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Step 1: looking for patterns

First lets go about a few ways on how to find stocks that have an interesting daily chart pattern.

Each charting/trading software has so called ďhot listsĒ build in. Letís assume you are looking for stock that is in an up trend and that has pulled back over the last couple of days. You could simply bring up a ďhot listĒ that shows you which stocks have had the biggest percentage gains over the last month. If you look thru the individual stocks within this list I am sure you will find stocks that match your criteria of a pullback pattern (i.e. basic swing trading patterns).

Bring all of those stocks in separate watch list and do some further analysis. Do the stocks fit you trading criteria? Do they have enough volume? What is your risk reward ratio? (for more info see the MasterTrader e-book). It is very important not to over-analyze and to only consider stocks that match your criteria.

On some days you will simply donít find any interesting candidates. Beginners often donít understand this fact and end up making trades they shouldn'tít have considered in the first place. This is one of the main reasons new traders fail!

I tend to not look at a stock for more than 10 seconds when I look at it in my hot list at the start of my scanning process. This allows me to stay more objective and gives me less room for false interpretation. The longer you look at a stock the more things you see that are not really there.

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