Beginner's Guide to Stock Trading

How to find stocks to day trade and swing trade? This is one of the most commonly asked questions from new traders on my youtube channel. So in this video, I'll be showing you the step by step process for beginners to find to start scanning for stocks to trade for free without any fancy premium scanners or news platforms. The goal of this video is to teach you how to start planning and working independently build your own watchlist and find winning trades without being a sheep relying on scanners or chat room alerts. As always, if you enjoy step by step videos like these, make sure to drop a like and subscribe and ring that notification bell if you want to learn more from my channel in the future. Step number 1 would be scanning for the stocks to trade. And my favorite free scanning platform is Finviz.com. Thank you. This is still the most beginner friendly website. And again, it's completely free to use. So start with going to finviz.com. And over here, you can see that once you're on the homepage, you get a broad market view of everything that's happening in the market. Now, the place we want to focus on is the Finviz screener. So go back to the homepage and from the homepage and click screener on the top over here. Screener. And this is where you can input all the filters and scan for stocks that's only matching the criteria you have. And I'm gonna show you the criteria right now. And but first of all let's close my ad, Google ad on the top. Yes I was shopping for some shoes. So over here I always start from the descriptive filters. I leave exchange blank because I like to scan for both Nasdaq, NYC, and the Amex. I don't discriminate. For market cap, I would prefer to scan for stocks that's under 2 billion market cap. I like to separate the small cap scans and the large cap scans. For this example, let's go ahead with the small cap scans. So I'm going to select small under 2 billion market cap. So we got the market cap. Earnings days, you can leave that alone. Target price, I leave that alone as well. Index, dividend yield, everything, I leave that alone. Now what I care more about... I don't even care about the average volume. Now what's more important in the current market condition is relative volume. If you are ever concerned about any of the key terms here, if you hover over the word you're looking at, let's say relative volume, you can see that relative volume means the ratio between current volume and a three month average. That's intraday adjusted. By using this key metric, you're gonna find stocks that's increasing in volume steadily on the daily chart. And that's very important in the current market condition. And if you are a new trader, a very important concept to start understanding early on is that you need volume to proceed the breakout successfully. If you don't have volume, the breakout on the stock is most likely going to pop and fail. So that's the reason we are searching for relative volume ideally over 1 or even 2. So let's try over 1.5 for now. The next key metric that's very important to put on your filter is current volume. So if you hover over the the word, it'll show you that current volume means the number of shares that's being traded today. And for us, we definitely want something that's more than 1 million. For this demo, I'm gonna do over 5 million and see what we get. So there's other stuff like country, options, and shorts, and price. So I think for me, I'm going to scan for stocks that's under $10, especially when it comes to the small cap stocks. Again, we can always expand the range if we don't get enough results. Okay, so you can see that once we have all these four filters, we get two pages of results and a list of tickers. So by default, you see the ticker, the company, the sector. the industry, the PE ratio, and the change on the day, etc. And the volume on the very right side. But for us traders, we want to see the daily chart because that's where we're going to do the next step later on when we do technical analysis. But for now, let's go up to, you can see we are at overview right now. But for us, we want to look at charts. So you can see once you click the charts, you actually see what these daily charts for all the stocks showing up looks like. You can see we still have two pages of examples. By default, they give us the technical one, but I prefer the type to be candlestick charts. So now this is where we can see the recent three month charts and what it looks like. Alright so now that we have a list of stocks that's matching our criteria of being a small cap stock, relative volume over 1.5 and current volume over 5 million and price under $10, we have a good list of stocks over here. You can see one page is probably like 20 stocks and the daily charts to look at. I know at this point you must be thinking Can we just buy all of these stocks? No, don't do that. Because we need to go on to step number 2, which is technical analysis on the daily chart. For us short term day traders, we want to look for stocks that's consolidating on the daily chart and slowly about to set up for a breakout. What a true breakout would look like, would