Scanned Options for Stock Trading

Scanned Options for Stock Trading

Scanned Options for Stock Trading

Stock trading entails buying and selling currencies in a financial market. How an account can accumulate billions of shares in a single day is beyond comprehension. It must be a mystery to you. No worries; stock trading does not require you to understand every detail in the system. The advancement of technology and integration of such features are changing daily and it is a real job to keep up. The technical elements of buying and selling stocks is not necessary, focus on understanding how the financial markets and master the two techniques of trading; electronically and exchange on the floor. If you are planning to start a business in the financial markets, it is important to understand various concepts, these include; stock prices, how to bid and ask prices, stock quotes, and stock orders. There is a lot that you have to study before investing to avoid huge losses. This is why stock scanners exist.

What is a stock scanner?

To trade, you have to set criteria for your market search and alerts on the high and low currencies. There are endless techniques you can use to achieve this; the more creative you are in developing a search technique the more you will reap. But let’s be honest, navigating through the financial markets, currencies on a daily basis is not practical. You will give up before you make any profit. Here is where stock scanners come in.

Stock scanners are tools that automatically search through the markets and high-low currency prices to give you desired results. Scans work on two principals, fundamentally or technically. Fundamental scans focus on business operations to obtain results through financial metrics. Common elements of business operations used are cash per share, revenue growth, market capitalizations, and price earnings ratios. Technical scans base its results on stock actions involving percentage price changes and price alerts with respect to high and low variations.

Goal of setting a scan

In financial markets, there is a lot of stock activity. Not every cause of shift in prices is a chance for you to invest; you have to be wise in selecting and establishing trade set-ups that have high probability of paying. The goal of using a stock scanner is doing away with the low probability stock actions and focusing on the gems. While scanners are pre-programmed you have to develop criteria on your own for optimal results. Just like any other technological integration, scanners should not replace human abilities. Be sure to control and monitor the results to avoid unnecessary losses.

Also, there are multiple stock scanners available online. While they all offer same results, analyze their structures before investing in any of them. Here are two renowned scanning options for you:

  1. Bull Flag Pattern

A bull flag involves three components that guarantee your efficient services with respect to price projections and stock activity. These three components are; high relative volume, a pole, and sideways consolidation.

Flag pole

It is represented by a powerful price surge. This component is considered to be at best when caused by news or earnings, which are fundamental catalysts. Buyers outnumbering sellers on specific stock results in a price surge.

Relative volume

A high relative volume is an indication of increased number of buyers into a stock. It also shows that the buyers are there to stay despite the weak signals. This is an indication of long term trend of the stock hence an appropriate time to join the stock.

Consolidation flag

After a price surge and coiling of prices is the best time to enter as a trader.  Set price and wait as the stock piles up. Wait for the coiling consolidation pattern to break and chase to the bottom of the flag.

  1. Rising Wedge Setup

This is price wave reversal pattern; it is working against the wave. The analogy analyzes the stock on basis of movement of assets value and price. When the assets move up or down, it forms a wedge. When the price goes sideways, triangles are formed. It is a whole pattern that completes by the price breaking out of the wedge. At this break point, the price breaks facing the opposite of the original side of the wedge hence the term reversal pattern.

Price target

Wedges are used as significant turning points when determining price for a long term trade. At break point, the price turns facing the opposite of the wedge; this only denotes a good time to trade if the price ranges above the previous trend line. The wedge does not give any hints of long term price ranges. Wedges only help to draw trend lines that project possible price ranges in the long term.

Trading considerations

Heights of a pattern are a good way to estimate when to exit a trade. Focus on the long price runs and how high or low the wedge is when you last traded. When the wedge is rising and you are long, take it as a warning sign. It is a falling trend and you should exit as soon as you can. Also, when the wedge is falling and you are short, also exit trading in the stock especially when the price breaks upwards. However, don’t be too speculative when using the wedge setup. Wait until a break out before making any decision.