I'm looking at educating myself a little better on stock selection for day trading. My weakest skillset of all. I'm assuming there's allot of material out there and some might stand out ahead of the rest. Books on this topic are what I'm looking for mostly but I'm open to any suggestions. I was specifically wanting to re-educate myself on finding stocks for trading Intraday and not so much for Investing longer term. I know Mike Bellafiore's 'The Playbook' suggests stocks in play. Maybe there are other's that really stand out to you which are helpful in this area? Any help on this would be greatly appreciated. Thanks
Get a scanner. The interactive brokers scanner is free. Otherwise www.trade-ideas.com or www.scanz.com
If there's movement in a stock/index/FX/Commodity etc then most trading stratigies work, even a simple MA crossover. Some strategies better than others of course but still, they all will generally work. So just use a scanner and go where the action is. Today it might be AMZN, tomorrow EUR-USD, the next Corn etc. Not saying you can trade all those things but if there's good action they'll be good moves and lots of strategies will catch those moves. As for good books, the best book is really the chart. Read that every day and start to ask youself some simple question - WHY did that move happen, what happened to the price in the PRECEEDING bars? WHY should I have covered at a certain point, what were the clues? WHY was I right to get stopped out there? WHY was I wrong to get stopped out there? WHY did the market dump right off this high and not say the previous high or the one previous to that? Keep asking these sorts of questions, and you'll start to get some fuzzy answers. Keep it up and those fuzzy answers will start to get clearer.
Like others have mentioned, you'd be better off doing your own research and backtesting to build confidence. One thing right off the bat that would be clear, is that you would want to be looking at stocks with high ATRs to give you sufficient volatility. You'd also want stocks trading enough volume so you don't see wild flushes. Some questions you may want to explore in excel or googlesheets: "If xyz stock gaps up on the open by x%, what is the probability it closes higher than where it opened?" "If xyz stock rises x% in the most recent x trading days, what is the probability that the stock will be higher y trading days from now?" "If xyz stock fell by x% yesterday, and I place a limit order to buy if it falls another y% lower today, what is the probability that the stock will be higher z trading days from now?" etc, etc, etc
Since, you are a day trader, those that day trade use Trade Ideas which has a feature to pick the gapping stocks of the day. Those are the ones day traders pick to trade. Not affiliated with Trade Ideas whatsoever and do not day trade myself. I only Swing Trade and Trend Follow.
I appreciate a the answers. I'm in Australia and will trade Australian stocks. Scanners and the like are an option for sure, but I have allot of time on my hands right now and wanted to do some reading. There's a tonne of books out there, so I thought there might be something I could read which covers this topic in detail. Fundamentals, index comparisons, currency and commodity relationships (in the short term) with the market. I like to read too. Maybe there is no book or written material on this. But I'm sure there is. All of these tips and explanations will be very useful, so thanks for replying. I actually write allot of this stuff down and go over it.
Domino, if you've got some time on your hands go read (free PDF online) Steidlmayer on Markets by Steidlmayer & Hawkins. The information he offers on 'markets' is incredible. I'd say he's arguably the foremost thinker on what a market is and how it works. You'll learn a lot. Personally I don't use his market profile but the book isn't so much about that.
Thanks very much for this. This is exactly the kind of thing I'm always on the lookout for. I'll be printing this off and reading it for sure. Strangely enough I was also looking for material on how the market works recently.
I've just gone over the Interactive brokers scanner and I'm amazed as how detailed it is. The whole trader workstation is pretty hard to use though. I've got some learning to do on this. Still looking for a structured way to approach this.