How to Find the Biggest Stock Gainers and Losers?

Many day traders look for stocks with big price movements-the day’s gainers and losers. These are stocks with big percentage gains. These stocks are a great starting point to explore and find trading opportunities. This blog post will break down why you should find stock market gainers and losers, possible strategies.

Why Find Stock Market Gainers and Losers?

You can find stock market gainers and losers anytime of day-pre-market, intraday, or after hours. However, many day traders chose to focus on the pre-market and early intraday stock trading. Typically, these are shown as the stocks that have the biggest percentage increase in price during the time period selected. Many scanners show for the trading day.

These stocks with big percentage gains are a great way to create a daily watchlist so you can give them more attention. Once getting your list of the biggest gainers (and/or losers!), you’ll want to do further research, especially taking a good look at the volume. Analysis will help you determine whether you should buy, sell, or even short the stock, if that is part of your trading strategy.

These big gainers and losers can indicate a stock’s movement and the overall market or sector sentiment. As a day trader, the biggest gainers and losers could be a big opportunity to capture volatility and short-term price movement. As mentioned before, market movers are just one indicator for finding a stock to trade. When you find a stock you’re interested in, make sure to do more research, look at other indicators, and look at the context of the gainer or loser. Is the movement caused by an unknown reason or a news event?

What to Do Next

Once you find a big market mover and check for movement context, you’ll want to check the volume to make sure the stock has high liquidity so you can get in and out of a day trade quickly. After that, you may want to look at moving averages (such as a 30 day moving average) to confirm that the stock is a potential trade. You can also look at the chart to see if there is a chart pattern you use in your trading strategy.

The theory behind this strategy is that more people are looking at the biggest gainers and losers, meaning it’s more likely to be in higher demand, causing the price to go up even further.

Additionally, if the biggest gainers and losers are in a certain industry or sector, you can identify trends that may affect the group as a whole so you focus on (or avoid!) the group.

Originally published at https://pro.benzinga.com on May 28, 2020.

52-Week Highs and Lows — Hype or Helpful?

Besides an actual stock price quote the most available and commonly published piece of stock market information is what stocks have hit a new 52 week high or low today. Most financial newspapers will print the list, which is also available from just about any finance website. However, does this metric have any meaning or usefulness?

52-Week Highs and Lows

Some analysts propose that buying a stock hitting its 52 week high could be a reasonable strategy. Statistically speaking, there does seem to be some validity to that assertion. Conversely, avoiding a stock hitting its 52 week or yearly low is probably also be a good idea.

However, some caution and caveats are appropriate here. The 52 week time period is arbitrary and selected for convenience. The fact that investors pay so much attention to this artificial number is a great example of “anchoring.” Anchoring is what happens when decision makers (including investors) place a disproportionate amount of emphasis on a number or measure that has limited or no meaning.

The 52 week high or low is really just useful in trend identification. If a stock is at its 52 week high then its trend is positive. If a stock is near its 52 week low then its trend is negative. Momentum investors try to buy with the trend and the 52 week high is a convenient way to define its direction.

It is important to remember that the studies used to show that buying stocks at a 52 week high can be an effective predictor for above average growth in the future are based on large groups of stocks. Trying to apply a concept that works across large pools of stocks to just one or two stocks is not very reliable. Once again, diversification is needed to really see any benefits from buying up trending stocks.

The effects of anchoring can also be felt in the volatility of stocks at their 52 weeks highs. It is common for investors to feel that a stock at its 52 week high “can’t” reasonably go higher in the near term. This attitude may be the contributing factor for stocks at these highs to have greater percentage price changes or volatility than would be normally expected.

While 52 week high lists can be useful in finding stocks with some up trending momentum, diversification and the ability to sustain price volatility are needed to really take advantage of the opportunity. If you are interested in learning more or adding a few stocks to a paper trade portfolio, you can access a list of stocks hitting 52 week highs and lows here.

Originally published at https://www.learningmarkets.com