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 Sam brings over 15 years experience of equities, forex, options, and futures trading which began when he was on the floor of the Chicago Mercantile Exchange. He has traded equities, futures, interest rate markets, forex, options, and commodities for his personal interests for years and has educated hundreds of traders and investors through seminars and daily advisory services both domestically and internationally. Sam has been involved in the markets since 1991 both on and off the floor of the Chicago Mercantile Exchange. He has served as the Director of Technical Research for two trading firms and regularly contributes articles to industry publications. Sam is known for his trading, technical research, and educational guidance.
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Sources for Trading Opportunities in Stocks
As market speculators in stocks (or any market), it is our job to find stocks that are trading at price levels where supply and demand for the stock is out of balance and simply trade the stock to balance. Whether we are using support and resistance, moving averages, stochastics, and so on, our task is still the same. Each day, there are plenty of these lower risk/higher reward opportunities waiting for the astute market player to find them. Where to look? When I am teaching Professional Trader Part 1 and 2, there are two sources I find most helpful in this quest.
The first source is www.briefing.com. Once here, there are three sections to choose from. Choose the "free content" section in the Investor section. Next, select the "calendars" tab and you will find what you are looking for. The first section in "calendars" is "upgrades/downgrades". Spend time in this area each morning before the open of trading if you are a day trader as you are likely to find plenty of opportunities. What you want to look for here are stocks that have been upgraded and are opening right into resistance. These setups are potential low risk/high reward shorting opportunities. You also want to look for stocks that have been downgraded and are opening right into support. These setups are potential low risk/high reward buying opportunities.
A little further down under the "calendar" tab, you will find an "earnings calendar". During earnings season, make sure and check this section as well. If a stock reports good earnings before the open and it opens at a price level where price resistance is much higher, you can consider buying it. If, however, that same stock gaps up right into a resistance level on a good report, you may want to consider fading the gap and going short. Conversely, if a stock reports bad earnings and it opens at a price level where support is much lower, you can consider shorting the stock but if the bad earnings report brings in enough sellers and the stock opens right into a support level, this may very well be a low risk/high reward opportunity to buy the stock.
The second source is www.nasdaq.com. Once here, click on the "extended trading" tab. Next, click on the "Pre-Market Heat Map". This is a fantastic source as it not only gives you a look at all of the Nasdaq 100 symbols in one box, it shows you pre-market which stocks are gapping up and down the most. In class, we spend most of our time on the top two rows and the bottom two rows as these show us the stocks that are most "out of balance" at or near the open of trading. What we are looking for primarily are gaps to fade. We go through the top two rows and find stocks gapping up strong and RIGHT into resistance for shorts near the open. We go through the bottom two rows and find stocks that are gapping down strong and right into support for longs near the open. Again, we are simply finding stocks whose market price is currently at a level where supply and demand are out of balance and we take advantage of this buy trading them back to balance.
With any of these ideas, don't forget to check the trend of the stock in question and make sure the candidates you find trade at least 1 million shares per day on average. Also, it is always a good idea to check your support and resistance levels and the trend of the S&P or Nasdaq and time your stock trades with these markets. As you can see, the key is knowing support and resistance and trend analysis as that is what primarily determines price direction.
Keep in mind that most if not all the opportunities I have outlined here will offer you the desirable entry very close to the open of trading in most cases. If you are not VERY solid with support and resistance, come and take a Professional Trader course before trading market imbalances on your own with your money. You will find that it is always a much cheaper (and beneficial) learning experience when you learn and practice with Online Trading Academy money than it is if you practice with your money. And yes, we do trade REAL money in class.
Have a great day.
- Sam Seiden, sseiden@tradingacademy.com
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