stockbee

7/17/2016

Bullish Anticipation Watch list for next week

XNCR CEQP WIN VEEV LOCK MAIN HAS ECA MLM NDSN PES MDVN STOR NOC CYS GLPI DGI MTZ QLYS CPRT NFG ACC NWL IDA JNJ SCLN ENLC MASI MXL MRO AUY AMD DHI ERF GWPH OUTR PETX DPM WES GLOG PBA INGN SXL SA BTE GLBL

7/15/2016

How to use momentum to find explosive stocks


Understanding Momentum helps you find explosive stocks and exploit them as swing trader or position trader. As a trader you want to be in stocks that for a given holding period are the fastest moving stocks.

At simplest level momentum is rate of change (ROC) with which stock is going up or down. It measures speed of a move. Knowing ROC of stocks allows us to rank them and focus on those with top speed.

Let us say if you want to focus on say only 50 strongest stocks in the market. You can find them if you understand momentum. If you want to narrow your focus and only focus on best stocks in the market , focusing on 200 stocks with most momentum is sufficient to find big moves both for swing and position traders.

Momentum is time specific. In order to find stocks with momentum you must first decide your time frame. A time frame of 3 to 6 month is good for finding momentum stocks.


How can you scan for momentum?

There are many ways to rank stocks by momentum and every method has some advantages and disadvantages. Once you understand momentum you can use it creatively to find many kinds of stocks

Let us say we are talking about momentum on 6 month time frame to rank stocks

6 month = 126 trading days

Using Telechart we can find momentum in various ways

c/c126

will give you six month momentum compared to price 126 days ago

c/avgc126

will give you six month momentum compared to average price of 126 days

c/minl126

will give you six month anchored momentum compared to lowest price in 126 days

(c/c63+c63/c126)/2

will give you six month momentum calculated as equal weighted 2 period for 3 months

There are many many ways to slice and dice momentum. But all the above momentum scans can be used to rank stocks . They help you find relative momentum for a universe of stock. These are simplest scans for momentum, you can improve on these by using absolute momentum scans instead of relative momentum.

7/14/2016

Trading Tools I use

The tools you use depend on your setups, account size , and trading time frame. I primarily trade momentum and growth based setups on a swing time frame. I have million dollar plus account to trade. The tools I use are suitable for that .

The cost of tools for me is minuscule as % of capital traded.The cost of all  the tools for me is around 2500 dollar a year.
But for those with small account keeping cost of trading low is important.

Brokers

Interactive Brokers (recommended)
TD Ameritrade 
Fidelity 
I use three brokers for my trading but my favorite broker is Interactive Brokers. It has the best execution. The user interface is very suitable for active trading. Shorts are widely available.

Telechart 2000 Gold with real time data add on 

This is my most used trading tool. I run all my scans on this.
For my style of trading this is the best and simplest trading tool.
The only big limitation of TC2000 is it does not have more than 2 years of history.

Old Telechart 2000 for Stockbeebot Data

Stockbeebot is automated bot that calculates breadth intraday and posts on memers site.

Marketsmith 

I use Marketsmith primarily for Episodic pivots strategy as it has sales , EPS growth rates, fund holding and other information easily available.
I also run bunch of scans in Marketsmith for earnings surprise and growth stocks.

Investor's Business Daily

Not very useful in current weekly format. 

Free Tools I use

Finviz
Zacks
Seeking Alpha

Stocks setting up for 8% to 20% move

To become profitable work on your self efficacy beliefs


"If I have the belief that I can do it, I shall surely acquire the capacity to do it, even if I may not have it at beginning." Mahatma Gandhi

