Finding Stocks to Trade Faster
Oftentimes, Traders just cannot find great stock picks quickly and easily. This leads many Traders to resort to relying upon news, recommendations from gurus, social media, or online trading chat rooms. Unfortunately for those Traders, High Frequency Traders and other predatory systems can easily track and exploit Retail Traders who are using any of the above for their stock picks.
Volatility, whipsaws, weak follow through runs are all caused by predatory systems which are either High Frequency Traders, Professional Traders, or even Retail Brokers. This is due to the anomalies in order flow caused by all of the common ways that Retail Traders find stocks to trade.
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Many
Retail Traders still blame “Market Makers,” which is a common myth. However 99%
of all small lot orders are now fully automated, circumnavigating the Market
Makers entirely in both the Stock and Options Markets. 
Instead the real culprit to volatile price action, whipsaw action, poor fills, and lousy runs that do not net sufficient gains for profitable trades is Cluster Orders. They happen when too many Retail Traders are all attempting to trade the same stock at the same time, using the same “trading system” or “trading strategy.”
Here are 5 Tips to Finding Stocks to Trade:
1. Know what price
action precedes volatility, which is often a compression pattern.
The
chart example below is volatile. The price moves often in what appears to be
unexpected up and down action, which is often gapping. By recognizing price
patterns that precede sudden moves, Traders can take advantage of the sudden
runs.
2.
Learn to identify High Frequency Trader or Professional Trader set ups that
precede velocity action.
High Frequency Trader leave a specific and easy to recognize footprint on the chart. This can be an extraordinarily long white candle or a gap, and extreme volume. Prior to their action there is often Professional Trader footprints which are more subtle, but can also be identified. Professional Traders are careful about entries and often enter incrementally. They tend to precede High Frequency Trader sudden huge moves in price.
3.
Use more of the historical daily chart price action to anticipate future near
term price action.
Chart analysis for optimal stock picks requires more than just looking for a specific candlestick entry, indicator crossover, or setup. Those are good starting basics, but once a Retail Trader has learned these basic beginner skills, they need to start learning the more advanced skills of chart analysis. One of those advanced skills is identifying which of the 9 Market Participant Groups is in control of price at that time. The chart example shows many gaps, which form the Island Gaps. It is a volatile price action dominated by Professional Traders entering, followed by High Frequency Trader orders that trigger due to the Professional Trader activity.
4.
Finding Stocks to Trade faster requires learning to recognize the Trendline
Patterns and Sideways Patterns in the chart.
Amplitude and magnitude of the candlesticks, provide excellent information for short term trading entries and exits.
5.
Identify the Technical Conditions for that stock.
Price formations do not occur by accident. Every price pattern has intent behind it, based on who is controlling price and their intended price direction for that stock. Fundamentalist controlling price create a different look to price action, than when Technical Professional Traders are controlling price.
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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock
Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
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Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.