look like this stock GROM over here. So if we click it and go to the daily chart here. You can see that the stock came from $2 all the way to about $4. And here it is reaching some resistance around $4 and has tried breaking out to $6. So this would be one of the stocks I would further analyze on my broker platform. Another good example here would be the stock NXTP. If we look at the chart on the daily, you can see that this thing consolidated and held the support around $130 for a couple of weeks. Then once it broke about $150 and later on around $2, it's starting to break out from $2 to $230. So this will be another stock that we can look at later on. Another one here from our scan the CEI, you can see this thing broke multiple resistance. It broke $1. resistance and another resistance here at 180 and once it broke all these resistance it went to the upside from 150 all the way to almost five dollars now it has since then came all the way back down so the breakout for this stock is over but this is essentially what you're looking for the earlier parts before this huge breakdown all the other stocks that we just talked about has a chart that looks very similar to the part preceding the breakout on CEI. And that's the reason we are scanning for those stocks. So besides looking for stocks as breaking above some recent resistance, a breakout chart, I also want to see increasing volume on the daily chart. Because in order to have a true breakout, with a stock breaking above resistance to the upside and hold above it, you need more people buying it. It's actually pretty simple. increasing volume precedes the breakout, and consistent volume sustains the breakout. So that's why volume is so important. That's why we didn't just scan for high volume stocks, but high relative volume. Factors 1.5 to 2. So now that we've selected the 3 stocks we want to focus on and further analyze, it's time for step 3, which is preparing for watchlist on our broker platforms. So now that we're on my broker platform, you can see I'm using thinkorswim as a demo. So the first stock we're gonna look at is CEI. You can see this thing came all the way from 50 cents and once it broke above a lot of resistance up here at All the wicks up here you can see some resistance at 170 and 240s and also later on $3. This thing just took off almost to $5. Now this will be a good time to give you an introduction to support and resistance. Because every time I asked for support from my ex-husband, all I was given was resistance. Okay, real talk. please be supportive of your loved ones endeavors or struggles. Because otherwise you're gonna be that person messaging them many years down the road asking for stock analysis. Okay so a crash course on support and resistance. Support are the areas on the daily chart where historically buyers came in to buy the stock. So you can see for CEI the previous support down here where you see buyers coming in around 60 cents. and later on over here around 120 and then all the way here some little support you can see the stock held that area for about 170s for an extended amount of time so those are gonna be support for the stock Now the other side would be resistance. Resistance levels are the areas where people came in to sell the stock. So this would be the opposite of support. So you can see that for the same example, CEI, let's say I bought the stock at $1,700. In the past, when a stock rang up to 3.10 or all the way up here around 4 dollars, that's where everyone sold the stock. So myself included, if I see that there's resistance at 3 dollars, I would also probably sell. And you can see it will be the same thing here. People came in to buy the stock around 50 cents and then once they held these levels, you can see this line here around a dollar, a dollar here. That's the prior support all the way from the daily over here. People came in to buy and the stock went all the way to 170. The resistance we talked about earlier and then pulled back. held a small higher low support 150, didn't quite pull back to $1, and broke out above that 170 resistance, and the stock just took off to the next resistance up around 240s, 310s, and later on to almost 4-5 dollars. okay so looking at the cei chart you can see that the stock already had its breakout it went from 50 cents to a dollar 70 and all the way to almost five dollars but now it's been selling off um and even though recently we bounced from 90 cents to around 240s here we sold off we didn't hold the breakout right you can see the stock didn't hold above $2. So it's back under that 170 resistance, 180, 170 resistance over here. So for us, if we're looking to long the stock, there is really no long on the stock until it broke above the resistance it sets in on this day, 246. So this is going to be the key resistance. I'm going to right click and make this line white here. So that's going to be the key resistance. So I'm going to set an alert. That's also part of the process of preparing for a watch list. You don't just buy or sell any random stock. You wait for the stock to actually hit those levels. And then you can look at. the stock. So I want to know when CEI breaks above