How to use IBD 200 to find swing trade candidates | stockbee


How to use IBD 200 to find swing trade candidates

The IBD 200 is published every Thursday. It is a list of top 200 stocks ranked by IBD Composite Rating.

IBD 200

Stocks in 200 under certain circumstances offer a quick 10 to 20% profit potential. That is the reason to focus on these stocks. It is convenient way to quickly narrow  a universe of 7000 stocks to 200 stocks. As a vehicle selection strategy, it is convenient, cheap and readily available. 

What you need to do is to run a range expansion scan on it, it will give you 5 to 10 stocks that are having range expansion and volume expansion. 

For example yesterday 11 stocks had range expansion and volume expansion out of the 200 stocks.
  1. swi
  2. acat
  3. scss
  4. cmn
  5. tal
  6. sxci
  7. halo
  8. ssys
  9. akrx
  10. qcor
  11. holi
Out of that you can find 2 or 3 good swing trade ideas like ACAT for example.

Essentials for setup to work
  1. Stocks in IBD 200 list have price momentum+sector momentum+ earnings momentum
  2. The quality of momentum should be good. Denoted by orderliness and symmetry of moves. Relative linearity and absence of too many 4% breakdowns.
  3. There should be a momentum pause of 10 days plus. Either through pullback or sideways move.
  4. The momentum pause should be orderly denoted by shallowness of pullback, compactness of pullback, absence of heavy selling.
  5. Volatility should compress during the momentum pause. Volatility compression/squeeze can be indicated by Bollinger bands. It is also indicated by series of narrow range bars during the momentum pause.
  6. Stock should breakout from such momentum pause on volume and certain magnitude move (4% plus)
  7. The immediate day before breakout day should be narrow range day or negative day. (ideal but not must)
  8. Stock should not be up 3 days in a row prior to breakout.
  9. Stock should not give up intraday gains. Should close near its day high.
  10. The stop is low of entry day.
  11. The exit is on profit target of 8 to 20% in 3 to 5 days. If stock is breaking out of less than 10 day consolidation operate with smaller profit target. If stock is breaking out of 10 day plus  consolidation work with 10% target. 
  12. Partial exits in strength are advised.
  13. Anyday after entry stock goes up 10% in a day move the stop immediately to protect open profits or sell part of the position.
  14. Risk between .25% to 1% per position depending on market phase and quality of setup.
  15. Check earnings date before entry. If entering before earnings take a smaller position of less than 5% of portfolio. 
Most of these things you can see in good breakouts. If you understand and internalize these things you can select a good IBD 200  breakout in a snap.
If you internalize this you can anticipate some IBD 200 breakouts.
This kind of swing trading method works best in a market undergoing momentum phase. In that kind of market breakouts are aggressively bought and tend to have 3 to 5 days follow through.
Those 3 to 5 days follow through moves tend to be of 8 to 20% magnitude during bull phases.
That is why Market Monitor filter or breadth thrust filter is important to improve your odds of success. 

For working people with complicated lifestyle the IBD 200 offers a very convenient way to focus on Top 200 momentum stocks with growth characters. In a traditional bull market growth stocks make big moves so this list will keep you on right side of the stock selection universe.

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If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and detailed methods to swing and position trade.

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You will learn about Investor's Business Daily’s IBD 200 list and how it can be used to find swing trading candidates for explosive moves.

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If you are looking to develop your own trading strategy the membership site might be for you. You have to be willing to put in the effort to build your own method. There are no silver bullets offered on members site. Every method, every scan, every nuance is detailed and all possible help is offered to design your own method.

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