Description

My basic trading philosophy can be summed up by one simple quote:

"Trade the ticker, not the company" - Nate Michaud


Sunday, February 23, 2014

Watchlist for February 24, 2014

I went over some basics as to how I build my watchlist in this post, however, I have found that people learn best through example. Reading pump emails is simple enough, but using scanners to find plays seems to be the area where most people need guidance. I'm going to pretend that I don't have any OTC stocks on my radar for Monday and start a watchlist completely from scratch, walking you through my step-by-step process. Future watchlists will not be this complicated. I just want to detail the process as best I can so others can learn to do this for themselves.

I know many readers of this blog use "Stocks to Trade," so I will run my scan on that platform. However, keep in mind that Equityfeed is a very similar platform, and you can set up nearly the same parameters. You will notice some differences in this scan from what I've previously discussed. There are a couple of reasons for this:

     1. I run this scan when the market is closed.
     2. I'm constantly learning and refining my strategies.

Here are the basic criteria I begin with:

  • Only OTCBB or Pinksheet Stocks
I don't want this scan to include listed securities, so I specify that I only want to scan this sector of the market.
  • Price > $.01
I normally don't trade subpenny stocks, so I exclude them from my scan
  • $ Volume > $500,000
I want to only trade stocks with good volume and good liquidity. This is the figure that I choose to use.
  • Trades > 200
This is a new criteria I use for my nightly scans only. Higher priced stocks can trade $500,000 of volume easily on just a few trades, giving the false impression of liquidity. I've put in a trade minimum to ensure these stocks get excluded from my list.
  • Normal Securities, Q stocks, D stocks, E stocks only
You may have noticed that some OTC stocks have five letters in their ticker instead of four. Tickers with five letters have special designations, most of which you can see in the image below:


Above you can see the only options I choose to scan for are check-marked. "Stocks to Trade" and "Equityfeed" are nice because they allow you to leave out the rest. Most scanners don't allow you to cut out the other options. If I were using one of those scanners, I would just make a mental note to ignore all other five-letter tickers.

Once I have set these parameters, I run my scan. Below, you can see the full list of tickers that meet all my desired criteria:


Once I have this list, I begin pulling up the daily charts of all of these stocks and decide which charts have patterns that I'm the most comfortable with. If I like the chart, it makes my watchlist. I will often break my watchlist into two categories, "Main Watches" and "Keeping on Radar." Here is my list of charts from the above watchlist that catch my eye before prioritizing them:

PAWS
EKSO
MRNA
XXII
NVLX
VEND
FNMA
ELTP
WPWR
FITX

The stocks that are my "Main Watches" are the stocks that I believe are most likely to offer a clear-cut trading opportuity the following day. If I have quite a few "Main Watches," I will prioritize based on which ones I think will be most playable immediately at the market open. Stocks that I'm "Keeping on Radar" are stocks that are nearing a key price point that I believe would offer a play but may not get there the following day. I will often check the "Keeping on Radar" plays at least a few times a day, just in case one shapes up to offer the opportunity I'm looking for.

Now that you understand my process, let me show you my prioritized watchlist for Monday, complete with daily charts:

Main Watches:

NVLX - I'm long 85,000 shares from .294ish heading into Monday. The daily chart is overextending - but there was a speedup in price action on Friday, volume almost doubled, and it closed very strong. A gap up is very likely in my opinion, I would short a large spike or g/r move in the morning, but if the stock holds green this could really start to go crazy. I won't get overly biased one way or the other, and look to trade sharp, volatile moves.

XXII - Four up days in a row without going red, and chart is starting to overextend. Volume is lighter so executions will be tougher, but I want to short either a large morning spike or a g/r snap.

VEND - Hard-mailer promotion still going strong. This probably needs a few days to parabolic before shorting for the massive collapse, but I will consider any g/r snap or fast spike for a short sell scalp. As you can see on the daily chart, the stock has gone g/r multiple days, yet recovered each time.

EKSO - Overextending chart, I will take my typical approach with this and look to short either a large morning spike or a g/r move if it opens weak.

