Stocks - A Winning Way To Scan For Stocks That Are In Uptrends
With thousands of stocks listed in the exchange for trading, how does a trader go about his stock selection? I am really not refering to the elemental approach where the trader studies the basics of the company, and research the performance results of the company, check its price-earnings proportions or check its balance sheets and turnover and its dividend yield.
Generally among those successful traders who really make their living off by trading professionally in the stock exchanges, their preferred system appears to be the technical research approach.
By this, they use charting, and technical signals applied to the stocks. They can create filters or explorations, to scan for stocks that meet some selected signals to show the stocks are starting to move or have begun to move.
Pro traders who trade for a job have a choice of trading tools to help them, but one of the most typical tools they use to good effect is the indicator called On Balance Volume.
Popularised by Joseph Granville, the On Balance Volume or OBV briefly is basically accumulative volume, where the base principle is that similar OBV should support equivalent cost. By utilizing this indicator, short term traders will be in a position to identify when there's a difference in this setting, or where OBV has outbreak already but price has still lagged behind, giving rise to the situation where an approaching price jump is predicted.
But how large is the impending jump? If there is indeed an OBV outbreak, and by inference the price should follow in the next few trading sessions, one must also ensure that the impending jump is of sufficient size to warrant a good margin of profit attractive enough for him to trade.
Added to this trade indicator, traders add one more trading stipulation to nail those giant moves. We all know in Elliot wave idea the three and 5 waves of any stock are the rash and powerful waves up.
I have seen much success from traders who scan their stocks with an OBV outbreak and are in their impulsive 3 and 5th waves which are their longest and strongest waves.
Fitted out with this understanding, when a stock is discovered to possess just undergone an OBV Outbreak upwards and is moving within either its third or fifth wave, you've got a wonderful applicant which will doubtless run away in price, and letting you harvest a good-looking profit inside a short trading period.
Article Source: FxTradingStock.com
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by: David Spenser
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Date: Mon, 7 Feb 2011
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