Twelve years ago when I first started investing I used to visit Money.com on a regular basis. I saw that everyday no matter how bad the overall market was there were stocks that moved 10, 20, 30 percent or more (see for yourself here). Usually it made me upset that I didn't own any of these particular stocks on the days they made their moves. Being a "rookie" investor at the time, my stocks were usually losers or small winners. They never typically made big moves. After I took Finance 101 as a Marketing student I knew that if I could capture moves like this that it wouldn't take a long time to become very rich. So I had two problems to solve.
1. How can I know when a stock will make a minimum 10% move in a short period of time?
2. How can I find as many of these stocks as possible before they make that kind of move?
If you have gone through Lessons 1-6 in this Training section you already know the answer to question 1. The purpose of Lessons 1-6 is to teach you how to spot when a stock will make a big move in a relatively short period of time.
Now we will address question 2: How do we find stocks?
There are literally thousands of stocks in the U.S. Stock Markets alone. You may have a stock that isn't doing well but chances are that somewhere out there is a stock that is making a big move that you are missing out on. The secret to finding stocks is to use a Screener. All online brokers give you free Screener tools to help you find stocks.
What is a screener? A screener allows you to scan the markets for stocks using a predefined parameter. For example, you have learned about the MACD (mac-dee) and it is clear to see that this oscillator is very accurate in alerting you to when a stock will move up or down. You can tell your screener to find all the stocks in the entire market that show a bullish MACD crossover(MACD crossing over the EMA or Zero line). Or you can tell it to find all stocks with RSI values that have just crossed over 50. Or maybe you want to find all stocks that have made new 52 week lows. All screeners can be programed to search the ENTIRE market for stocks doing these or almost any other thing you can think of.
Using a screener is like having a thousand employees search the entire market for you every minute of everyday
Your screener will search the entire market for what you tell it to find. If you don't use a screener you have to find stocks on your own. This can be extremely time consuming and tedious. And no matter how much time you spend in front of your computer you will never be able to check every single stock in the market to find the few that you like. All online brokers offer free tutorials on how to use their stock screeners. I would advise anyone to take those lessons. What you learn in a short period of time for free is invaluable and it will change the way you find stocks forever.
Below are a link to a screener and instructions on how to tell the screener to find all stocks on the NYSE which have an RSI value that just crossed above 50. Although this screener won't give you the complete results of the screen unless you have an account with Ameritrade, it is still useful for demonstration purposes.
To see a sample screener click here.
Step 1. Click on Exchange (in the Basic box)
Step 2. Click on NYSE (in the Criteria Name window)
Step 3. Click on Technicals and select Relative Strength Index (RSI)
Step 4. Change the 30 to 50 in the Relative Strength Index Window
The green "view matches" box shows you the number of stocks on the NYSE that match your search criteria.