The most important determinant of your success in trading or in your personal life is your self efficacy beliefs.
In last 16 years I have talked to several successful traders including mane very well known traders and interacted with them on regular basis and some of them are now personal friends.
One of the most compelling reason why they are successful is they have high self efficacy beliefs.
It is not their unique setup or scan or entry or exit or position sizing that can explain there success.
One thing that clearly separates traders who succeed and sty in game for decades is their strong self efficacy beliefs.
Because of their self efficacy beliefs they figured out profitable ways to trade. No one gave them a 1000 pages manual on trading or held their hands when they were taking baby steps in trading. They figured out things for themselves. And they continue to tweak their approach to date.
Almost every successful trader I know of has developed their unique style on their own.
Which is true of most Stockbee members also.
The days, the months , and the years they spent trying out different things and failing at it or losing money further enhanced their beliefs in their own capabilities.
Yes they borrowed from some other traders ideas or books or courses but that is not the key to their success. Thy are self made traders.

The most important determinant of your trading success will be your self efficacy beliefs.

It might take some few days to understand that and some years. But once your self efficacy beliefs about trading change things start to happen.
Once that is in place your self talk will change to "hey I can do this", "hey I don't have all the answers but I am confident of finding the answers", "hey I know how to bounce back from setbacks" .
When you attempt trading some find early success and some find early setbacks. That experience sets your self efficacy beliefs.
Some people give up believing markets are too difficult or manipulated or beyond my understanding . Their self efficacy beliefs dictate their behavior.
In the beginning year I spent almost 18 to 20 hours trying various things going through hundreds of trading books, testing hundreds of ideas.
The intense effort ultimately started paying off as more and more market and setup clarity started to show up and then I put my own method together and over the years modified it.
The same story repeats for most successful traders.
If you read the Jesse Livermore book it details how he developed his unique style after several efforts.
The Darvas book again details his struggle to develop his own method.
Every trader goes through same phases as Livermore or Darvas or any other market wizards or successful traders like George Soros, Paul Tudor Jones, Stanley Druckenmiller have also gone through same learning curve and figured things on their own.
In the Stockbee Advance Bootcamp several traders presented and it is same story for Stockbee members.
Once your self efficacy beliefs specific to trading change you will start experiencing success.
That does not mean you will not have setbacks. If you have high self efficacy you will find a method. If you don't have it, even the most profitable method will not work for you and you will keep finding faults with methods.

Self efficacy beliefs is the biggest determinant of your trading success.

Unless you work on self efficacy you will find many inhibitors and will be constantly dissatisfied with any method, guides, videos, or instructions, or site. You will constantly chase new methods, new scans, new claims, new gurus, new newsletters, and so on.

Psychologist have found that self-efficacy beliefs help determine how much effort people will expend on an activity, how long they will persevere when confronting obstacles, and how resilient they will be in the face of adverse situations. The higher the sense of efficacy, the greater the effort, persistence, and resilience.

Profitable trading involves all these challenges.
You need to put in lot of effort to understand and internalize key concepts like equity selection, entries, exits, risk, risk/reward and then put it all together.
In the process you will have several setbacks and false starts. If you have enhanced self efficacy beliefs you will persist in face of such adversities.
If you have high sense of self efficacy beliefs then you will spend time mastering trading software, and mastering trading setups and make them work. Absent that you will abandon your effort at first hint of failure.
Learning to trade is not an easy task. It is one of the most challenging task you would handle in your life. Some are lucky and they find success instantly. For rest it is a big battle.
People with a strong sense of self efficacy beliefs approach difficult tasks as challenges to be mastered rather than as threats to be avoided. They have greater intrinsic motivation. That helps them to engage for long periods in activities and helps them overcome repeated obstacles. They do not have discipline problem.
People with high self efficacy beliefs set themselves challenging goals and maintain strong commitment to them, and heighten and sustain their efforts in the face of failure.
People with high self efficacy beliefs quickly recover their sense of efficacy after failures or setbacks, and attribute failure to insufficient effort or deficient knowledge and skills that are acquirable rather than external circumstances.

Your self-efficacy beliefs also influence your thought patterns and emotional reactions.

