How to scan for momentum stocks

Momentum is stocks tendency to move in the direction of prevalent trend. You can use momentum to select stocks to swing trade or position trade.

Momentum can be calculated in many ways and the period and specific method used to calculate momentum depends on your goals and holding periods.

Momentum is often used to rank stocks and then top 25 or top 50 or top 200 stocks are selected for swing or position trades. This kind of momentum is relative momentum or relative strength.

Momentum can also be used to identify when a stock has entered momentum phase and when the momentum has ended. This kind of momentum is called absolute momentum.

Momentum based trading strategies have big advantage as they allow you to put your money to work in fastest moving stocks.

The momentum scans shared here can help you find momentum stocks on your own and profit from them.

In Telechart you can create a layout with multiple momentum sort criteria. This kind of momentum sort allows you to rank stocks by momentum quickly.

YTD Momentum

This sort criteria comes in pre built in to Telechart. It finds momentum from 1st January to today. The scan parameters are:

100 * (C / C'12/31/2017' - 1)

MDT Momentum

This is six month momentum ranking sort. It is useful for intermediate term hold and long term hold.

c/avgc126

TI65 Momentum

This is 3 month momentum ranking sort criteria. It is good for finding swing trades opportunities. If you know how to use it profitably you can find thousands of trades in a year.

avgc7/avgc65

21 day momentum

This is one month price percent change ranking. Short term momentum often mean reverts so this can be used to find extreme momentum moves vulnerable to reversal and you can fade them. It can also be used to find consolidations or pullbacks on recent big breakouts.

c/c21

10 day momentum

This is one 10 day price percent change ranking. Short term momentum often mean reverts so this can be used to find extreme momentum moves vulnerable to reversal and you can fade them. It can also be used to find consolidations or pullbacks on recent big breakouts.

c/c10

5 day momentum

This is one 5 day price percent change ranking. Short term momentum often mean reverts so this can be used to find extreme momentum moves vulnerable to reversal and you can fade them. It can also be used to find consolidations or pullbacks on recent big breakouts.

c/c5

One Year Momentum

Longer duration momentum moves can be used to find position trades. A stock with long term momentum can often spend months forming a base near top of its range , such stocks on high volume breakouts can go on to make further big moves.

c/c252

DT momentum

DT (Double Trouble) momentum sort is anchored momentum sort. It is based on the Darvas and Richard Love books . Itcalculates momentum from 52 week low. This kind of momentum is good for finding longer duration swing trades.

c/minl252

TI 42 Momentum

This is a 42 days momentum sort. It is used for mutual funds in 401k investing.

100*avgc4/avgc42

All above scans are for ranking stocks. But many of these momentum indicators can also be used as absolute momentum indicator. The advantage of that is , it tells you when a stock has entered momentum phase.

Above chart shows TI65 Momentum used as absolute momentum . The Pink period indicates stock was in downtrend and when the downside momentum started and ended. Green portion tells you when the bullish momentum started.

Absolute momentum is good for signalling trend transitions . The signal depends on period you use. If you are aggressive trader using faster signal will get you in early. Longer period momentum of 6 month is slower in identifying trend transitions but can help you avoid whipsaws.

Same MNK chart with MDT as absolute momentum indicator will show you that.

TI65 Absolute momentum Bullish

avgc7/avgc65>=1.05

TI65 Absolute Momentum Bearish

avgc7/avgc65<=.95

MDT Absolute Momentum Bullish

c/avgc126>=1.19

MDT Absolute Momentum Bearish

c/avgc126<=.81

DT absolute Momentum Bullish

c/minl252>=1.80

Once you understand momentum and nuances of using momentum you can find many creative uses to momentum.

If you are serious about making money trading learn about momentum and how to use it to extract money from the market. Once you learn the details of momentum it is life long money extraction tool.

Best site to learn to trade

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 a lot of things before coming to my site, and it has offered them the most extensive and detailed methods to swing and position trade. Members range from very experienced traders to novices.

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As a member, you will learn the basics of swing trading, momentum investing, growth investing, and risk management. You will learn about Stockbee Momentum Burst breakouts, Stockbee Trend Intensity Breakouts, Stockbee Episodic Pivots Breakouts, Stockbee Lemonade Strategy for 401k, and many other member-shared methods.

You will learn how to set up your own scans, how to select the right kind of stocks, how to set up stops, when to enter, when to exit, how much to risk, how to track your trades, and all other details about trading.

You will learn about developing your own methods and not relying on others for trade ideas. Develop your own edge. Once you develop your own method, you will have a lifelong profitable method.

The site gives you an opportunity to interact with some of the most successful traders and learn from them about their trading methods. It is a vibrant community with members from different backgrounds and experiences willing to help each other. Members have shared their methods, scans, software, backtests, and market insights.

Every day, the emphasis is on continuous learning and upgrading of market knowledge and setup knowledge. The members range from hedge fund employees, financial advisers, active swing traders, investors, and new traders.

You will see that many trading bloggers have been using my market timing methods, scans, and chart templates. They have developed their own methods based on my methods.

Almost every member comes through a recommendation of some of the leading trading bloggers and trading sites. 80% or more members continue to be members for more than 3 years. Most tell me that they stay on because every day they learn so much from the members' site.

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 the 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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