Get in, get green, get out.

My thought process is: get in, get green, get out.

Get in:

The first thing I notice is an appropriate stock coming up on my scanner. A scanner is software that searches for stocks based on predefined momentum criteria, such as relative high volume (number of shares traded), price, and price movement (how quickly and strongly the price is changing).

Within the scanner, I check the float, which is the total number of shares available for public trading, along with the day’s volume (the number of shares traded so far today).

If these numbers look good, I check the ‘about’ page (company description). Then I check for any recent news catalyst—a major event or announcement that could significantly affect the stock price.

I then glance at the ownership section, which shows who owns the company’s shares and their stake size, to see how it is distributed among investors.

If all looks good, I enter the ticker symbol (the stock’s unique identification code) to open the tape. The tape displays Level 2 (real-time order book with bids and asks) and Time & Sales (a list of every actual trade as it happens).

Volatility—the degree and speed of price movement—can also be measured from time-and-sales data, which records every completed trade, including price (trade value) and size (number of shares per trade).

Next, I scan the chart for price action, trading volume, RSI oversold signals, and the price’s position relative to the 50- and 200-day simple moving averages. RSI shows momentum by comparing gains and losses. Moving averages indicate the average closing price over 50 or 200 days.

I then review the chart’s timeframes—specific periods displayed, such as 1-minute, 5-minute and 4-hour views—to learn about recent and historical price movements. I also mark key resistance levels, which are price points where the stock has had trouble moving higher in the past, before proceeding.

Get green:

Around 30 seconds in, if it’s an in-play stock (one with high volume and interest) and IWM sentiment is positive, I start looking for a buy setup (a trade entry opportunity).

Finding a setup, which means identifying a favourable condition to make a trade depending on what’s happening in the market, may be instant, take an hour, or never come.

A setup is a trade opportunity identified by analysing both the stock chart and the tape. Once buying starts, my focus shifts mainly to reading the tape to gauge the activity and strength of buyers and sellers.

Get out:

While the chart often provides a potential sell price by indicating patterns and key levels, my exit decision is ultimately based on reading the tape—watching real-time trades and orders for signals that the stock price may reverse direction.