This is critical in trading. You should not be overly excited by profit on single trade and same way not get depressed by loss on single trade. At the end of the day trading is probability game. High self-efficacy helps create feelings of serenity in approaching difficult tasks and activities and activities where outcome is uncertain.
If you have low self-efficacy beliefs then often you believe that things are tougher than they really are. As a result this belief that fosters anxiety, stress, depression, loss of discipline, over trading and a feeling of being lost. You are unable to solve your own trading problem.

Psychologists believe that self-efficacy beliefs influence the level of accomplishment that one ultimately achieves.

Self-beliefs can also create the type of self-fulfilling prophecy in which one accomplishes what one believes one can accomplish. This further enhances self efficacy beliefs. This leads to higher performance this in turn leads to higher effort and higher accomplishment which in turn further enhances self efficacy.
The goal of this site is to constantly challenge you to enhance your self efficacy beliefs. To constantly goad you to keep working on your self efficacy beliefs. To challenge your existing beliefs. To provoke you to examine your current beliefs. To offer you a template for enhancing your self efficacy beliefs.
If you do that then you will achieve your trading goals. And you will not need this site, or alerts, or alerts with sound effect.

Everyday think of how you can enhance your trading related self efficacy beliefs.

7/13/2016

Follow a systematic daily approach


Trading is easier if you have a set process and everyday you follow it i.
A set process allows you to do the same thing over and over in a systematic manner till it becomes second nature.
Once you have a well thought out method the day to day challenge is largely about implementing your plan and sticking to it.
That requires setting up a daily routine and adhering to it as far as possible.
Profit is a outcome of executing a well thought out and designed setup idea day in and day out.


Situational Awareness (SA)

We know swing setups work, but overall market conditions can have impact on the % of trades likely to work.
So SA helps you in controlling your trade pace. In good environment you want to be more aggressive. In bad conditions you want to focus on risk management.
Question you need to ask daily for SA:
What is your market bias today
Is there a plan to exploit it
Is there an alternative plan


Anticipation

Anticipation allows you to control risk and get in to setups early or as they are breaking out. Anticipation is also useful on current open positions. If you have thought through what you will do under different circumstances on your open positions you are in better position.
Question you need to ask daily for Anticipation:
What homework have I done to identify good opportunities ?
What are the 3 to 5 very high probability opportunities I must focus on today
What is my plan for existing open positions

What is working currently

Different phases of market favor different kind of stocks or setups. Some time beaten down stocks do well. Sometime stocks with momentum do well. Some time value or growth is in favor. Knowing what is working helps you focus on hot opportunities.
Question you need to ask daily for What is working:
What is working in the market currently
What stocks and sectors are leading the market currently
What style and setups are working currently
What kind of follow through is happening

The hardware and software

All our good plans or intentions or setups are of no use if our hardware or software fails or is not optimum for trading.
Are you setup for today
Is your hardware in proper condition
Is your software working without glitch
What is your backup plan in case of failure.

Your mental state

Your mental state affects your trading. If your are well organised and in proper frame of mind for trading you will be successful. If you are excited, harried, angry, disorganized you will find same thing in your trading.
Are you calm, excited, harried , or confused today?
Are there distractions likely to affect your trading today?

Continuous improvement

As a trader you need to focus at least 25% of your daily efforts on developing new trading setups and ideas and on enhancing your trading skill and knowledge of market. A purposeful plan to do this will cumulatively help you transitions in to new setups and ideas as market changes.
What is your plan for enhancing your market knowledge today
What is your plan for enhancing your trading skills
What is your plan for enhancing your trading mindset

What needs to happen for me to be a confident and in control trader

Do I have resources to get there?
Do I have the burning drive to get there?
Everyday using this kind of framework will make you a better trader . If you rigorously follow these kind of checklist you will see improvements in your trading in 90 days.

