How To Use The Percolator Scan to Find the Best Stocks in 10 Minutes or Less | stockbee

10/04/2010

How To Use The Percolator Scan to Find the Best Stocks in 10 Minutes or Less

This is a guest post by Dan of Patientfisherman blog. He has developed a powerful scanning tools to find swing trading opportunities quickly. This allows him to trade while working.


Why did I build Bluefin in the first place? After about a year or so into my StockBee degree, I began to realize that there was a considerable amount of commitment and time involved in finding the best stocks.

I needed to know if they were in the top 20 sectors, what their momentum rating was, float, overextended, what was the catalyst, number of days up? Number of days down? Within 10% of their high? Is it an IPO?
I found myself frantically trying to do research using IBD, Google news, Briefing.com, Yahoo InPlay, Nasdaq morning movers before I left for work and between meetings during the day.

Coming from a programming background, “There had to be an easier way”.

Initially, I built out the StockBee filters (MDT and EP).After some discussion with Pradeep, we decided add the watch lists ranking each stock by sector strength and individual momentum using our own formulas.

Today, I use “The Percolator” scan to find my daily selections. The scan will filter stocks across all of the watch lists found in Bluefin on the following criteria:
  1. Today’s percent change >= 2%
  2. Today’s volume surge >= 50%
  3. Within 10% of 6 month high
  4. C1 Percentchange <= 4
  5. C2 Percentchange <= 4
  6. C3 Percentchange <= 4
  7. C4 Percentchange <= 4

This list is sorted by volume surge from highest to lowest. Now, we have all stocks starting to move on potentially higher volume within 10% of their 6-month high with no breakout days in the past 4 days. We have about 2500 stocks in Bluefin, this will narrow those down to a manageable list of potential opportunities.


 
Next, a quick glance down the Watch List column will tell you the attributes of any given stock. You can look at these watch lists as the catalysts. Is the stock in the top ranked sectors (Momentum and Strength or Emerging Opportunities), an IPO, Post Earnings, or has a high short interest to name a few.

Looking at DMAN, you instantly know this stock is both in the Momentum and Sector and the Today Earnings lists. With a low float at 21 million this stock caught my eye, so I click the Symbol to bring up the chart. (I should mention that I ran the “Today’s Earnings” watch list earlier and already knew this stock had an earnings surprise of 300%.)

Reviewing the chart, I see a very nice setup with the bull flag pattern resolving with a breakout today on earnings news.


Next, I refer to Stop and Shares columns.


This tells me how many shares I can buy with a 1% risk and my initial stop (9.14). The initial stop is calculated by using the lowest low in the prior 3 days.
The RR column is the Risk/Reward for the current trade with a target of 10% from the current price. One thing you have to take into consideration is that the RR column also uses the lowest low for the past 3 days so breakouts like DMAN will have a low Risk Reward.

You could use half of the days gain as your new stop price and the Risk/Reward would be much higher. We’re looking at some toggles to change this column to use different values based on the initial stop price.
Where the RR column rocks, is for swing plays. Using the lowest low for 3 days will ‘force’ you to select stocks coming off more stable price action prior to today’s breakout. For example, if I click the RR column, the Percolator list will sort by Risk/Reward.


StockBee recommends a RR of 4 or higher for entry. You need to catch these stocks in the morning. By noon most of them have moved below the 4-1 risk reward.


My first click brings up “ING”. This one looks toppy, so I pass and click the next stock: INTU.
INTU belongs to the “Post Earnings Surprise” list, which occurred on August 23. With a pullback this one looks prime as a swing candidate.


With a tight stop at 43.64 I can pick up 800 shares with a low 1% risk at stake. I took this trade on Friday. Since the market monitor at extremes, I sold for a small profit at the end of the day. Under normal circumstances I would of held for 3-5 days to catch the entire move.


With both trades DMAN and INTU, 45% of my account was working in the market. It took about 2 minutes for me to find and create the order. I was on auto-pilot for the rest of the day.
In short, you can use “The Percolator” to help focus your daily selection list to the best stocks and setups. With the Total Shares, Risk, and Risk Reward columns you can easily get your position sizes and initial stops.

If you have any questions feel free to drop me an email at patientfisherman@gmail.com




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What will I learn in the members site?

The members site will give you in depth understanding to develop your own trading method. The emphasis is on making you self sufficient and confident of your own trading method and style.

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The site has hundreds of videos and trading methods and variation of methods. Members help each other in developing the methods and share actively their research and finding. A collaborative spirit allows you to get input from others on your trading ideas or problems.

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Do you have a trial?

If you are just looking for trial you are better off trying thousands of other trading sites that offer free trial or one month trial and offer you promise of riches.

It is for those who are ready beyond the trial phase and ready to put serious months or years  of efforts to learn to trade on their own. It is for those who want to learn to find their own fish.

The free blog has all the details about the methods I trade and if you go through the posts highlighted in the sidebar you will learn about them.



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