Stock Screening Software

[grswickes]

I have downloaded and am playing with IncredibleCharts. As a novice I like the look of their Stock Screening ability as it can narrow down the search criteria and/or choices for me.

My problem is that if I narrow down the seach to much, to aggresive with the criteria, you get very few results (this could be a good thing!?). Also being purely based on Technicals any results obtained are reactive not proactive!

Having said that what are the best criteria for picking up the beginning of a trend??? There are quite a few options, such as: Price Filter, Volume, % of Price High, % Price Move, Bollinger Bands standard deviation, Directional Movement system, Moving Average Crossovers etc etc etc.

But which ones to pick????? I am concerned that simply getting a result, based on historical (or is that hysterical) data means I may have missed the boat and the trend is over!

Any suggestions as to the best stock screening criteria?????

 

[tech/a]

Its an age old question.

When is a trend over?

If you can answer this question then you can answer the question of when has a trend begun.

All oscillators in their own right are at best a 50/50 proposition.
Combine with PRICE ACTION and the odds increase slightly.
Add a CONFIRMED trend and look for entry in that trend and you have an even higher chance of finding something you can stick with.
Many try and predict/trade breakouts.I like trading new highs myself.
By low sell high or Buy high and sell higher.Either way take more notice of price action than Oscillators/indicators.

You need to answer a few questions.
(1) When will your analysis be considered wrong---you have to determine this.In other words if you see a setup then buy and price doesn't go on with it---when do you sell out? This is your stop.

(2) If all goes well when will you sell?---how do you know that when you sell you'll have achieved enough profit--You can go broke taking a profit!

Your looking at making Discretionary decisions without knowing the mechanics of WHAT makes a successful and profitable trader.
Without knowing this everytime you take a trade you enter a lottery---regardless of how you enter or how you exit.

To be a successful discretionary trader I think you need to become a successful systematic or mechanical trader.
Anyone can make $$s on a few traders a year few can make CONSISTANT profit year in year out.

 

[grswickes]

Yes I agree that before entering the trade stop loss and profit taking points should (and would) need to be pre-determined. I didn't mention them as I suppose I am considering them step 3 or 4 of the stock selection / Buy / Sell process.

Step 1 - Some sort of stock screening
Step 2 - Check the company out for any oddities, recent announcements etc, check the industry sector for similiar positives or negatives etc etc
Step 3 - Confirm the trend over 1, 3 and 6 months, ensure sufficient volume being traded etc etc
Step 4 - Determine volume purchase required to be traded for profitable exercise including costs, stop loss, profit taking point etc.
Step 5 - Take the plunge

Yes lots of etc etc, just following the KISS principle for now

Please excuse what may be a silly question but what do you mean by Price Action? Price moving in the right direction UP!?

 

[tech/a]

Ive used WEB as an example

 

[grswickes]

Thank you.

I believe I understand the principles and can clearly see what you mean on the charts, but......

What was you initial reason to watch this stock? Sector? Comments about them in journals etc?????

Out of the, what is it, thousands of Aussie stocks you picked this one?? This is my dilema, how many to watch???

 

[RichKid]

Thank you.

I believe I understand the principles and can clearly see what you mean on the charts, but......

What was you initial reason to watch this stock? Sector? Comments about them in journals etc?????

Out of the, what is it, thousands of Aussie stocks you picked this one?? This is my dilema, how many to watch???

Hi grswickes,
Welcome to ASF!
Tech has made lots of posts on breakouts and speccies, if you do a quick search you may find the threads and extra info (use 'breakout' or similar words). Great questions btw, there's also a thread on Incredible Charts here on ASF. Enjoy the forums!

 

[tech/a]

I dont watch many charts at all.
I only watch them if the software gives me a breakout alert.
I had no idea who WEBJET were when I bought them.I had no idea they existed.They were in the ASX but I didnt even know that.

The formula is a metastock formula I wrote up.
It doesnt find EVERY breakout only those with the characteristics I like in a breakout.It also has filters which define where the stock is as far as price movement--EG its trading over its 40 day M/A.

Alerts dont come every day.
(1) I dont trade EVERY alert either.
(2) This is when I place one I like on watch.

(3) Im slow to enter.
(4) Fast to take a stop.
(5) And painfully slow to exit a winning trade.

