The top stocks to trade have an average monthly volume of greater than or equal to 500,000 shares. The price should be greater or equal to $20 per share. This insures that you have some institutional interest. That is what moves the price.
Stocks with less volume are a hazard, in my opinion. You might get lucky, but you won't be consistently happy trading these issues.
Try and implement a trading system that looks for stocks with a monthly average volume >= 500,000 shares and a share price >= $20.
Your scan criteria should look something like this:
MA(Volume, 20) >= 500000
Use a simple moving average, MA. 20 is the number of trading days in a month: 5 days per week x 4 weeks = 20)
Close >= 20
This builds your universe of trading candidates.
Now that you have your universe of candidates you should weed out some of the choices.
Find the stocks that move fluidly in one direction. Avoid those that chop all over the screen. Flag the smooth movers and put the selections in a list by themselves. Give it a title that describes the contents of the list, for example, My Trading Candidates. Observe these stocks for potential entry points.
The selection process is critical to successfully making money in the markets. It's the first step in a successful stock trading system!
Good luck with your trading!