7/12/2016

Guidelines to find good momentum burst setups

Guidelines to find good Stockbee Momentum Burst setups


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BWEN , LCI, CRBP, LFVN, BEAT ,and TXRH are examples of good momentum  burst setups showing up on my scans yesterday and many of them were already on my Anticipation Watch List

Momentum burst is the tendency of stocks to move in sharp 3 to 5 days moves of 8% to 40%. This can be used by swing traders to capture part of that explosive move.
In order to find candidates like BWEN , LCI, CRBP, LFVN, BEAT , or TXRH, you have to run a range expansion scan and then select stocks that meet a particular set of criterias.

There is a very specific range expansion pattern we are looking for when trading momentum burst. The following examples show that:

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12.png
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In all these examples you will see a period of very orderly consolidation prior to the breakout. During the consolidation the stock exhibited very low volatility and did not have wide ranges.

Essentially these stock were  consolidating pre breakout. The breakout triggered a mini buying frenzy and stock went up for the day and as more buyers step in will  likely go up for next couple of days.  As swing traders we are interested in setups like these.

Here are my guidelines for finding best setups like these daily:

  • stock should have range expansion on breakout day
  • volume on breakout day should be higher than previous day
  • day before breakout should be narrow range day or negative day
  • pre breakout there should not be many big range moves or breakdowns
  • stock should have linearity in prior uptrend before the consolidation period
  • correction or consolidation should be orderly during the entire move
  • volume during consolidation should be preferably orderly and lower
  • stock should close near high on breakout day


Here is another  example of a good setup and how it would look on breakout day.



How did the above stock look on breakout day


Does it meet all our requirements. It traded in narrow range pre breakout . It had low volatility pre breakout. It traded linearly in previous move and this was a very compact orderly correction. On breakout day volume was higher.

To identify these kind of setup you have to understand this is a skill which requires some minimum level of competency. You develop that by correctly identifying setups after setups. For that you need to study historical setups and develop guidelines to identify such setups.

7/11/2016

BWEN: Stockbee Trend Intensity Breakout


BWEN is an example of Stockbee Trend Intensity  Breakout today which I bought. The stock has established momentum for last 4 months or so. Stock was consolidating near high for last one month . Today it showed up on scans early as buyers stepped in.

BWEN is an example of momentum bursts move in stocks. This stock had a big momentum burst move in May. In just 6 days it went up 54%.

To find stocks like these you need to focus on stocks with established momentum and that are in consolidation phase.

Anticipation Watch list for July 11, 2016

Anticipation allows you to control risk and get into setups early or as they are breaking out. Anticipating a breakout helps improve your per trade profits. It can also lower your risk as your stop is close. It can help you profit from even smaller moves.
Anticipation requires more pre planning and effort then buying a breakout. You need a process flow to do that. The process should be done daily and followed consistently.
To find Anticipation setups focus on stocks with established momentum. That helps you improve your probability of breakout working.
My Anticipation Watchlist:
YNDX GWPH CVGW PE GKOS DXCM WES NS EEQ MASI FANG BTE XNCR AERI GGAL LOCK CGNX SNX JACK ERF NERV RP TXRH MAIN LCI EMES ANIP

7/08/2016

PLAY : A good breakout from anticipation watchlist


PLAY ( Dave and Buster)  has been on the Anticipation watch list for couple of days. It had a big earnings breakout a month ago. After that it went sideways and consolidated, The last 3 days were low range days. Today it is breaking out of that consolidation.

To find opportunities s like these daily , develop your own scans to identify anticipation setups on stocks with established momentum. If you do that you will never run out of trade ideas.



Bullish Anticipation Setups for July 8, 2016


Anticipation allows you to control risk and get into setups early or as they are breaking out. Anticipating a breakout helps improve your per trade profits. It can also lower your risk as your stop is close. It can help you profit from even smaller moves.
Anticipation requires more pre planning and effort then buying a breakout. You need a process flow to do that. The process should be done daily and followed consistently.
To find Anticipation setups focus on stocks with established momentum. That helps you improve your probability of breakout working.

