Every morning the trader sits down at his computer to begin the day, and the dilemma faced is always the same - finding a stock or two or three to make a buck on for that day. This really shouldn’t be that hard, but for some traders it is. Let’s see if we can break it down and maybe make it a little easier.

First let’s start with a few basics about your work habits. The markets open at 9:30 EST, right? WRONG! Trading these days starts at 7 A.M.! That’s the very early morning action. Then you have what some traders call the official pre-market trading that starts at 8 A.M. following that is the official market opening at 9:30 A.M. EST. This means that if you have been sleeping in, you could be missing some very interesting early morning trades. However, a word of caution here - pre marketing trading also has a higher element of risk attached to it because of a lack of liquidity.

Okay, so now that I have gotten you out of bed, you can start scanning the pages of Wall-Street Journal, Independent Business Daily and… WRONG again! Oh sure, you may find a trade or two in one of these publications, but in all too many cases that news is going be too old to trade. In addition, the news in those publications, or the reaction by the stock, is going to show up in other places.

The first thing you may want to do in the morning is check the after hours action from the day before. This information can be found a number of places. I use the NASDAQ home page under the Extended Hours Trading link found on the left side of the page. This will give you a list of the stocks that were most active in after hours for the day before. In most cases these stocks are moving on news released after the close. These links as well as others can be found at www.TraderAide.com.

While you are on the NASDAQ page make sure you take note of the Pre-Market Most Active list. This is going to be another great source of potential stocks for you to consider. An additional source on the NASDAQ page is the NASDAQ-100 Pre-Market Heat Map. This is especially useful right at the beginning and for the first hour of so after the beginning of the 5 A.M. premarket trading action. In both cases, after-hours movers and pre-market movers, the action is usually news related.

An excellent source of this news is MarketWatch. You can find it in a hundred other locations on the net, but I find the MarketWatch site easy to use and even more important, easier to search. It is also less likely to be full of non-trading” news that you really don’t need to trade.

A few of the things you want to be looking for include events on stocks that take place nearly every day, such as: analyst up/downgrades; earnings reports’ and FDA actions which could include approval, disapprovals or merely making comments on application.

I also suggest you watch Bloomberg TV early in the morning, before the 5 A.M. premarket trading begins. I prefer Bloomberg to CNBC at this time in the morning because of their presentation of the futures and the news streamer on the bottom of the screen. Once the pre market opens I suggest you change over to CNBC simply because they have, what appears to be, a much larger audience. On CNBC the stocks reported on or mentioned are often sent up or down, offering excellent trading opportunities in many cases.

Once the markets opens, almost all real-time quote systems have an element built into them that will give you at least the top ten most active on the three main exchanges, both gainers and losers. Also, they may have a more advanced “screener” of some sort. With RealTick by Townsend Analytics, Ltd, it’s called Hottrend Realtime Radar. You can leave this running throughout the day. Stocks that show unusual volume compared to their historic volume patterns will show up automatically on the Radar. It is available for both NASDAQ and NYSE traded stocks. Check with your supplier to see if this feature, or something like it, is offered.

Last but not least, you want to be checking your Dow Jones news feed for the latest breaking news starting at about 6:30 A.M., New York time. Sorry “West Coasters, but as the bank robber said when asked why he robbed banks, “Because that is where the money is”.

Happy trading!

No permission is needed to reproduce an unedited copy of this article as long the About The Author tag is left in tact and hot links included. Questions and comments can be sent to Floyd at floyd@TraderAide.com.

About the Author

Floyd Snyder has been trading and investing in the stock market for three decades. He was on the forefront of the day trading craze that swept the nation back in the late 1990’s, both as a trader and as the moderator of one of the Internet’s largest real time trading rooms, http://Daytraders.com. He is the owner of http://www.TraderAide.com and Strictly Business Magazine at http://www.sbmag.org

STOP.

STOP trying to create the perfect trading system. There isn’t one.

Phew..what a relief. Stop spending all those hours creating more and more trading rules and realize this:

Money creation in the stock market is made from CONCENTRATION. That’s right. Trading the very best stocks atthe right time with enough capital to make a big difference.

You must go from wealth CREATION to wealth maintance in this game. Unless you plan on “investing” for the next 25+ years and building wealth slowly.. this is my plan of how you can make millions in the stock market:

In Darvas’s book “How I Made $2 Million…”

How many looked at his position sizing? In his early trades Darvas only trade 1 or 2 stocks at any one time on MARGIN! Only when he got upto over $500,000 did he start diversifying a little. Most people overlook these facts.

MY Momentum Stock PLAN:

CONCENTRATION BUILDS WEALTH DIVERSIFICATION MAINTAINS WEALTH

END GOAL:

$2 MILLION+ ACCOUNT MAKING 20-30% P.A

Start with:
$50,000 Trade 2 stocks with half capital in each.

RISK Per TRADE = 5%

When at $100,000 Trade 3 stocks with 1/3 capital in each.

Risk Per Trade = 3%

When at:

$500,000 Trade 5 stocks with 1/5 capital:

Risk Per Trade = 2%

When at $2 Million Trade 8 stocks with 1/8 capital:

Risk Per Trade = 1.25%

You first have to create wealth in order to maintain it. Whilst trading only two stocks at a time may be deemed to ?risky? by the ?professionals? you must be very selective on the stocks you trade. Quality beats quantity. Especially when you concentrate so much.

This is the only way a small account can break into the big time. You must not only focus your efforts in the early stages but you must also onlytrade the top 0.1% of stocks in the marketand get yourtiming SPOT ON.

About the Author:

Mark Crisp, A Successful Momentum Stock Trader and Author http://www.stressfreetrading.com