How to narrow down and choose the best?

K

konviction

I trade breakouts, but I'm trying to figure out a way to narrow down the list and find the ones that have the best potential.

1000's of stocks are breaking out during the day but I simply cant follow them all and i dont know how find the ones that have the most potential over 3 months to a year, which is my intended holding period.

I could narrow down by fundamental data but tos's fundamental scan options are crap and looking at each one would take forever.

I could use the fundamental tools on finviz, but then again, that may or may not reduce the amount of manual checking for each stock.

any suggestions would greatly help.
 
How about where it is in relationship to past ten years. If too high and a higher timeframe like monthly might show slowing down in trend, might be better to find on the monthly a stock lower in past ten years which is breaking out to upside that has based for several months.
 
As I typically trade options, I only like to look at stuff that does decent volume (1 mil min, usually 5 or higher) since the spread just sucks for the less liquid stuff. Obviously if you're trading shares, that's a moot point, but it's a decent starting point to start chopping.

Also, I usually screen with a price range...typically 10-75 or so. I guess that would be a function of your trade capital, but again, it's a nice way to weed out a chunk.

Perhaps you might also screen for more volatile stuff (say beta > 1.5 or something) as well. You could always add something to see if a particular stock is currently overbought/oversold.

A decent screener can be found at stockfetcher since that'll scan for nearly any technical setup you care to create (you can roll your own). It's dirt cheap to subscribe, but you can tweak stuff to to make use of delayed info and that's free.
 
Depends on your timeframe, but here's an idea...


Let's say you trade on daily timeframe. Find the stocks with a 5 day range that is considerably lower than the average 5 day range over the last year.

Enter on a breakout in a pullback setup <=5 bars.

Do not enter short in stocks that have already broke down considerably. Do not enter long in stocks whose volume has dried up considerably since initial run up.
 
Just do fundamentals plus your breakout strategy. You'll kill it. P/B 3 or below. Market cap 100M or whatever you choose. Positive income and sales. You could add plenty more to narrow your search down.
 
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