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Step 4: using software

Scanning for day trades is a little more difficult because there is less time to prepare for the actual trade. Just as with scanning the daily charts I use hot lists to find candidates. Please refer to your software in order to find out which particular list is interesting and available

I also like to use “remote” scanning programs. These scanners deliver a number of pre defined and partially adjustable scans directly to your desktop without having to install complex software that takes up a lot of resources. They can be used for day trades as well as swing trades.

Here is some good scanning software: (nice pre/aftermarket gapper list)

Keep in mind that no matter what scanner you use the results are generated by a machine and you will need to analyze the results by yourself.

Here is an example: Your scanner comes up with a stock that is in an up trend and has pulled back in price over a few consecutive time periods. This could be a good trade but we still need to determine whether the trade has enough potential and if the stop is small enough.

I found that about 80% of the results I get from a scanner are not interesting for me. The other 20% deserve closer attention. 5% or less end up being a trade.

Again, patience is extremely important. There will be good chances and you rather wait for a good trade instead of being stuck in a bad one.