Where I Find Stocks To Trade

In trading, correctly picking your entry and exit points is only half the battle. More importantly, you gotta be sure you’re playing the right stocks! To find the right stocks, I use just a few different websites.

Download this cheat sheet to learn where to find stocks to trade.

Below is a list of websites I check every night to find what’s in play—and by in play I mean stocks that moving 30-300%/day and have plenty of trading volume so that I can get in and out easily. The time it takes to research varies (anywhere from 2 minutes to 2 hours) dependingon market conditions (during boring markets, there’s not much volatility, during bear markets, there aren’t many bullish plays, during bear market spikes (hopefully we get one in the next 2 weeks, there are tons of plays because I look to short into the brief spurts of strength, etc).

I’m sure there’s a way to model everything and/or use pure screening software, but that’s not my game—I just stick with what I know. Once you start practicing the PennyStocking process, you’ll see that anybody can do this—no assembly required.

Yahoo! Finance —this is the grand daddy of financial websites and you should plunder it for information. On the left hand side, I scroll down and click Price % Gainers and I look at each day’s biggest winners. I’m looking to see which big movers will continue to run and which ones will break down. This simple list is where I get 90% of the stocks I trade. Price % Losers doesn’t interest me because I’ve found that big losers are much more unpredictable.

StockCharts.com — I use all the various stock scans to see all the various chart patterns – 52-week highs, $ gainers, gap ups, whatever. 99% of these charts are too messy / unpredictable so I ignore them. I’m looking for very clean-looking charts. I’m working on a charts page for this site so you can see examples of what I’m talking about—it should be up within a few days.

Clearstation —I use the tag and bag to see all the various charts—best trends this week, stocks in new uptrends, etc. Again, just looking for interesting charts with enough trading volume (at least 500,000 in daily trading volume).

And, even though the financial media doesn’t give them any respect—internet message boards are great places to do research. Particularly hype research. TheLion.com (more specifically one message board–Wall Street Pit) and InvestorsHub (more specifically one message board Zeev’s Turnip Patch) are the two best places—Yahoo has message boards, but they’re not great for finding stocks, they’re mostly just spam and amateurs looking to brag about their winners and comfort themselves over their losers.

After I find the stocks in play, I write down all the tickers that interest me and then do full investigations on them—fundamental, technical, and the message boards. Yes, the chart/price action is what interests me initially, but then I want a story to back it up and people who believe that story to back it up even more. In smallcaps and microcaps, it’s all one big self-fulfilling prophecy (many people can’t understand this) so as long as the hype is believable, the price action is predictable.

Certain types of news influence stocks in different ways (buyouts usually lead to little volatility aka I ignore them, FDA news leads to big gains, but I don’t understand the science nor can I predict how successful any drug will be (despite all the BSers out there, nobody does) so I usually leave those alone unless they’re big winners for several days in a row—then I might look to short, newsletter/analyst mentions lead to wild swings—the hype only lasts for so long—so those are my favorite kinds of plays to short, earnings can really power a stock—I hardly ever short these, instead I look to buy these plays if and when their trading volume proves to me that their outstanding earnings have forced people to view the company more positively, etc.

Everybody seems to like to play the same stocks, GOOG, CROX, BIDU (or maybe they just like to write about them), but if you’re willing to look beyond the most actively traded issues, you might be surprised as to how much easier it is to trade stocks that everyone and their mother aren’t playing.