I was recently asked about how I determine my “universe” of stocks. That is the stocks that I consider fair game to be traded. I use different filters for swing trading and day trading but they do have similar criteria. In both cases I’m trying to find liquid, volatile stocks. Once the filter’s applied I then look for certain patterns / setups to trade.

For swing trade candidates I use the following criteria in TeleChart:

• Price Per Share: about $5 to Max
• 5 Day Average Volume: 75th percentile & higher (right now that works out to about 466,000 shares per day)
• Price Volatility: 25th percentile & higher
• Volume (Dollars) 5-Day: 75th percentile & higher

Here’s a shot of the filter. The count column shows how many stocks are left after applying each row in the filter.

That typically narrows the market down to about 1,000 stocks. Then I look for setups among that set of stocks. I gave a lot of details about the setups I scan for back in the day.

For day trading I’m trying to find liquid stocks which are abnormally active and volatile. To do that I use the following two scans in Trade-Ideas:

Bearish Scanner’s Filter:

• Min Price: $10
• Max Spread: 10 cents
• Min Current Volume: 3 (stock is on pace to trade 3 times its normal volume today)
• Min Volume Today: 300,000
• Max Up from the Close: -0.5% (negative means down at least 0.5%)

Bullish Scanner’s Filter:

• Min Price: $5
• Max Spread: 10 cents
• Min Current Volume: 3 (stock is on pace to trade 3 times its normal volume today)
• Min Volume Today: 300,000
• Max Up from the Close: 1%

Sometimes I’ll tweak these settings to give more or fewer alerts. I usually do that by adjusting the “Min Current Volume”. Details about the actual alerts & setups I track for daytrading are on my “how I work” page. If you use Trade-Ideas you can paste the following link into the “Collaborate” feature and load that filter and all the alerts I track:

Bearish — grab the URL of this link

Bullish — grab the URL of this link