How do you filter stocks & decide entry point?

[ash262]

Hello everyone,

I am a beginner in the trading business and this is my first post. I have a couple of questions I would be grateful to hear practical advice on.

Some background about me: I'm 23 years old, work full time as a programmer for a respected software house. Not long ago have I discovered stocks trading - and now it has evolved into a passion - I'm living and breathing it. Have thoroughly studied O'Neil whose strategy I find very sound and took a subscribtion to IBD. Have also read a number of other authors - Livermore (which I absolutely enjoyed), Darvas, Loeb, Schwagger, Turner, Link.

For me it's not solely about money. I just want to learn this business and become good at it.

Currently I am not doing any "real" trading because
1. Don't yet have a strategy or a plan. Actually I got so confused after studying all these works... Everybody's approach is so different and it's hard to choose one approach over another.
2. Decided to go with a simulator (wallstreetsurvivor) first so that I can test different approaches and get a feel for the market (I know it is nothing like real trading because of the psychological factor, but...)
3. Saving money for getting into the business.




I would appreciate it if you could help me on these questions:

1. The most difficult thing at this learning stage is how to filter stocks. I would like to know how does an experienced trader form his list. Do you for example open FinViz and prepare your list for the next day based on certain criteria? What are these criteria?

2. How big is your list? How often do you change stocks on it?

3. How do you usually determine the entry point? Is it a pattern or a indicator signal (such as SMAs crossing?)

Thank you in advance.

 

[nazzdack]

Quote from ash262:
----The most difficult thing at this learning stage is how to filter stocks. I would like to know how does an experienced trader form his list.
----How do you usually determine the entry point?

1) Try to trade one "thing" only or only a few things at the most. That way, you won't have to waste time wondering what you will trade.
2) You have to determine YOUR entries and exits based upon a method that you, yourself, will develop. It has to be unique to you.

 

[lindq]

Quote from ash262:



I would appreciate it if you could help me on these questions:

1. The most difficult thing at this learning stage is how to filter stocks.

You're putting the cart before the horse. The first thing to do is determine your strategy, then build your watch list based on the strategy.

As a very simple example, if your strategy depends on a certain level of volatility, you would want to filter out symbols that do not ever exhibit a required level of volatility. Or volume. Or price levels. Etc. And if you are using technical indicators for setups, let's say on daily bars, you'll want to further create your watch list based on those parameters.

So again, it all depends on your strategy. Once that's set, you can create a watch list and track it.

A software package that's good at backtesting and tracking watch lists in realtime is InvestorRT at www.linnsoft.com.

 

[nLepwa]

Trading is about uncovering a stationary process on which you can bet often.

Everything else is called gambling.

Good luck

Ninna