Every morning the trader sits down at his computer to start the day, and the dilemma is always the same: find a stock or two or three to make money that day. It 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.
Let’s start with some basics about your work habits. Markets open at 9:30 am EST, don’t they? WRONG! Trading starts at 7am! It’s action very early in the morning. Then you have what some traders call the official pre-market trading which starts at 8:00 am. Then it’s the official market opening at 9:30 a.m. EST. This means that if you’ve been asleep you might miss some really interesting early morning trades. However, a word of warning here – pre-market trading also carries an element of higher risk due to a lack of liquidity.
Okay, now that I’ve got you out of bed, you can start scanning the pages of The Wall-Street Journal, The Independent Business Daily and… FALSE again!
Oh sure, you can find a swap or two in any of these posts, but in too many cases this news will be too old to swap. In addition, the news in these posts, or the reaction of the stock, will appear in other places.
The first thing you might want to do in the morning is check out the action after hours the night before. This information can be found in several places. I am using the NASDAQ home page under the Extended Hours Trading link located on the left side of the page. This will give you a list of the most active actions after the hours of the previous day. In most cases, these stocks move based on news released after the close. These and other links can be found at http://www.TraderAide.com.
While you are on the NASDAQ page, be sure to take note of the list of the most active pre-market. This is going to be another great source of potential actions to consider. An additional source on the NASDAQ page is the NASDAQ-100 pre-market heat map. This is especially useful at the start and during the first hour after the start of pre-market trading action at 5 a.m.
In both cases, after-hours movers and pre-market movers, the action is usually news-related.
MarketWatch is a great source for this news. You can find it in a hundred other places on the net, but I find the MarketWatch site easy to use and even more importantly, easier to search. It’s also less likely to be filled with “non-business” news that you really don’t need to negotiate.
Some of the things you want to look for include stock events that happen almost every day, such as: analysts’ ups / downs; FDA benefit and action reports that might include approval, disapprovals, or just comment on the application.
I also suggest that you watch Bloomberg TV early in the morning, before the 5am trading begins. I prefer Bloomberg to CNBC at this time of the morning because of their presentation of futures and the news streamer at the bottom of the screen. Once the pre-market opens, I suggest you switch to CNBC just because they have, what appears to be, a much larger audience. On CNBC, stocks that are flagged or mentioned are often sent up or down, providing excellent trading opportunities in many cases.
Once the markets are open, almost all real-time quote systems have something built in that will give you at least the top ten most active on the three major exchanges, winners and losers. Also, they can have some kind of more advanced “screener”. With RealTick from Townsend Analytics, Ltd, it’s called Hottrend Realtime Radar. You can let this work all day. Stocks that show unusual volume compared to their historical volume patterns will automatically appear on the radar. It is available for stocks traded on the NASDAQ and the NYSE. Check with your provider to see if this feature, or something similar, is available.
Last but not least, you want to check your Dow Jones news feed for the latest breaking news from around 6:30 a.m. New York time. Sorry “West Coasters, but as the bank robber said when asked why he robbed banks,” Because that’s where the money is.
Have a good negotiation!
No permission is required to reproduce an unedited copy of this article as long as the About Author tag is left intact and active links are included. Questions and comments can be sent to Floyd at [email protected].