The goal of day trading is to perform round trips within the same day, opening and closing positions, taking advantage of equity price variations, so that in the end, when market hours close, a profit has been made.
Every day trader has watch lists, which basically means that he has a narrowed selection of stocks which he monitors closely. Usually, even though there is a watch list of active positions which the trader intends on trading, there is also a general watch list which comprises of hundreds of stocks which are known to the day trader and which he has traded in the past.
The best candidates for trading are the stocks that have volume, liquidity, and movement. When news items act as a catalyst, stocks tend to register the most action and volume. News impacts stock price and creates so-called gappers or dumpers, which means that the price of stock either goes up or down, respectively, as a result of news influence. Gappers and dumpers should be included in the watch lists. It is important to know that in any particular field the leaders of that sector will tend to influence the evolution of the other players, so when a leading stock becomes a gapper or a dumper, the stock of the other major representatives of the sector should also be included in the watch list.
In order to identify potential watch list candidates, the trader usually uses stock scanners and screeners, which can either be integrated into the online broker’s platform or which he can use as an add-on to which he or she subscribes, being provided by the online broker or by a third-party vendor.
There is a need to distinguish between stock scanners, stock screeners, and stock filters.
- A stock scanner is a tool that monitors the market and searches for stocks that meet specific criteria selected by the user, streaming real-time information about the stock that shows up as a result of the scan. This means you do not have to intervene to receive updates.
- A stock screener is a software that you can use to retrieve a static list of stocks that meet the designated criteria which you input. One important thing to note regarding stock screeners is that they produce a static list of stocks and they do not update automatically.
- Stock filters are used to limit the criteria used in a stock search. They are usually used to narrow down the information retrieved after performing a stock scan or a stock screen. Example of stock filters includes price, EPS, volume, a customized symbols list, beta etc..
Scanners can be platform-based or you can use desktop-based applications for the purpose of scanning stock. Most trading platforms include a scanning tool which you can use to identify stocks which deserve your attention. It is important to note that a scan can include entire markets or a selection of stocks, a factor which will impact the time needed for the scan and the accuracy of results. They can either use your computer’s resources or the data provider’s servers to perform the scans.
Desktop scanners are best used to perform scans applied to watch lists or sectors, so they can produce the timeliest results and avoid slowdowns of your system, seeing how they use your computer’s resources in order to run.
The desktop-based scanning software might take more time to configure and will probably require extensive knowledge of scanning criteria to set-up the scan. Some might even require some programming knowledge. Apart from this, they are likely to produce the most accurate results which you can act upon quickly. There is a definite advantage to monitoring the evolution of the stocks you are familiar with, so that when a scan produces a short list you are ready and capable of making the trading decision quickly, compared to sifting through a larger array of general stocks which you are not familiar with, and which you have to further analyze in order to decide if they are trading material, possibly missing the window of opportunity on the trade.
Online subscription-based scanners usually offer the option of using pre-set scan criteria, which tend to produce speedier results. This type of scanner has the disadvantage of alerting a large number of traders, all looking to take advantage of the scan results. It is imperative that one determines if the opportunity that presents itself has been identified early on and it is ripe for the taking, or if the chance of making a profit has passed.
There are several types of stock scanners, depending on the type of criteria that is used for performing the scan and on the time frame they provide data in. There are stock scanners that rely on technical indicators and those that apply fundamental analysis. Regarding the time frame analyzed, there are scanners which analyze stock and provide information within market hours, ideal for day traders to fine-tune their active watch lists, and there are end-of-day stock scanners which can provide an excellent advantage in preparing next day’s trading session.
Obviously, depending on the trading style, one type of stock scanner will be preferred over the other. It is common sense that for those interesting in investing and for swing traders, a scanner based on stock market fundamentals is appropriate, while for day traders or for short-term swing traders a scanner which uses technical indicators as criteria is the best choice.
Technical scanners rely on technical indicators or on specific chart patterns that trigger the stock alert, letting the trader know that a trading opportunity might be at hand. Intraday scanners require the trader to perform a fast analysis of the scan results so that a trading decision can be reached quickly, ensuring a profitable timing.
While technical analysis takes into account the price evolution of a stock, the fundamental analysis relies on evaluating the actual financial health of a company, by looking at elements such as the earnings reports, business strategy, catalysts, and financials.
Scanners are an efficient tool as they help traders monitor the market and identify new trade opportunities. Ideally, they provide accurate results in a timely fashion. By restricting a search to a group of familiar stocks, the trader is faster in validating the results that showed up on the scanner, thus being able to make the decision of trading that particular stock much faster, which is of the essence in day trading. Below are some of the best stock screeners & scanners available:
Trade Ideas offers several products of undeniable value for stock traders. Trade Ideas Pro is one of the available stock scanners. It is a downloadable Windows compatible application. It offers fast access to the statistical analysis servers in the Trade Ideas data center.
The application can be tested for free by downloading it and by using the demo mode login. In order to receive demo mode instructions, a form on the Trade Ideas website must be filled in, and the required information includes the first and last name of the trader, and an email address. Most features are available in the demo mode but there are also some key differences. For example, there is a fifteen to twenty minutes delay in streaming alerts, there are no custom symbol lists, no custom formulas and there are no charting capabilities.
