Finding Candidates

Every trade starts before the chart. With thousands of tradable names available, the first real skill is cutting that universe down to a handful worth opening — a screen. Earlier sessions all assumed a chart was already in front of you. This one is about how it got there.

Four steps, in order

Running these out of order, or collapsing two into one, is one of the most common ways traders talk themselves into a bad position.

1. Filter — run the screen and collect the names that match a quantifiable trait.
2. Read — open each chart and look at structure, levels, and volume. The screen’s numbers get no vote at this stage.
3. Reject — discard everything the chart does not support. Most of the list dies here, and that is the step working, not failing.
4. Commit — for the few survivors, write entry, stop, and size from the risk rules in Session 02 before placing anything.

Nothing a screener returns is a trade. It is a list of names with something numerically in common, which is a much smaller claim than it feels like at 9:30 in the morning.

Liquidity comes first

Before a screen asks a directional question it should ask a liquidity one, because a name can look perfect on every other measure and still be untradeable.

Every screen below shares the same floor underneath it: enough average dollar volume to get in and out without moving the price yourself, a spread narrow enough that crossing the market does not eat the edge, and a general avoidance of sub-scale names where a few orders swing price wildly.

The specific thresholds depend on your account size and style, so do not carve numbers in stone. The question does not change, though: can I get out of this without being my own worst counterparty?

Screen archetypes

These five are not the only screens that exist, but they cover most of what a discretionary trader needs.

Earnings-gap momentum

Looks for names that reported recently, gapped meaningfully on the report, and have held the gap since. A surprise big enough to reprice a stock overnight often starts a multi-week move, because the market needs time to digest genuinely new information.

The gap itself qualifies nothing — plenty fail immediately. What qualifies a candidate is whether it bases: consolidates constructively above the gap instead of filling it back in within a few sessions.

Growth-leader screens (CANSLIM-style)

Borrows from a well-known checklist for identifying growth leaders: accelerating current earnings, sustained annual growth rather than one good quarter, something genuinely new about the business, favourable supply and demand in the shares, leadership within its industry group, institutional sponsorship, and a market direction not fighting the trade.

A screen can only capture the quantifiable half — the earnings figures, the relative performance, the sponsorship data. Whether something is truly new, or whether the chart confirms leadership, still needs your judgement.

Relative-strength momentum

Ranks the universe by medium-term performance and returns the top slice. Strong names tend to stay strong longer than chance predicts, because strength attracts attention and attention attracts buying.

Treat the output as a place to hunt for bases, not a buy list. It tells you where strength currently sits, not which name is ready today.

Breakout proximity

Looks for names trading within a few percent of a well-defined range high with relative volume picking up. It feeds directly into the breakout process from Session 12.

Relative volume above 1 only means today is running ahead of the recent average at the point you check. That is a low bar, so use it to narrow the list rather than as evidence a break is coming.

Downside candidates

The reverse of the two above: weak relative strength, broken structure — failed support, lower highs — and the bearish shapes from Session 10. Same purpose, pointed the other way.

Running screens in practice

Run screens after the close, when the day’s full range and volume are known, and chart only the top handful from each.

Expect to throw away roughly nine names in ten once you open the charts. That is the screen doing its job — producing more raw material than you need so the reading step has something to filter. Five names you have actually charted beat fifty you have not.