Consistent High Volatility Stock Screen For Day Traders
Here’s how to find stocks that tend to move a lot each day using a high volatility stock filter (also called a screen or screener). Run the screen once a week, pick a handful of stocks that meet the volume and volatility criteria you want, then trade those stocks all week. Repeat each week.
I know many day traders who spend hours looking for the perfect stocks to trade, or spend all night looking for a stock that’s poised to breakout and make them a fortune. If you like doing all this work each night and during the trading day, then consider getting a Finviz Elite subscription. It will show you, in real-time, what stocks are gapping higher, breaking out, have big volume increases, or are moving a lot in the pre-market.
If you would rather do less work and just trade a few stocks each week that are highly likely to move a lot each day, then keep reading.
Finding Stocks With a Tendency to Move A Lot…Every Day
Moves happen every day, and if we know how to capture that movement it doesn’t matter what we trade. That said, we may as well play stocks that are moving a lot, because finding “stocks on the move” doesn’t take as much research as you think.
If you’re looking to day trade stocks, keep it simple. Day traders often look for stocks poised to move, instead of stocks which are already moving. Possibly this is because they feel they have missed out on some movement already. Who cares! Profits are profits. Things in motion tend to stay in motion, things at rest tend to stay at rest, at least in the short-term.
If that makes sense to you, here is a simple method for finding stocks that are likely to move a lot each day. We are going to use what I call a high-volatility stock screen.
If you already have a stock screener you use regularly, look for stocks with an average daily range over 4.5%(intraday high minus intraday low). The average should be taken over at least 50 days. This tells us that the stock has been averaging 4.5% moves over the last 50 days, and if it has been moving that much for that long, the volatility will likely last another week or more. We will also set a price and volume criteria. If you don’t know how to do this in a stock screener, I will show you how in the next section.
For this particular screening method, I only look for stocks with over 4 million average volume, and typically only trade stocks over $5, and preferably over $10. This is to avoid stocks that are $1 and move 5%…but that only equates to $0.05 of movement. I am not interested in these types of stocks. I prefer stocks over $5, where the price is actually moving around so I can assess when to get in and out.
When you run your own screen, and I will give you the actual formula and a stock screener you can use in a second, you may choose to alter the volatility, price, or volume criteria more to your liking. You may also filter stocks by exchange to narrow down the results or avoid ETFs, for example.
Presto! You have stocks which have a tendency to move a large amount each day after the open, and are likely to continue to move a lot over the next week!
Run this screen once a week and pick the best 2-5 stocks, then day trade those all week. Since you will generally trade the same stocks for several days you can run statistics on them and get a better feel for how they move. And you already how much the stocks move during the day, which is a piece of knowledge you can exploit.
I find it easier to trade the same stocks day after day. Each stock tends to have certain tendencies, and when you trade something a lot you learn how to exploit those tendencies. What you will find when you run this scan/screen is that many of the same stocks will pop up on it week after week. It is quite possible to trade the same stock for months on end. This allows you to get into a groove with it, which should help improve performance.
We don’t know the direction these stocks will go on a particular day, we only know that they move a lot. Be nimble and prey on the volatility. Have a trending strategy and a ranging strategy in order to take advantage of whatever movements occur (see Two Simple and Effective Strategies–these are applicable to stocks or forex).
Getting too many search results from the scan? Increase the filter criteria. Volume is good, so increase the average volume, or increase the average daily percentage movement. You can also narrow the price range of the stock screen, or add an exchange filter.
Too few results? Relax the criteria. Try a different price first, then slightly reduce the volume or the average daily range.
Where to Run Your High Volatility Stock Screen
If you only want a handful of stocks you can use the free version of the screener at StockFetcher.com. The free version shows you five results from your stock screen. If you pay a small monthly fee, you see all the results. Here is the StockFetcher screen that I use. Cut and paste it into StockFetcher (MyFilters>Create New).
and Price is between $5 and $150
and Average volume (50) is greater than 4000000
and average volume (10) is greater than 4000000
and exchange is not amex
add column Average Volume (30)
add column Average Day Range (30)
Tweak the screen to your liking. I have excluded Amex in the screen to avoid leveraged ETFs. Those move a lot, but I prefer looking at stocks which are moving a lot. Use “and exchange is NYSE” to get stocks only listed on NYSE, or “and exchange is NASDAQ” for only stocks on the Nasdaq. The screener only works on US equities.
The last two functions in the screen–the “add column” ones–make for easier sorting. Once you have your results, click on the Average Day Range column to sort from highest to lowest volatility.
I run this screen, and one other one, each week to find day trading stocks for the week. The full list is published on the Day Trading Stocks Picks page.
Final Word On The High Volatility Stock Screen
This high volatility stock screen is great for finding stocks that move a lot during the day, and that also have adequate volume for day trading. If you are new to day trading or have a tendency to get anxious when trading, don’t use this screener. These stocks move very quickly so you need to be on your toes and on top of your game. Knowing which stocks to trade is only a small part of the battle.