One of the advantages of Trade Ideas Pro is the fact that it relies on AI technology. Holly is the AI behind Trade Ideas Pro. At the end of each trading day, Holly analyses what happened within the market hours and calculates how this last trading day was statistically relevant for the last 60 days of trading. Holly then comes up with 35 trading strategies and analyzes the outcome of each strategy looking to improve them. Only the strategies that have a success rate greater than sixty percent and a 2:1 profit factor are displayed to the trader the next day.
Access to artificial intelligence also makes it possible to backtest each strategy using OddsMaker. With OddsMaker there is no need for programming knowledge and most of the processes involved take place on the Trade Ideas servers so that results are displayed faster. With OddsMaker every trader can test and improve a trading strategy within minutes. All that is necessary is to select a strategy window for the simulation and to input specific entry, exit and hold parameters in order to run the OddsMaker. The Chart Windows allows the trader to have a visual confirmation of an alert without leaving the Trading Ideas Pro platform.
Other important features of the Trade Ideas Pro scanner are its Alert Windows that display events in real time according to the selected parameters and Compare Count Windows that gives the trader access to a visual comparison of any two strategies. Top List Windows helps with ranking market data other than chronologically and the info is updated every thirty seconds. Trade Ideas full stock quote windows allow the trader to access all essential data related to a stock’s price.
Trade Ideas for the Web is the right solution for displaying alerts and top lists in all of today’s browsers, regardless of the platform (Android, iOS, Windows). It can be accessed on any device via the cloud. The identical interface allows several alert and top lists windows to be opened at the same time in the same browser window.
TC2000, the scanning software developed by Worden Brothers Inc., prides itself on being the Stocks & Commodities Magazine reader’s choice between 1993 and 2018. Its makers underline the fact that it is fast and easy to use, with its famous 2-second scan that allows the trader to identify the stocks that meet his or her trading style and take into account the trader’s risk tolerance.
The software provides a series of charting capabilities. The trader can choose from multiple plot styles and can plot hundreds of relevant technical and fundamental indicators. It is possible to save customized chart templates. Predefined system lists and indexes are available, being automatically updated, apart from the trader’s personal watch lists, all of them scanned and sorted in real time. The user can create and save column templates for future reference. The trader also has the option of linking the active stock symbol to any chart within the layout. Sorting is made easy by simply clicking on each column header. Stocks can easily be flagged to allow a simple organizing of personal watch lists.
The TC2000 offers fast scanning, with an average 3000 symbol scan completing in seconds. The trader can rely on pre-defined scan conditions or can create his or her own by using EasyScans®. The software ensures price, trendline, indicator or conditions alerts, with notifications being available through the application or by email.
TC2000 also offers access to proprietary indicators such as MoneyStream®, Time Segmented Volume® and Balance of Power®. The software allows users to create practice accounts for free, using play money in order to get familiar with everything in a simulated environment before investing actual money. Also, for an integrated experience traders are encouraged to open an account with the affiliated TC2000 Brokerage.
EquityFeed is a stock discovery platform designed to meet the requirements of day traders, swing traders and active traders. The platform can be tested for free over a period of fourteen days.
The platform offers ultra-powerful scanning, allowing traders to customize the search criteria. Using Filter Builder, traders can create and save customized filters in 3 simple steps. Traders can choose the market they are interested in, the stock type, a specific sector or even filter by watch lists. The first step in building a filter involves selecting the analytics to be used as a criteria for scanning the stock. The trader can choose from 3 main categories: price, volume, and technical variables. The second step involves selecting an operator such as for example “greater than”. The third step involves inputting the value or analytic to which the analytic selected in step one should be compared. The trader can complete these 3 simple steps several times in order to refine the search or scan, and finally, the filter can be saved for future use.
With the platform’s pattern recognition tool, traders are alerted as soon as a potentially profitable event happens. The platform alerts traders about 5 major types of events: new highs, new lows, price breakouts, volume breakouts and block trades.
The platform also allows for entire equity markets to be displayed using Market View. Traders can customize the way the lists are ranked and sorted. The can choose to sort stocks depending on a certain variable by simply selecting the column the variable is displayed in and by clicking on the column header, once for sorting descending (from high to low) and twice for sorting the stock ascending (from low to high). Columns can be added or removed easily. Traders can also easily apply filters to the market list.
Another important feature of the EquityFeed platform is the Chart Montage window which details the real-time trading activity of any stock symbol. It represents the go-to resource within the platform for making the trading decision. In-depth data about the stock’s evolution is displayed, and traders can add to the complexity of featured data. It is extremely easy to act in a timely manner as the actual trade can be completed directly from the EquityFeed Chart Montage window. There are a lot of advantages to using a stock scanner and choosing the right one is of the utmost importance.
TC2000 is impressive especially through its track record of being the Stocks & Commodities Magazine reader’s choice between 1993 and 2018. EquityFeed stands out as being a reliable stock discovery platform, fast and easy to use. But by far, Trades Ideas Pro is the most innovative stock scanner available at the moment, using cutting-edge AI technology and featuring impressive backtesting capabilities.