27th Oct 2009
Best Day Trading Stock Picks
How do you find the stocks ready to explode?
If you came looking for a way to really learn how to make a steady stream of really good profits then this article on Daytrading Stock Pick is the place to be. If you came looking for the “Holy Grail” this is not the article to read. Don’t be fooled by those that claim to have found one when it comes to the market. That is not to say however, that there are not some great and very predictable tools by which to judge a stock that is ready to explode. I have been trading for quite some time and like most, I found a great deal of failure at the onset. That failure has turned around in a dramatic way and this is because of hard work and being a true student of the market. What I am about to share with you here is the result of countless hours and research. If you heed this advice and paper trade to confirm the veracity of the statement then you will be much, much further ahead than most traders. So let’s get started:
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What direction is the overall market heading in?
In order to figure this out we can observe many different directional indicators. A favorite of mine is the 200 day moving average which is also my tool for individual stocks. When the market is above the 200-day MA, it has historically been a great time to go long on our positions. When the market is below the 200-day MA, it has been a wise idea to begin locking in profits on the short side. One other popular method of testing the direction of the overall market is the VIX. Be very careful when the VIX is 5% above or below its 10-day MA. 5% below usually comes before a quiet/down market. 5% above often comes before a short-term rally. There is also the Put/Call Ratio which usually tells us about where the market is heading. Put/Call ratio readings below .50 are short-term bearish for the market, especially when it’s below the 200-day MA. Put/Call ratio readings above .90 are usually bullish, especially when the market is trading above its 200-day MA. Lastly, you should try and pay attention to the Advancing Issues versus the Declining Issues. There are a whole host of other methods you can use to test the overall direction of the market. One departing tip for this part of the article and that is: Over the long run you will be a much richer trader if you consistently trade toward the trend of the market.
What sectors are hot and which ones are not?
If you know that you are in a bull market you jump into picking the big money stocks right? Wrong! You must carefully break down the tape further. You need to know what sectors are getting the money flow into them and which ones are not. This is not very hard to do and does not take that much time. Yahoo finance has an excellent section dedicated to investing and once you click on this section you will find an area dedicated to “Industries.” You can get a nice read on what sectors are moving in an upward direction. Also, CNBC, MSNBC, as well as other financial websites perform similar functions. So now you know what direction the overall market is moving and you have your eyes on the hottest sector. Now, the next move is to hone in on individual stocks.
Look for trending individual stocks
It is a good idea to look for stocks that first are trading above (long) or below (short) the 200 day moving average. This is only step one in the attempt to find the hottest stocks. If you would like to find out more about this topic as well as profitable strategies you will find no where else check out the link below. You will find an offer for a professional trading coaching session free of charge. Check below.
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