How to find Momentum/Volatile Stocks???

[nishant 10]

Hello Everyone!

 

Is there any method to determine the highly momentum based and/or volatile counters?

 

And as i'm not sure if i've used the word "momentum" correctly which i'm exactly looking for, hence putting an example to you all:

 

Say, a stock namely "A" is currently trading at 5000 levels. And on an average (considering all the rangebound and trending period) it moves about 100 points on an intraday basis. That is about 2% of the current price.

 

There is another stock "B", trading at 1000. It moves 40 points on intraday basis. That is about 4%.

 

So i want to explore for stocks of the kind "B" which have high intraday movement (in percentage terms, 4% intraday movement as against 2%). Is there any specific indicator(s) which may be used because determining the counters by calculating manually for a long period is pretty cumbersome.

 

I'm not sure if i used the term "momentum based" correctly? If i'm wrong then please let me know the correct term that i'm looking for as described in the aforementioned example.

 

Regards

[Nick1984 10]

I think you mean just stocks that experience high price volatility. This is a double edged sword. These stocks are either very small or micro cap stocks therefore they suffer from huge price fluctuations as much as 5-20% in a day however there is bugger all volume so not a great trading instrument.

 

Large cap stocks may only move 1-2% a day but they have enormous volume so you can day trade them easily. If you have some serious capital behind you then stocks are probabbly better than futures and other derivatives to trade.

 

Eg: If you are trading with a $500,000 position every day (remember I did say serious capital) you could buy up shares in BHP Billiton (ASX code BHP) at the current price of 38.82. That would give you 12,880 shares. If you take lets say a 2% price movement which isnt uncommon you can go $0.778 in either direction. On that number of shares your profit is $10,000 per trade. Not bad ey.

 

Price volatility is usefull in these low cap stocks only for longer term trades cause you simply don't have the volume required to effectively trade them on an intraday basis.

[nishant 10]

Thanks for the suggestion Nick! What you had written is true. But can still something be looked for in ascertaining the volatile by any means, because there are really few bunches of counters which have high liquidity as well as volatility.

[brownsfan019 17]

nis - there's all sorts of ways to create watchlists for what you are looking for. The key is toying with the components and seeing what works best for you. I would probably suggest TradeStation or eSignal for something like this. Again, it's a matter of setting up the parameters to meet what you are looking for.