Trading horizon: 15 days average holding period
Profit target: 10 %
Suggested Stop loss: 5 %
Volume and Price filters - Volume and price are key
Volume (Today/Average 10 Day)
First narrow down the list to those stocks where the trading characteristic of daily volume is above its 10-day moving average. For this look at the ratio of daily volume to the 10 day average volume and pick the ones with the highest ratios of those which have a ratio greater than 1.
Price Performance (5 Days)
Next apply a filter to pick those stocks that have experienced the strongest price gains in the previous five trading days. For this, scan for the 5 day price performance and pick the ones with the highest.
Moving Average filters - Moving averages are important and right behind volume and price.
Filter out the stocks that are below the 10 dma and 20 dma and/or below the 50 dma as well.
Basic filters to consider
Include only equities with an average daily volume in excess of 100,000 shares and a value of $4 in the searchable universe.
Security price > $4
90 day average volume > 100 K
Market cap filter
Select the equities that fit your particular investment style.
I prefer the mega-caps. The other choices are large, medium, small and/or micro caps.
Security type filter
I select only the common stocks and filter out things like ADRs, REITS and Unit Trust Funds etc.
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