I've been actively trading for about a year now. Most of my trading activity has been in scalping NYSE stocks. I am very interested in doing more swing trading but I just haven't been able to come up with strategies that I have enough confidence in to pull the trigger on many overnight trades. I'm not lazy by any means. I enjoy studying the markets and trading. I just feel unfocused. Without a basic swing strategy in place, I find that surfing through various stock charts looking for possible trades to be ineffective. I just find that chart patterns often feel too subjective. I look at many charts and come up with seemingly valid reasons why the stock price will advance...or decline, in the near term. Enough commentary. My question is this: how do you narrow your search for tradable setups. Focus on a particular sector or group of favorite stocks? Story stocks? Screen for particular technical or fundamental characteristics? Anything else? I'm not looking for an answer to how I should be spending my research time. I'm just wondering what approaches others are taking. Also, how much time do you spend outside of market hours studying?
my7tvette One way I like to do research is to have google e-mail me news events from key words that I tell it to search for, and as it happens I get the article. So for example, if I'm interested in trading gold, I might tell google to look for any news that has to do with the search words "gold"..duh, but also "GLG" which is the ticker symbol for Glamis Gold..a stock I like to trade.. Also I like to go to all the major finance sites like msn money, yahoo finance, google news, bloomberg, reuters, and cnn. So, when I wake up, I check to see if any stories from google came in, read them, then go to all the financial sites I just listed, read all the major news stories..things like oil..interest rates..things that can move the market, then focus on my specific stock (if any news of the company or sector is mentioned). Let me back up a minute. Sometimes I dont even bother with some of the research, if the TA looks bad..like if a stock is below the 200 EMA.. I probably wont even look at it, and no point in wasting my time. I do have a handful of stocks that I like. I like metal, steel and gold stocks.. TIE, GLG (all the gold stocks), TS, CCJ, STLD, to name a few. I think its a good idea to get to know a few stocks, see how they move. Looking at a chart is just not enough, you need to see the numbers go by to really understand. I dont know what you mean by "Story stocks"..I guess stocks that get talked up in the news?..If thats the case, I do some "story stocks", but hardly ever any techs. What I like to do is go to yahoo finance and see who is reporting earnings. I filter these stocks by: 1. An avg vol of at least 350,000 + 2. Trending stocks..nothing worse than being stuck in the mud because the stocks been consolidating for the past 3 months. 3. No penny stocks If the earnings are: 1. Better than expected, buy and go long 2. Less than expected, short 3. As expected, watch closely Looking at some stocks, even after a good earnings report, they may move sideways, or decline a bit for a few days 3-5, then breakout. These plays can be risky, because the big money got in way before most of the public. But if these stocks are widlely know, like wal-mart for example..the "crowd" can sometimes push'm higher, or lower. --- I dont know why I didn't think of this earlier, but now I'm looking at the Income statement and balance sheet of stocks. I pull up the daily charts to see how the stock moved last time it reported earnings. How far did it go up?, how long did it take to get there? are some questions I might ask myself. The point of any business is to make a profit, and the income statement is great at showing that (on yahoo finance, and its free). -- I use my scottrade elite demo to put 50,20, and 200 EMA on 60 minute and daily charts, as well as CMF and MACD. CMF, in case you dont know tracks money going into and out of a stock..great little tool. I also look for shapes, like triangles, flags, etc.. Trend lines and channels ( aka ranges) are also a helpful visual. I'll do the math for my fib calculations and write them on an index card to help me remember the numbers. - Nathan
Thanks for your in-depth response! It seems as though you have found a way to narrow your focus to particular stocks/sectors with which you are familiar, and further narrowed your search to those stocks likely to move with an "engine" behind them (earnings, etc.). That makes more sense to me than looking at random charts and thinking "this stock has been going up; I'm going to buy some and hope it continues going up!" I guess my scalper's mentality has caused me to avoid news, looking more for trading ranges and status quo. Lots of valuable insights in your response.