FMSA
ANIP
AERI
NERV
WPZ
PE
GWPH
YNDX
BIG
TBPH
CALD
GKOS
PLAY
MAIN
LOCK
EA
GEL
IRWD
KRA
FIVE
TPC
CVGW
ABM
TXRH
CPRT
EBIX
LBIO
XNCR

Knowledge about stock momentum will help you make millions


Many readers of this blog and beginner traders email me asking where should they start. I always tell them to try and develop understanding of what is momentum , how it works and how to use it.


For swing trading using momentum can help you find many profitable opportunities. The best use of momentum is to reduce your tradable universe to only stocks with confirmed and established momentum.

Currently there are over 5000 stocks actively traded in the market. Momentum allows you to narrow that list to few hundred stocks with best potential for profit. 




Momentum based stocks are the low hanging fruit. You know a stock is going up or down and then you can target part of that move. You can find entry points in direction of momentum along the way.

Momentum is a very powerful friend of short term as well as long term traders.  If you are looking for long term trades, momentum is still your best bet. 

If you understand momentum you will be trading fast moves in the market. For investors also stocks with momentum offer various position trading opportunities


If you are serious about your trading develop basic idea about:

What is momentum.

Why momentum works

What is momentum anomaly

Why momentum anomaly has been shown to be number one anomaly by profit potential

How can you scan for momentum

What is relative momentum in stocks

How can you scan for relative momentum

What is absolute momentum and how to scan for it.

How can you use momentum in swing trading

How can you use momentum in position trading

How can you use momentum as a growth investor.

How can you use momentum as a value investor.

How can you use momentum as a ETF investor.

There are many ways to slice and dice momentum. Having working knowledge about momentum will help you make millions over the years. 

7/07/2016

Bullish Anticipation setups for July 7, 2016

Anticipation allows you to control risk and get into setups early or as they are breaking out. Anticipating a breakout helps improve your per trade profits. It can also lower your risk as your stop is close. It can help you profit from even smaller moves.
Anticipation requires more pre planning and effort then buying a breakout. You need a process flow to do that. The process should be done daily and followed consistently.
To find Anticipation setups focus on stocks with established momentum. That helps you improve your probability of breakout working.




These are some of the anticipation setups I am monitoring today:
JONE FMSA JOY NGL QTWO ENBL PLAY SODA USAC TXMD CPE CVGW AERI TBPH WIN GLOB ENLC TRGP CBRL NERV ABM YNDX NCT MAIN CPRT AMAT ORBC ENLK WIFI FIVE GEL X WPZ IRWD OTIC GWPH
If you want to make money swing trading develop your own method to anticipate breakouts, it will help you make money.

To improve your trading study past winners daily





To improve
your
trading study past
winners daily
bee.png

What kind of moves are happening in market, what is the nature of those moves, where do they start from, should one focus on beaten down stocks or stocks with established momentum, where should one enter, exit, put stop. All these questions you can answer for yourself if you study the immediate winners.

Look at the following three examples of DRD, GORO , and FSM. They have made big moves in last 5 days.
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Today morning I studied hundreds of such moves first thing in the morning and that is what I do day in and day out.

First thing in the morning I obsessively study stocks that make 8% moves and 5 dollar plus moves in 5 days. Those are the kind of stocks I want to be in next week.

By studying them daily, I remind myself of what works and what to look for in swing moves.
When you do it over and over again you start finding small nuances to look for in successful breakouts.

The process also help to embed in your brain a short term momentum burst move.
Sometime while going through them you start questioning some of your own guidelines for selecting trades or you start questioning commonly touted market rules.

One of the best reason for doing this is it is based on actual past winners in immediate time frame. It gives you lot of information on what is working currently.

Most days it takes only 10 to 15 minutes to do this. Some days while going through them you find something and then it can trigger a deeper study.

A 8% plus or 5 dollar plus move in a short 5 day time period is a explosive move and it is the kind of move everyday we are trying to exploit. Thousands of moves like this if traded with proper risk control and tight stops can make our year.

There are many traders who are obsessed by the index moves and you will see everyday they spend considerable time analyzing them using chart patterns or pivots or support and resistance.

