2.76

NIHD – Gapped from $0.65 to $1.07 before closing at $0.85

CBRIQ – Gapped from $0.099 to $0.135 before closing at $0.133

We can see that EGLT and NIHD are both perfect matches. CBRIQ fits all of our criteria but the red close is not very significant. If we wanted to filter out this result, we could go back to our scan and add a minimum value to our “Last Price < Day Open” filter (i.e. 2%).

Step 4: Optimize Scan (When Necessary)

Creating your scan is just the first step of the trading process. The scan helps you find charts that are similar to a particular setup, however there is no guarantee they will pan out the same way as the original setup.

In certain cases, you may need to adjust your scan settings. For example, you may find that our new “Gap Up/Close Red” scan works best when a stock is coming out of a longer term downtrend. If that were the case, you would add filters to find stocks that have been down trending.

For our “Gap Up/Close Red” scan, both NIHD and EGLT played out the same as HMNY, making for great short opportunities.

In Conclusion

If you’ve been trading for a while, you already have all of the data you need to create great scans. Go back and analyze your trades to pinpoint where you make the most money. Once you know your ideal chart setups, you can begin creating scans to find more of them.

Reverse engineering the scanning process is one of the most effective ways to find stocks to trade. This process can require some trial and error, but once you create your scans, you will be able to use them to find stocks over and over again.