(1)- (5) come with experience took me 8 yrs and I cant impart that to anyone in a reply to a post.Its my way of trading and its neither the best or only way to trade.Its slow,boring,not sexy,and other than those on forums and my wife very few in our circle know I trade.I hate talking about trading socially---unless I meet with like minded people and that only happens when its arranged.--well to me anyway.

Id be looking at trading longer term---initially.

I rarely trade in a discretionary manner.
I would strongly advise you learn how to trade mechanically and learn WHAT it takes to trade profitably---right now your consumed with HOW to trade profitably---thats fine everyone starts here.

I and the software get it wrong---more often than not.
But ponder this as a hint.

10 losses at 1-1.5% and 2 wins of 45 and 100% respectively---
Trading this way over the next X years with these sort of results
Would this be a profitable way to trade?

(No hints people!)

 

[grswickes]

You wrote....

10 losses at 1-1.5% and 2 wins of 45 and 100% respectively---
Trading this way over the next X years with these sort of results
Would this be a profitable way to trade?

Using my trusty friend Excel I can perform the following simple analysis....

Trades of say $1000 each

Initial investment $12,000
Cumulative Profit/Loss $1250
Brokers fees $840
Actual Profit/Loss $410

Yes profitable

I believe the 7P's can be applied here...

Proper Prior Planning Prevents Piss Poor Performance

Discipline Discipline Discipline

 

[GreatPig]

This is my dilema, how many to watch???

It's not just a matter of "how many", but also of which ones. And that will depend somewhat on your trading method and style.

For example, do you only want to watch the top 200, the BT Margin list that Tech uses for one of his methods, or all the penny-dreadfuls as well? I think this choice will depend somewhat on your trade time-frame, how much time you want to spend watching your trades, and your aversion to risk.

The real cheap ones have the potential to make a lot of money quickly, but likewise to lose a lot quickly. And they can be more difficult to sell or buy at the price you want, since even 1/2 a cent can make a big difference. For example, you might buy something at 10 cents, see the last trade as 10.5 cents - an increase of 5% - yet if you wanted to sell, you might find you'd have to take 10 cents for no gain at all.

Another issue is liquidity. It's much easier to trade the more liquid stocks (ie. those with reasonable daily volumes), however, there have been some great gains in some low-liquidity stocks (take a look at SYN for example). The problem with low-liquidity stocks is that there are often only small volumes available at any price (sometimes only a few hundred to a couple of thousand dollars), and often large gaps between prices. This means if you want a decent-sized parcel (say $10K-$20K), it can be very difficult and time consuming buying and selling that parcel at the price you want. If you list the full amount, it might sit there for a week or two just being pecked at, or a little might go and then the price move against you so much you don't want to complete the order.

So if you want things easier and lower risk, you might want to avoid the very cheap stocks and low liquidity stocks. However, you can miss some great gains that way - if you haven't gone broke already trying .

Cheers,
GP

 

[tech/a]

I'm sure you have a decimal point in the wrong place.

10 X 1.5% losses on $10000 (10 x $1000) = $150
1 X 45% win $450
1 X 100% win $1,000

Brokerage $20 in and out on 12 trades $480.

Anyway thats not the point of the exercise.
What I was trying to get across was that you dont have to be right very often to be profitable. Most are focused on entry and being right.
If you do our exercise with $10000 trade size parcels the rate of return less brokerage becomes a far better proposition. brokerage is no longer a high consideration.
So even parcel size needs to be considered.

In fact I believe entry to be the least important component of successful trading.

 

[grswickes]

Hi tech/a

Nice charts but from my perspective I would have been automatically kicked out, by a pre-set stop loss ,5 days after you entered! Do you not use stop losses? Or do not consider them important?? What software are you using do show the breakout? Metastock?

 

[tech/a]

If Trading in a discretionary manner,My stop is 10% of purchase price if Stock is over 50c
20% of purchase price if under.
If however a trade breaches a trend before the stop is hit then I'll take it early.
However when trading systems there is a set stop of 10% of purchase price.Parcel sizes are dramatically larger than my discretionary trades.

Yes Metastock/Tradesim (Systems testing) is the software choice.
Marketcast for live data.
I always trade with stops and always take them.
I dont however use trailing stops in systems tests but will in discretionary trades.As the trade matures I will widen the trailing stop.