PT Education Series - SWING trader daily SCREENING process 🔍

daily #process

Hi!

Here is the latest article in the PrimeTrading education series about the daily SCREENING PROCESS to find tactical entries in potential leading stocks.

Here’s what you’ll learn:

• Building the UniverseList (≈ 500 names)

• Building the WatchList (10-100 names)

• Building the FocusList (0-10 names)

• EXECUTING the FocusList

Enjoy! ✌️

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Building the UniverseList (≈ 500 names)

The first step for me is to build what I call my UniverseList. This list contains the stocks that fit the fundamental & technical criteria that I want to see on every stock that I trade.

For that, I developed an automated model in a spreadsheet, similar to what IBD MarketSmith offers. It allows me to give a score for each stock in the US stock market and to find the best of the best names that fit my model.

You can also use tools like these to find stocks with great fundamentals:

1. finviz.com

2. IBD / MarketSmith

3. Finbox.io (Which I use to feed my model)

4. TradingView

5. Barchart.com

Here’s how my model is built:

FUNDAMENTAL (FA) SCORE:

• Quarterly earnings growth and acceleration in the past 3 Q

• Quarterly Sales growth & acceleration in the past 3 Q

• Quarterly EPS & Sales Growth Amplitude

• Q EPS Surprise over the last 3 Q

• Annual EPS & Sales acceleration & growth over last 2 Y

• EPS JUMP - which is the increase in the most recent Q EPS Over the last 7 Q average

• Margins growth over the last 3Q

• And finally, the projected EPS and Sales for the next Q

TECHNICAL (TA) SCORE:

• Trending moving averages (10, 20, 50 sma)

• Relative strength

  • RS-1M: Over the last 1M, with a 1-week step, with an emphasis on the most recent week

  • RS-3M: Over the last 3M, with a 1-month step

  • RS-6M: Over the last 6M, with a 1-month step

PRIME SCORE:

• A mix of FUNDAMENTAL & TECHNICAL scores

  • Adjusted with a model ratio to adjust weight between the two

TECHNICAL FILTERS:

• 🚀 Ratio < 150 (Float/avrg vol.)

• Number of float shares / daily average volume

• The smaller the ratio, the quicker the stock tends to move

  • Growth Score > 35

  • Average daily volume (3 months) > 500 000 shares

  • Average daily liquidity (3months) > 10 000 000$

  • Market cap < 200 bil$

I want to build a list of around 500 stocks that have the best fundamentals to make sure I have conviction in the business’s current & potential growth/performance.

Once that big list is built, it becomes my sandbox in which I will then continue to drill down to find the STRONGEST stocks. Because even if a stock has stellar fundamentals, if its chart does not fit my template and it does not lead, I don’t even want to consider it.

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Building the WatchList (10-100 names)

Once the whole US market is drilled down to the 500 best names, I want to ONLY focus on the technicals at this point.

I have 2 different ways to approach that step:

1. Chart screening with a technical template in TradingView

The first way I build my daily WatchList is by applying technical filters to my UniverList directly into TradingView. I essentially want to focus on the names that are:

1. Above their 200dma

2. Above their 50dma

3. Their 20dma are ABOVE their 50dma

I like to go through that list of around 100 names each night to find the names that are in a stage 2 uptrend to find potential setups for the following day.

When the list goes above 100 names, I start sorting it my 1M, 3M or 6M performance and only focus on the strongest names.

2. Using my Spreadsheet to see which stocks outperform my UniverseList

The other method I use each night is to go through my spreadsheet technical filters to find stocks that are leading short, mid or long term the market and look for names that show up consistently or also new additions.

I look at the top 20 names in each of these categories:

1. Prime Score (TA + FA score)

2. TA score

3. 1M Relative Strength

4. 3M Relative Strength

5. 6M Relative Strength

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Building the FocusList (0-10 names)

Once I have this shortlisted list of strongest names, I want to find tactical entries on which I can enter with a risk-reward.

I have developed a playbook of a couple of technical setups that I use to trade the market, you might have already seen this article about these, but if not you kind find these here:

PT Education Series - Alex's technical setups playbook 📒

I am a true believer that you can shorten the WatchList in names of INTEREST, but at some point, you really have to just flip charts in software like TradingView and learn how to find these setups yourself.

The perfect scan that finds these low-risk setups don’t exist IMO.

Might be more work extensive at the beginning, but after a few months, this will really become second nature and you’re not gonna stay on a chart for more than one second.

I like to build a FocusList of less than 10 names each day so that I really keep my focus on a small amount of stock. I also ONLY look at these names during the trading day to not deviate from my prepared plan and don’t force trades. If those names don’t set up during the day, then I simply don’t open new positions, simple as that!

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EXECUTING the FocusList

Once that short FocusList is built, I put alerts on the levels I consider buying each stock. I do that in TradingView as well.

Then, it’s really about executing my system.

Here are a couple of articles I wrote that will explain this part in way more detail:

PT Education Series - Market STRUCTURE & PIVOTS entries 📈

PT Education Series - Entries & Position management ⚙️

PT Education Series - Maximizing trading PROFITS through proper EXPOSURE 🪜

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Takeaway

In this article, I showed you my own PROCESS to screen the market and find proper entries, however these rules might not fit your style or personality. You MUST have a system in place with specific rules that fits your personality, and that, you’ll have to experiment to find what fits you best.

I really hope that you enjoyed that PrimeTrading Education series article. If you did, please share it so that more folks can be reached and this Newsletter can grow. :)

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Feedback!

I would highly appreciate it if you could DM me with constructive feedback or new idea for that newsletter.

Also, if you have questions, don’t hesitate!

Cheers! ✌️

Alex