# Use of scanners



## LiL_JaSoN (18 February 2011)

Ok, stupid question.

Iv been researching and reading and seem alot of people use scanners to scan through stocks looking for the biggest % price move, gaps, volume, etc

how do you take these results into consideration when trading? what does it mean? etc.


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## pixel (19 February 2011)

LiL_JaSoN said:


> Ok, stupid question.
> 
> Iv been researching and reading and seem alot of people use scanners to scan through stocks looking for the biggest % price move, gaps, volume, etc
> 
> how do you take these results into consideration when trading? what does it mean? etc.



 For starters: The biggest % price move is usually a sign that it's all over. Some stocks do continue after a breakout, but they rarely make it into the daily gainers list, which usually only shows 20 or 25 stocks.
Gaps can also be a bit misleading - check out this article:
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:gaps_and_gap_analysi

That said, your observation does have substance, and many - especially Technical - traders will use a computerised tool that scans an entire market for stocks, the trading of which is showing certain behavioural changes. How these signals are interpreted depends on the individual's Trading Plan and methodology.
I usually stick the daily results into a watchlist and wait for the next day (or days) whether the signal is met by "follow-through" or whether is was a false alarm. 
The benefit of such pre-scans lies in the drastic reduction of stocks I have to watch at any given time. Having a vague notion of what to expect, having been able to assess a new candidate for a place in my portfolio, possibly even an early chance to set alarms for support or resistance breaks - all that goes a long way to speed up my reaction if the expected "move" happens. Definitely beats watching an entire market or trying to trade in and out of the same handful of stocks some people seem to fall in love with...


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## joea (20 February 2011)

LiL_JaSoN said:


> Ok, stupid question.
> 
> Iv been researching and reading and seem alot of people use scanners to scan through stocks looking for the biggest % price move, gaps, volume, etc
> 
> how do you take these results into consideration when trading? what does it mean? etc.




You need to have a entry & exit strategy to take advantage of scanning.
e.g. one of my scans is "vol spike move up "  which incorporates (price x 110% plus vol x 2).
It looks at price first, then checks for vol increase.
Take WHE on the 3 & 4TH Nov. 2010. Once you are alerted, you have to check if the stock suits your entry of your trading plan. 
Or you may have a watch list that you scan.
Scanning allows you to form a watch list. Then your trading strategy kicks in.
Obviously the better the scan criteria, then the better the trade opportunities.

Most traders make the mistake of attempting to watch the whole market.
Better to go for e.g., to scan best commodity, in rising sector. This could be gold etc.
Or emerging stocks in resources or even top 50 blue chip. 
Cheers


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