Find The Best Stocks To Trade | How To Scan on Finviz

The scanning tool we are using in this article is here: finviz.com
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Setting The Stock Scanning Foundation

To start, it should be noted that we want to scan for individual companies only. By eliminating obscure ETFs and market indexes, we can focus on where there is truly an edge that can play out. Another quick filter to add here is for United States based companies only, that way we avoid the chop that commonly plagues ADR charts (think $BABA).

Next we should focus on the criteria that makes something easy to trade. First thing that comes to mind is liquidity. For that we will set a minimum requirement of average volume to be 2M shares or more. Of those highly liquid stocks, we want to also make sure we are trading the most popular ones, for this we set relative volume to over 1. Lastly to ensure that the stock will actually move an acceptable amount, lets set the average true range to over 1 as well.

Now that we have a solid foundation, we can move into finding stocks moving in a particular direction.

Golden Stack Uptrend

To find stocks firmly in an uptrend, we can think about their moving averages and how they must be stacked. In an uptrend we have the shorter time frame moving averages above the longer timeframe moving averages. Knowing this, we can set the screener to look for a stacked 20, 50, and 200 SMA. This will ensure that the daily trend of the charts returned are up.

Set 20-Day Simple Moving Average : Price Above SMA20
Set 50-Day Simple Moving Average : SMA50 below SMA20
Set 200-Day Simple Moving Average : SMA200 below SMA50

This is a great start, but you can find even more attractive setups by using the candlestick filter. Knowing that we want to buy pullbacks in an uptrend, you would want to look for hammers around support. We can filter for hammers specifically which would represent a shift in tone, favoring the buyers.

If you are looking for stocks that are possibly going to be breaking out in an uptrend, you can set the candle type to spinning tops, or white marubozu.

Golden Stack Downtrend

To find stocks headed south, take the entire process from above and reverse it!

Set 20-Day Simple Moving Average : Price BELOW SMA20
Set 50-Day Simple Moving Average : SMA50 ABOVE SMA20
Set 200-Day Simple Moving Average : SMA200 ABOVE SMA50

In down trends, while looking for lower highs to short, you can use the candle filter to look for large upper wick or inverted hammers. Spinning top and marubozu filters will work for finding more attractive breakdown setups.

Short Squeeze Scanner

Now for what everyone wants to find! The next big short squeeze runner thats going to 100x your portfolio…While rare, we do have a scan for that!

First thing we want to do is start with the foundation and actually UNDO some of the core elements. Feel free to remove the relative volume filter as well as the average true range filter. What this will do is open the scan up to find squeeze candidates BEFORE they have started to move or been picked up on peoples radar.

The additional filters we need are Float Short set to high >20%, as well as RSI set to Not Overbought <50. What this will do is find stocks that have high short positions that again have not yet begun to move. If the RSI is pumped over 50,60,70… its too late.

When the scan runs, its up to you to manually filter through the results and find the setups that look the most attractive. Not every result will be the best setup, however sometimes you find a diamond in the rough. Some of the things that we would encourage you to look for are, flat top resistances, or obvious places where if price crosses, stop losses for the shorts will be triggered. Think of them as trip wires that will start a chain reaction and possibly get us the squeeze we are after.

Saving Scans

You can save scans that you have created by clicking on “My Presets” in the top left corner of the scanner and selsecting save scan. This will allow you to quickly re load them in the future and not have to start from scratch every single time. A huge benefit to using Finviz.