That became the basis for the momentum day trading strategy that I’m trading today. I apply this to day trading penny stocks & small cap stocks.

Criteria for trading them: news catalyst , float under 100m and high relative volume.

I have three specific parameters that I use to look for penny stocks that have the highest probability of making a huge run.

Parameter 1: Breaking News – First I look for stocks that are gapping up because of some kind of news catalyst like FDA approval or earnings but we want to stay away from any stocks that are being bought out because they usually don’t trade away from their purchase price.

Parameter 2: Float – Ideally I want to the float to be under 100 million shares but under 50 million is even better. This is because when a stock has a small amount of shares to trade and there is a lot of buying interest then it could push shares up very quickly which is exactly what we are looking for.

Parameter 3: High Relative Volume – I like to see the stock active in the premarket with solid volume. Usually stocks with news will be gapping up in the premarket on really good volume so I know right off the bat that this stock will have plenty of liquidity for me to trade with size.

Once I make my watchlist of the best-looking stocks with the above criteria I will wait for the market to open and see if breakout over premarket highs for an entry or wait for a bull flag pattern.

day trading penny stocks & small cap stocks - best algo for trading 3 parametrs ?!

Possible ?