PAWS - Still a little too cheap to short with ECN fees... but Friday was a big up move so I'd be more likely to short a large morning spike than a g/r move.

Keeping on Radar:

FNMA - Would like to wait for the $3.50ish breakout before taking any sort of meaningful position, until then I might scalp fast, excessive moves but that would be all.

FITX - I really like how this is consolidating near its high, no play for me until $.115 breakout but I'll likely take a swing position if/when we get it.

WPWR - Stocktips promotion, $.45 breakout would be my main interest, as their past picks have had very successful breakouts. Not sure I can overnight this though as it's a blatant pump and SEC halts scare me.

ELTP - Another OTC with sold volume consolidating near its high, $.455 breakout buy is the only play I'd be interested in though.

MRNA - Start of a nice breakout on Friday. I'm hoping this can get overextended in the next day or two and set up for a textbook short. Just watching for now.

Some of you may choose different stocks or have different plans for them than I do, and that is absolutely okay! The goal of this post is to help some of you learn how to prepare. Whatever scans you choose to run or setups you choose to focus on is completely up to you!

Also, keep in mind that I will run variations of this scan throughout the trading day on Monday. If any tickers that I left off of my watchlist show sudden activity, I will be ready to add them to my list and I'll develop a plan for them on the fly.

I hope this gives everyone a better idea of how I prepare for the following trading day! The whole process is entirely chart-based and usually doesn't take me more than 15-20 minutes. Please feel free to reach out if you have any questions. Thanks for reading everyone!

Disclosure: Long 85,000 shares of NVLX from .294ish

84 comments:

  1. Thanks for all your hard work and making it available to us newbies !

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  2. great post Tim...appreciate your effort!

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  3. Thanks so much Tim! Your posts are so helpful and easy to understand. I really appreciate that you take the time to share your knowledge and experience, it has been very meaningful for me as a new trader.

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  4. You're a good man Tim. Great clear information.

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  5. Solid post! I printed that post out just to pin it up on my desk as a clear reminder about the simple things I may sometimes overlook! Clear cut as always. Keep on keepin' on!

    AWhit

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  6. Great ideea with this post, Tim! I feel I have learned a lot the past 4 months and now when I want to trade, I feel lost, I don't know where to find the set-ups from the lessons and the dvds. So this article comes to clarify that. Thanks a bunch!!

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  7. Replies
    1. Usually only if the rest of the OTC market is slow and there is one that is trading with exceptional liquidity. Otherwise, I would avoid them

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  8. Which plan do you reccomend on Equityfeed? Thank you.

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    1. That really all depends on a couple factors. Whether or not you want to have the ability to scan for listed stocks as well, and whether or not you want/need a Level 2 feed. Use your answers to those questions to figure out which subscription you need

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  9. Out of curiosity, what sort of "variations" of intraday scans do you run? I assume you're scanning stocks with unusual increases in volume, or stocks with quickly increasing percentage changes? Thanks bro.

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    1. Well for example, I'd run one intraday with no trade minimum and a lower $ volume, so I can spot stocks earlier in the day. Also, in most cases I would only be concerned with the stocks having big percentage up days, so I'd only look at the top % gainers that hit my volume scan

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    2. Thanks man, appreciate the reply. I wasn't sure if you had complex intraday scans, or if you just stuck with keeping it simple. Gotta love that simplicity! haha

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    3. Hi Tim, When you refer to looking at high% gainers and stocks that have had a good run up are you looking more for shorts or longs?

      Cheers. Awesome blog.

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  10. Hey Tim, thanks a lot for this info. A lot of your items are also on my watch list so that's good for my self confidence :-)

    In your first post about creating a watch list you mention an additional filter: > 5% gain on the day. Is there a reason why you left that filter out in your latest post?

    When I looked at PAWS I was thinking there might be a possibility for it to go up since it hit 0.14 which was a previous high and it showed earlier on the day it can bounce. What do think about that?

    THanks again for sharing your thoughts!!

    cheers
    Marco

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    1. I left that out because there very well could be OTC stocks at the end of the day that had a down day but are still close to a key price level I could play off of. Whether or not PAWS keeps running, I can't offer up more than a guess at this point. I'm going to have to judge based off of price action tomorrow

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  11. i'll repeat myself but i am learning way faster reading your blog than watching tim's DVD collection, thank you !