this 246 in the future. Because remember what we said about breakout in step 1, it's only if a stock can break out successfully above a prior recent resistance which in this case will be 246 then this thing would have upside to potentially go to three dollars or 370 and four dollars and above so until that happens i'm going to leave cei alone So what we can do here is go to the left side and put that on our watch list. I'm going to put CEI here. So the next stock for us to analyze is GROM. So first of all, I want to go to a daily chart to make sure I'm looking at... yeah max available you can see this thing didn't have much volume until recently on the daily chart the volume bar view kind of look at this the previous trading volume is very low only about 400 000 shares and again remember what we talked about in step number one we want to trade stocks that's trading at least one or two million shares average on the daily so it's only until recently on this day this thing traded over 50 million shares so So this is definitely worth our attention. So once the stock broke out with high volume, you can see it traded above all these recent resistance. So on the daily, you can see the previous high over here is 490s. And after that, the stock sold off. So that's the reason that's going to be the most recent resistance. And over here, you can see buying started coming in around these areas. Why? Because you can see over here. it consolidated and held that three dollars areas for multiple days this day this day and all the following updates and over here on the previous i guess couple months earlier it also held that three dollars mark so that's why we that's gonna be a support for the stock. A resistance is gonna be this area about $490. If you round it up to the recent highs are gonna be around $5 to $5.50. So this area is going to be the resistance for GROM. And you can see that yeah sure it has the resistance around $5 which it's kind of holding below right now. But you also have these areas around $440s $450s has been bought up. So what I'm gonna do here is, I wanna know when the stock breaks the most recent resistance around $5.50. Now it doesn't mean to just buy the stock when I hear the alert. It means that I wanna look at the chart on my platform and assess. the chart and the price action intraday and whether there's consistent volume. Remember if the volume is inconsistent, the breakout is going to pop and fail. So I'm going to set this white line here. That's going to be the key resistance for the stock to break out above and hold above it to continue to go to potentially 670s. So that's going to be very interesting. So I'm going to set an alert right here, right click, create alert. So I will know when the stock hits $548 or $550. Now I'm gonna put that also on the watch's GROM. So this will be my process for drawing out the support and resistance and setting alerts on my broker platform. Again, just because you're setting alerts doesn't mean you just buy or jump into the stock right away. The broker alerts are here to signal you when a stock is breaking through that resistance level you planned out. A really good example of this is the broker alert. what that means is on the stock vygr this is the intraday chart you can see it touched and broke that 460 resistance around 11 o'clock but if i just jump in and buy the stock right away i'll be dragged down to about 440. So that would be a 20 cent loss. The idea is not to jump in right away, but rather to observe and look at a stock and how it's trading on the chart intraday. So if I see the stock hitting 460, I wouldn't jump in. Instead, I'll start looking and seeing whether it's slowly trending up and whether there is a long setup. So you can see once it pulled back from that resistance, it slowly trended up higher and making higher lows. And once a second or third time you retest it, that's when it finally broke out to $490 almost $5 and to new highs near the end of the day. It's true, not every single stock you find on Finviz and the ones you find on your watchlist will run like you had planned. But the more stocks you find that meet your A-plus setup, that has the right volume, the right breakout daily chart, and the right levels, the more prepared you will be when you are alert. most of the work done in trading happens outside of regular market hours. That's where I do the most of my preparation, charting and entering my trading journals. And during market hours, I'm just observing and watching the stocks I prepared on my watchlist and pressing buy or sell buttons if I see them break out and hold above the levels we talked about. Let me know if you enjoyed this video and watching my process for scanning for stocks to trade and preparing for potential runners and watchlists. If you want to learn more in depth about my trade planning process for the small caps and the large caps, make sure to check out my website at humbletrader.com. If this video helped you out, please remember to drop a like and subscribe if you want to see more day trading content like these. Thank you guys for watching, I'm the humble trader, and I'll see you guys next time. Thank you.

