TL;DR: Using the 4 tips below to pick the right stocks and 3 extra tips to avoid traps when picking stocks each day could increase your win-rate to a significant 95%.

Want to achieve a win-rate as high as 95%?

Start picking the right stocks to trade!

You could be the best trader in the world by learning all of the technical analysis.

However, if you choose stocks that don’t move or are illiquid. It is very difficult, if not impossible for you to make long-term profits.

Today, we are going to discuss the key concepts in stock selection, based on the book “One Good Trade” by Mike Bellafiore.

By applying these principles, you can achieve a risk/reward ratio of 1:5 with a win-rate above 60%.

Secret Tips for Finding Stocks In Play

There is a misconception to traders that if the overall market performs badly, then there would also be a shortage in good trading opportunities.

This concept is so wrong.

There were traders making huge profits during 2009 when stocks crashed to the bottom.

Remember, you are only as good as the stocks that you trade.

Here are some key principles for selecting the most favorable stocks to trade on each day:

1. Stocks with fresh news

Pay attention to news and announcements that could impact a company’s stock price. This includes things like, reported earnings, clinical trials for biomedical or pharmaceutical companies, acquisition etc.

Here are some valuable sources of news that you may want to bookmark:

Investing.com, MarketWatch, Seekingalpha, Spike.news, Yahoo Finance

They offer stock screeners, finance calendars and news to help you find trading opportunities and stay updated to the market

2. Stocks that are up or down more than 3% before the open

Look for stocks with high volume and volatility. Day traders typically prefer to trade stocks that are liquid and move frequently, as this gives them more opportunities to make profits.

To spot stocks that have significant move each day before market starts. Go to TradingView, set up your watchlist for stocks. Click the three dots on the top right and check the “Extended Hours” option under the “Customize columns” setting.

From there, you could sort the price changes pre-market to spot stocks that have gone significantly up and down.

3. Stock that will move more than 3 points intraday (It also has to be in a clear direction)

Select stocks that have high volatility intraday, preferably more than 3 points. However, by just having high volatility is not enough, the stocks need to show a clear direction that you can somehow predict or understand its trend.

Consider the current market trend. If the overall market is trending up, you may want to focus on stocks that are also trending up. Conversely, if the market is trending down, you may want to look for stocks that are trending down or consolidating.

To quickly filter stocks that have high volatility, you need a stock scanner that allows you to screen for stocks based on a variety of criteria, such as price, volume, volatility, and technical indicators.

For example, the tool provided by Marketscreener is a simple and easy to use tool for stocks screening.

4. Stock that will have real order flow and develop important intraday levels, which we can trade off of

Use technical analysis to identify potential trading opportunities by spotting important levels, e.g. potential bottom or top, support & resistance, support and demand zones etc.

TradingView is the most popular technical analysis software available, which is also offered for free for its basic features. This platform allows you to chart historical price data and use technical indicators to identify potential trading opportunities.

With TradingView, you could then subscribe to TradeDots, which is a trading indicator for labeling market reversal points with analysis of historical price actions.

Unlock your free trial with this link

What not to do when choosing the stocks to trade

1. Do not trade stocks with enormous short interest
2. Do not trade stocks with daily volume likely to be less than 600k shares intraday
3. Do not trade more than two or three of these stocks each day

Bottom line

The strategy behind these tips is to make your capital to be efficient and liquid, so we could move between different assets each day. Therefore, we want to find more volatile stocks to trade on to maximize the profit that we could take in each trade.

We want to execute our tradings with consistency and discipline. It is to avoid we accidentally blow up our account with one trade after we think we can outsmart the market.

It also helps you to developing the skills necessary faster. As a professional intraday trader might make more than 200 trades per day, you will learn so much each day, significantly shortening the learning curve of new traders.

It’s important to remember that there is no guaranteed way to find profitable stocks to trade each day. Even the best traders have losing days. Therefore, manage your risk well, focus on the long term game.

About TradeDots

TradeDots is a TradingView indicator that identifies market reversal patterns through the implementation of quantitative trading algorithm on price actions. Try our 7-day FREE Trial to level up your trading game.

Set up your personalized trading alerts using our Telegram Bot, so you can now trade effortlessly without gluing to your screen. Join us now to experience TradeDots across all trading assets!

—

Disclaimer: The information provided in this article is for educational purposes only and should not be considered as financial advice. Trading involves risk, and it is important to conduct thorough research and seek professional guidance before making any investment decisions. Prospective investors are encouraged to perform their own due diligence or consult a financial advisor before making investment decisions.