    Which scanner do you recommend the most if cost was no concern ?

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    Replies
    1. Equityfeed or Stocks to Trade, they're basically the same thing

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  12. I'm new and your posts are amazing!! .. Thanks a million for sharing your knowledge, this is the most informative materials I've seen yet! You're the man

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  13. Sorry newbie question here. What is a g/r an acronym for? Thanks for doing this!!

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    1. g/r means green to red, or in other words, the stock dropping below the closing price from the previous day

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  14. Thank you, thank you, thank you!! 2 month New Ps silver and superman subscriber. Please keep blog posts and chat room trades and input coming Tim. What exactly do you mean by g/r "snap?"

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    Replies
    1. g/r means green to red, or in other words, the stock dropping below the closing price from the previous day

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  15. Great post again Tim. I'm starting to really like your website and blog posts.

    If you don't mind, can you do a coverage on buying stocks on breakout? All too often, I realized I will buy a break that seemingly broke through its resistance, only for it to pull back soon after. An article touching on the true breakouts vs. the head fakes would be really appreciated.

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  16. Hi Tim, Great post and easy to follow. Been following Sykes for a while and have had some success, but your posts are really clearing the fog for me. Thanks.

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    Replies
    1. Well, it sounds like you have a pretty good handle on the choice. For you, the issue would boil down to whether no PDT rule is more valuable to you than monthly platform fees. The market depth that I select is "Pink sheet level 2" and then anything else I would need auto-fills with that. Hope this helps!

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    2. Thanks for the reply Tim. I deleted my posts trying to keep from looking like a dummy. I called Fidelity several times and finally found that they do have Level 2. If they dont approve my account for Margin then i will look else where for another trading account soon. Platform is free with fidelity right now so hope i can start nailing some good trades.. Thanks again for the reply.

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  18. Awesome post! Quick question. I noticed you said you wouldn't hold WPWR overnight because its a pump & dump by stocktips.com, but noticed that your long NVLX over the weekend when it is also a pump & dump also (albeit on a smaller scale $8k promotion earlier in the month from promoter 'OTCmagic'. Just curious which made you hold the one promoted stock but leary of holding the other one. Thanks!

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    1. The key difference in my mind is that it is one of the smaller promotions. I haven't seen anything to indicate that the SEC cares about the "little" ones yet, they've so far only halted hardmailer campaigns and Awesomepennystocks picks. So I highly doubt NVLX is at risk

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  19. Would you recommend stockfetcher? What's the difference between stockfetcher and equityfeed/stt other than the fact that stockfetcher is WAY cheaper.

    thanks for your help!

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    1. I've never tried stockfetcher, sorry! If it offers the same scan options though, it sounds great!

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  20. coming back on your comment: "PAWS - Still a little too cheap to short with ECN fees... but Friday was a big up move so I'd be more likely to short a large morning spike than a g/r move"

    Can you not avoid ECN fee by NOT buying at the offer price or selling at the bid price ?

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    1. Unfortunately that only applies to Nasdaqs, most brokers don't offer that for OTC stocks

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  21. Tim, THANK YOU for your posts on this blog! I am a challenge student and find your posts extremely helpful. One quick question. I use IB and they have a market scanner. Would there be a reason for me not to use theirs and pay for equityfeed? Is equityfeed better for some reason?

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    1. Equityfeed has a few more options when it comes to scanning, and like I noted above you can ban certain 5 letter stocks. Nothing essential though! IB should be just fine

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  22. Hi.
    When would you have taken a Stop loss in NVLX if it had mooved lower?
    Did you have a fixed $ loss in your mind when taking the trade?

    Thanks

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    1. I don't like stop-loss orders, the problem is that it won't trigger until NVLX gets weak. Selling any OTC into weakness will be VERY difficult, better to sell into strength as it's spiking! Use level 2 to help time your exit!

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  23. Hey Tim, fantastic article, quick question though.