The goal of this video is to teach you how to start planning and working independently build your own watchlist and find winning trades without being a sheep relying on scanners or chat room alerts. As always, if you enjoy step by step videos like these, make sure to drop a like and subscribe and ring that notification bell if you want to learn more from my channel in the future. Step number 1 would be scanning for the stocks to trade.

And my favorite free scanning platform is Finviz.com. Thank you. This is still the most beginner friendly website. And again, it's completely free to use. So start with going to finviz.com.

And over here, you can see that once you're on the homepage, you get a broad market view of everything that's happening in the market. Now, the place we want to focus on is the Finviz screener. So go back to the homepage and from the homepage and click screener on the top over here. Screener. And this is where you can input all the filters and scan for stocks that's only matching the criteria you have.

And I'm gonna show you the criteria right now. And but first of all let's close my ad, Google ad on the top. Yes I was shopping for some shoes. So over here I always start from the descriptive filters.

I leave exchange blank because I like to scan for both Nasdaq, NYC, and the Amex. I don't discriminate. For market cap, I would prefer to scan for stocks that's under 2 billion market cap.

I like to separate the small cap scans and the large cap scans. For this example, let's go ahead with the small cap scans. So I'm going to select small under 2 billion market cap. So we got the market cap. Earnings days, you can leave that alone.

Target price, I leave that alone as well. Index, dividend yield, everything, I leave that alone. Now what I care more about... I don't even care about the average volume. Now what's more important in the current market condition is relative volume.

If you are ever concerned about any of the key terms here, if you hover over the word you're looking at, let's say relative volume, you can see that relative volume means the ratio between current volume and a three month average. That's intraday adjusted. By using this key metric, you're gonna find stocks that's increasing in volume steadily on the daily chart. And that's very important in the current market condition.

And if you are a new trader, a very important concept to start understanding early on is that you need volume to proceed the breakout successfully. If you don't have volume, the breakout on the stock is most likely going to pop and fail. So that's the reason we are searching for relative volume ideally over 1 or even 2. So let's try over 1.5 for now.

The next key metric that's very important to put on your filter is current volume. So if you hover over the the word, it'll show you that current volume means the number of shares that's being traded today. And for us, we definitely want something that's more than 1 million.

For this demo, I'm gonna do over 5 million and see what we get. So there's other stuff like country, options, and shorts, and price. So I think for me, I'm going to scan for stocks that's under $10, especially when it comes to the small cap stocks. Again, we can always expand the range if we don't get enough results.

Okay, so you can see that once we have all these four filters, we get two pages of results and a list of tickers. So by default, you see the ticker, the company, the sector. the industry, the PE ratio, and the change on the day, etc.

And the volume on the very right side. But for us traders, we want to see the daily chart because that's where we're going to do the next step later on when we do technical analysis. But for now, let's go up to, you can see we are at overview right now. But for us, we want to look at charts.

So you can see once you click the charts, you actually see what these daily charts for all the stocks showing up looks like. You can see we still have two pages of examples. By default, they give us the technical one, but I prefer the type to be candlestick charts.

So now this is where we can see the recent three month charts and what it looks like. Alright so now that we have a list of stocks that's matching our criteria of being a small cap stock, relative volume over 1.5 and current volume over 5 million and price under $10, we have a good list of stocks over here. You can see one page is probably like 20 stocks and the daily charts to look at. I know at this point you must be thinking Can we just buy all of these stocks?

No, don't do that. Because we need to go on to step number 2, which is technical analysis on the daily chart. For us short term day traders, we want to look for stocks that's consolidating on the daily chart and slowly about to set up for a breakout. What a true breakout would look like, would look like this stock GROM over here.

So if we click it and go to the daily chart here. You can see that the stock came from $2 all the way to about $4. And here it is reaching some resistance around $4 and has tried breaking out to $6.