But as a swing trader my primary focus is on finding individual stocks with explosive short term moves. Index is just a backdrop.

The process of going through these past immediate winners helps us incrementally improve our trading as we gain better insight.

As a swing trader we want to focus on explosive short term moves of 8 to 40% in 5 days or 5 to 25 dollars in 5 days.

That particular move we call momentum burst has certain unique dynamics to it and based on study of thousands of such past moves we have derived our trading scans and guidelines for entry, exit, risk, stops and setup selection.
If you want to trade breakout or anticipation setups , you should be your own expert on it. A book , or a blog , or a twit is not going to help you much unless you start getting in to depth of that move. And it is easy to do this once you set up time for this on daily basis.

You need to have very good understanding of 5 day timeframe. Same way if you want to be position trader you need to be expert on one year timeframe..

This kind of approach is very narrowly focused on a very specific phenomenon in market. It helps you to focus on most explosive part of a trend move.

In order to master a setup or an idea you need to be at it day in and day out. If you do it for few months , you see things others may not see , or gain insight others may not have. If you do this for six month on your own you will gain more insight in to markets and more importantly find very profitable setup and you will own it up as it is based on your own unique understanding of it.

Study these 8% moves closely to see how the move happens.
What was the setup before the start of the move
What was the 5 day action before start of this move
Was the stock up or down before start of the move
Was it near 52 week high or low
what kind of Trend Intensity it had
what triggered the move
what kind of breakout
How much was it up on first day of breakout
what kind of volume on breakout and pre breakout and post breakout
how did the move progress
what was the magnitude of move in first 3 days
and so on…

A daily effort like this cumulatively builds your understanding of the setup you trade.

Because if you want to find 8 to 20% moves in 3 to 5 days, you must know thousands of such moves. So that when a similar setup shows up you can instinctively and instantly react to it.
There are many variations of the 3 to 5 day momentum bursts you will find if you do this for months.
Some are high tight flags, some are double bottoms near top of the range, some are bottoming setups from 52 week low, some are part of range bound action. But most share some common characters.

Moves of 8 to 20% start from some kind of pullback or sideways moves.
They most often start with narrow range days.
They are not up 3 days in a row before start of the move.
Most have low volatility phase prior to breakout.
On the first day of start of their 8% plus move they have significant range expansion.
Most moves only last 3 to 5 days before having pullback.
If you know this you can anticipate some moves.
You can figure out where to enter, where to exit, where to put initial stop, where to move stops and so on.

The best part of doing it is , you will build your own knowledge and base your trading based on your own observation and your own derived rules based on what "actually" happens in a the market.
In order to do this I run 2 scan one bullish and bearish.


Bullish 8% plus or 5 dollar plus in 5 days
c/c5>=1.08 or c-c5>5 and
minv3.1>100000 and c>=5

Bearish 8% plus or 5 dollars plus in 5 days
c/c5<.92 or c5-c>5 and
minv3.1>100000 and c>=5
bee.png



After running the scan everyday I study these moves. The first thing in the morning I review these candidates. Write down my observations, capture images of some of them, put notes on those setups and so on.

You can use the above pcf in Telechart as Custom PCF% True indicator. That will show you periods where this condition was true for that stock. That way you can study thousands of these past moves.

You can also use the Custom date sort feature in telechart to find 8% plus movers for any specific time frame in the past ( for example you want to find say 8% bullish moves during market correction)

For longer term moves study I stocks up 80% plus in a year.

Doing this daily everyday builds incremental expertise. If you do this you will also figure out what to look for in anticipation setups.

While there is lot of noise in the market and people peddling their own unique methods, and thousands of blogs and million twits a day on stocks we don't have to fall prey to them , we can build our own unique understanding of market one day at a time with small amount of daily effort.

If you want to make money swing trading develop your own understanding of swing moves in market. Everyday work on improving your understanding of those moves and then develop scans, processes, and rules to trade them.