    What other stock screener would you recommend? I can't seem to sign up for Stocks to Trade and Equityfeed is out of my price range. Any suggestions?

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    1. I like the scanner interactive brokers offers, and that platform is VERY cheap. If any readers know of other cheap scanners, please leave suggestions!

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  24. This blog post is the first thing I've been able to read that teaches me about scanners and how to use them. SureTrader sent out an email a couple of days ago marketing their scanner and I was wondering if you've used it or looked at it? If so, do you think its decent enough? Thanks for all your work too btw, i'm learning a lot from you.

    -Korey

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    1. I haven't seen their scanner and I'm no longer with them so I won't be able to check it out unfortunately, sorry!

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  25. Thank you so much for the info you are a god sent

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  26. Thanks so much for the time and effort you put into these posts Tim. I learn so much from them.

    I was looking at signing up for Equity feed and noticed they have three categories and price ranges. Nanocap for $70 a month, Microcap at $100, and then US Equities for $180.
    I'm very new to this and in the penny stocking silver membership and chat room and still paper trading while I'm learning. What level of membership do you suggest for Equity feed for me?

    Thanks
    Malcolm

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    1. That really all depends whether you need a level 2 feed from somewhere or not. If your broker already provides that, no need to pay extra to have it at equityfeed too

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    2. I have ST and TOS. I was looking at getting EquityFeed because of the filters and real time alerts. I struggle to find things like pre-market gainers, or stocks that are suddenly high percentage gainers etc. It would appear all the top traders like yourself use better tools like stockstotrade.com or equityfeed.com for that purpose. That's why I was looking at equityfeed. I just don't know which level of subscription from them I'd need.

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  27. Tim, I can't get over how amazing this blog is! Quick question. All of your scans deal with pinks/OTC's, but I noticed some of your recent trades have been on other exchanges like ticker CVM. Do you just dabble in the other markets if they're are not promising setups in OTC's and Pinks? Thanks for your time!

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    1. I will trade other exchanges from time to time, it really depends how busy the OTC market is and how much I like the setup. I have a scan for listed stocks as well

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    2. If you would like, can you tell us what scanner do you run for listed stocks?
      Thanks, Tim!

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  28. Thank you for your time Tim. You mentioned VEND was a hard mailer promotion, do you know who that promoter was?

    Thanks

    Smalltime

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  29. any chance you could post your filter query as well?

    I believe the one you described in this blog for afterhours is: Show All stocks where ( LAST <= 10 ) AND ( DAY'S VOLUME >= 500,000 ) AND ( DAY'S TRADES >= 200 )

    Correct?

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  30. Thanks for sharing the wisdom with newbie such as my self. Congrats to all your success. Plus awesome video training at the conference

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  31. Tim this post is awesome. I am working with trigger orders right now. What if the sell skips my sell order/trigger at a limit price? Is it possible the stock can skip the limit sell price and not sell at all if it drops too fast? When the stock is crashing it sometimes wont sell and i try to send it to a specific route faster by clicking straight out of level 2. Can you recommend any stop / trigger techniques that will help keep profits?

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    1. It's definitely possible for a limit order to get skipped, that often happens in times of trying to sell an OTC stock into weakness. I'd recommend on taking profits along the way into strength instead rather than waiting on the stock to get weak. All of the best traders I know do this, it's okay to leave profits on the table if it means trading safe!

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  32. Wow thank you for such a detailed explanation. Really really appreciate this.

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  33. Hi Tim, just want to ask:
    Why do you filter your watch list only by OTCBB and Pinksheets? Why do you not also filter and trade NASDAQ, NYSE? Thans for your answer. Greetings, Silviya

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    1. OTC stocks trade differently than listed stocks, so I choose to focus on that niche

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    2. would you say OTC's are more predictable? or what is different than listed stocks in the way they trade?

      Thanks!

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  34. Tim,
    I've been practicing my watchlist with equityfeed, which I really like. In your scan I notice you excluded share volume. Can you speak more towards what type of volume you look for in your scan, but also in the moment of trading, and what to stay away from? Thank you.