So this would be one of the stocks I would further analyze on my broker platform. Another good example here would be the stock NXTP. If we look at the chart on the daily, you can see that this thing consolidated and held the support around $130 for a couple of weeks.

Then once it broke about $150 and later on around $2, it's starting to break out from $2 to $230. So this will be another stock that we can look at later on. Another one here from our scan the CEI, you can see this thing broke multiple resistance.

It broke $1. resistance and another resistance here at 180 and once it broke all these resistance it went to the upside from 150 all the way to almost five dollars now it has since then came all the way back down so the breakout for this stock is over but this is essentially what you're looking for the earlier parts before this huge breakdown all the other stocks that we just talked about has a chart that looks very similar to the part preceding the breakout on CEI. And that's the reason we are scanning for those stocks. So besides looking for stocks as breaking above some recent resistance, a breakout chart, I also want to see increasing volume on the daily chart. Because in order to have a true breakout, with a stock breaking above resistance to the upside and hold above it, you need more people buying it.

It's actually pretty simple. increasing volume precedes the breakout, and consistent volume sustains the breakout. So that's why volume is so important. That's why we didn't just scan for high volume stocks, but high relative volume.

Factors 1.5 to 2. So now that we've selected the 3 stocks we want to focus on and further analyze, it's time for step 3, which is preparing for watchlist on our broker platforms. So now that we're on my broker platform, you can see I'm using thinkorswim as a demo. So the first stock we're gonna look at is CEI.

You can see this thing came all the way from 50 cents and once it broke above a lot of resistance up here at All the wicks up here you can see some resistance at 170 and 240s and also later on $3. This thing just took off almost to $5. Now this will be a good time to give you an introduction to support and resistance.

Because every time I asked for support from my ex-husband, all I was given was resistance. Okay, real talk. please be supportive of your loved ones endeavors or struggles.

Because otherwise you're gonna be that person messaging them many years down the road asking for stock analysis. Okay so a crash course on support and resistance. Support are the areas on the daily chart where historically buyers came in to buy the stock.

So you can see for CEI the previous support down here where you see buyers coming in around 60 cents. and later on over here around 120 and then all the way here some little support you can see the stock held that area for about 170s for an extended amount of time so those are gonna be support for the stock Now the other side would be resistance. Resistance levels are the areas where people came in to sell the stock.

So this would be the opposite of support. So you can see that for the same example, CEI, let's say I bought the stock at $1,700. In the past, when a stock rang up to 3.10 or all the way up here around 4 dollars, that's where everyone sold the stock. So myself included, if I see that there's resistance at 3 dollars, I would also probably sell.

And you can see it will be the same thing here. People came in to buy the stock around 50 cents and then once they held these levels, you can see this line here around a dollar, a dollar here. That's the prior support all the way from the daily over here.

People came in to buy and the stock went all the way to 170. The resistance we talked about earlier and then pulled back. held a small higher low support 150, didn't quite pull back to $1, and broke out above that 170 resistance, and the stock just took off to the next resistance up around 240s, 310s, and later on to almost 4-5 dollars. okay so looking at the cei chart you can see that the stock already had its breakout it went from 50 cents to a dollar 70 and all the way to almost five dollars but now it's been selling off um and even though recently we bounced from 90 cents to around 240s here we sold off we didn't hold the breakout right you can see the stock didn't hold above $2. So it's back under that 170 resistance, 180, 170 resistance over here. So for us, if we're looking to long the stock, there is really no long on the stock until it broke above the resistance it sets in on this day, 246. So this is going to be the key resistance.

I'm going to right click and make this line white here. So that's going to be the key resistance. So I'm going to set an alert. That's also part of the process of preparing for a watch list.

You don't just buy or sell any random stock. You wait for the stock to actually hit those levels. And then you can look at. the stock. So I want to know when CEI breaks above this 246 in the future.