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    1. Right, I exclude share volume because it is a flawed stat when scanning stocks with such a wide price range. $ Volume is what will give you the best idea of which stocks are liquid

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  35. Tim: Great post - One Q, when you said "...Once I have this list, I begin pulling up the daily charts of all of these stocks and decide which charts have patterns that I'm the most comfortable with. If I like the chart, it makes my watchlist.." Which chart patterns do you look for?

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    1. Mainly I look for charts approaching key multi-day breakouts, or daily charts that are getting overextended with multiple up days in a row.

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  36. Thank you Tim, you are really god sent!

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  37. Tim, if we take smaller positions than you do, can we set the scanner to fewer trades, and less $Volume? Or anything under those values isn't volatile enough to be worth trading?

    Thanks!

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  38. Tim, this post is so helpful, thanks so much for cutting through all the crap and getting to the point!

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  39. Nice post Tim!
    It would be graet when u explain how to "short into a spike".
    Furthermore, what do u do when an overextended stock opens slightly red, is there though an opportunity to trade?

    best whiches

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  40. I'm new...but what does g/r mean? I've been seeing it in the posts I wanted some clearifications Thanks!

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    1. g/r means green to red, or in other words, the stock dropping below the closing price from the previous day

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  41. Hey Tim I am a total noob here. I have been studying Sykes and now you along with any (free) information i can get my hands on for the past couple of months. So far, this blog has been the most informative and concise. Thanks for posting it and keep up the great work!$$ I was wondering if you know of a way to scan for # of Trades as you do in this post, only through ThinkOrSwim?

    I hear you lived (or live) in Columbus. GO BUCKS! I am an OSU grad :)

    Thanks in advance for any reply

    --CC

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  42. Hey Tim,
    I read your posts where you mentioned that you are mainly trading off chart patterns, not so much research as Tim Sykes does. I've been studying technical analysis and have a mentor who is teaching me the ropes day trading Nasdaqs and NYSE (you might have heard of him, Kunal Desai, from Bulls on wall street. He is friends with Nate, Tim Sykes etc) My question would be, if with the knowledge and a bit of experience using technical analysis as I do with nasdaqs and nyse, do you think I can take the same technical approach with OTC's? Trading purely on chart patterns (Breakouts/Overextended stocks for shorts), focusing on stocks in play with high volume and volatility?

    Thanks Tim, appreciate your time in replying to so many queries

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  43. Hey Tim,

    NVLX, XVII & PAWS all look similar to me. What differences are changing how you trade them? I'm not clear on exactly what over-extended means? Thank you.

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  44. Thanks Tim.

    This is what I was waiting on. Great post as always.

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  45. Tim,

    I tried some screening using your input and found $VTUS which almost resemble your example of $NVLX closing strong on Friday with an increase in volume.

    What's your take on this one if you're allowed to reply?

    straggln.tradr

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  47. Thanks Tim for taking the time and explaining your madness. I have been paper trading for two weeks now and I found it had to create my own watchlist. I'm definitely planning on using your criteria for my scan. Thanks again and I'll keep you posted.

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  49. Thanks Tim for all your work and sharing your knowledge. I see that a lot of professional traders in the US are short-selling. Since there is a ban on short-selling in Belgium, I was wondering if there is still enough 'room' on the market to go 'long'. In your example above a lot of stocks are suitable for shorting due to overextended charts. So you have ' a history' on the chart that gives the information. Could you give us an example on building a watchlist on Equity typically for going long or a breakout? Many Thanks Victor

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  50. Hi Tim, i love the way you give back. Thanks a lot. You explain things really well You really are a good teacher. The question I have is, how do you set up your scanner to find OTC and Nasdaqs on E-trade pro? Thanks for your reply Tim.

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  51. Most comprehensive for a newbie such as myself. Thanks for transparency also!

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  52. Thanks for your transparency & patience w/ my questions:

    1. How do you know when a chart is overextended for shorts? Longs? Key indicator(s)?
    2. How do you know what amount & price point will break even to counter commissions & ECN fees? Does it depend on ur position size?
    3. Key indicator(s) for a morning break out to short? Is it previous day high?

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  53. Thank you for this! do you have any coupon to purchase stocks to trade?

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