Because remember what we said about breakout in step 1, it's only if a stock can break out successfully above a prior recent resistance which in this case will be 246 then this thing would have upside to potentially go to three dollars or 370 and four dollars and above so until that happens i'm going to leave cei alone So what we can do here is go to the left side and put that on our watch list. I'm going to put CEI here. So the next stock for us to analyze is GROM.

So first of all, I want to go to a daily chart to make sure I'm looking at... yeah max available you can see this thing didn't have much volume until recently on the daily chart the volume bar view kind of look at this the previous trading volume is very low only about 400 000 shares and again remember what we talked about in step number one we want to trade stocks that's trading at least one or two million shares average on the daily so it's only until recently on this day this thing traded over 50 million shares so So this is definitely worth our attention. So once the stock broke out with high volume, you can see it traded above all these recent resistance. So on the daily, you can see the previous high over here is 490s. And after that, the stock sold off.

So that's the reason that's going to be the most recent resistance. And over here, you can see buying started coming in around these areas. Why?

Because you can see over here. it consolidated and held that three dollars areas for multiple days this day this day and all the following updates and over here on the previous i guess couple months earlier it also held that three dollars mark so that's why we that's gonna be a support for the stock. A resistance is gonna be this area about $490. If you round it up to the recent highs are gonna be around $5 to $5.50. So this area is going to be the resistance for GROM.

And you can see that yeah sure it has the resistance around $5 which it's kind of holding below right now. But you also have these areas around $440s $450s has been bought up. So what I'm gonna do here is, I wanna know when the stock breaks the most recent resistance around $5.50.

Now it doesn't mean to just buy the stock when I hear the alert. It means that I wanna look at the chart on my platform and assess. the chart and the price action intraday and whether there's consistent volume. Remember if the volume is inconsistent, the breakout is going to pop and fail. So I'm going to set this white line here.

That's going to be the key resistance for the stock to break out above and hold above it to continue to go to potentially 670s. So that's going to be very interesting. So I'm going to set an alert right here, right click, create alert. So I will know when the stock hits $548 or $550. Now I'm gonna put that also on the watch's GROM.

So this will be my process for drawing out the support and resistance and setting alerts on my broker platform. Again, just because you're setting alerts doesn't mean you just buy or jump into the stock right away. The broker alerts are here to signal you when a stock is breaking through that resistance level you planned out.

A really good example of this is the broker alert. what that means is on the stock vygr this is the intraday chart you can see it touched and broke that 460 resistance around 11 o'clock but if i just jump in and buy the stock right away i'll be dragged down to about 440. So that would be a 20 cent loss. The idea is not to jump in right away, but rather to observe and look at a stock and how it's trading on the chart intraday.

So if I see the stock hitting 460, I wouldn't jump in. Instead, I'll start looking and seeing whether it's slowly trending up and whether there is a long setup. So you can see once it pulled back from that resistance, it slowly trended up higher and making higher lows.

And once a second or third time you retest it, that's when it finally broke out to $490 almost $5 and to new highs near the end of the day. It's true, not every single stock you find on Finviz and the ones you find on your watchlist will run like you had planned. But the more stocks you find that meet your A-plus setup, that has the right volume, the right breakout daily chart, and the right levels, the more prepared you will be when you are alert.

most of the work done in trading happens outside of regular market hours. That's where I do the most of my preparation, charting and entering my trading journals. And during market hours, I'm just observing and watching the stocks I prepared on my watchlist and pressing buy or sell buttons if I see them break out and hold above the levels we talked about. Let me know if you enjoyed this video and watching my process for scanning for stocks to trade and preparing for potential runners and watchlists.

If you want to learn more in depth about my trade planning process for the small caps and the large caps, make sure to check out my website at humbletrader.com. If this video helped you out, please remember to drop a like and subscribe if you want to see more day trading content like these. Thank you guys for watching, I'm the humble trader, and I'll see you guys next time. Thank you.

Transcript for:Beginner's Guide to Stock Trading

Transcript for:
Beginner's Guide to Stock Trading