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

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.

https://www.warriortrading.com/penny-stocks/?fbclid=IwAR1HV-YzJ95UdtsiRdocRgLMfyKSXkRTzBa8ckBtgI-pwnZqmakCLvJeo9U

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

Possible ?

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


Hi Thomas,

1. We don't have a "special event handler" that works as you described. You might want to consider adding those stocks into universe manually, or detect those unusual movement with some stretagy. (i.e. sudden increase in volume)

2. The ownership information like float shares outstanding is not available in universe selection at present.

3. Yes, you could access premarket data.
In AddEquity() method, we could set extendedMarketHours to true to access data and perform tradings during pre and post market sessions. Here is documentation of AddEquity() method. Here is a code snippet that allows us to access premarket data for "SPY":
 

AddEquity("SPY", Resolution.Minute, Market.USA, True, 1, True)

Hope it helps.

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


Hi TomasG, 

could you able to figure out the coding for your strategy?

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Hi Saravana,

It's now possible to build this strategy with our platform.

(1) To find stocks with FDA approval, we can subscribe the stocks in the universe to our Tiingo News feed. For recent earnings releases, we can can access the FileDate through our MorningStar data source.

(2) We don't have a company's float available for universe selection, but we can use SharesOutstanding as a proxy. See this thread for an example of accessing data from the company profile.

(3) Determining if a stock has high relative volume was already explained by Link above. However, this can't be incorporated into the universe selection model. See this related thread for more information.

Best,
Derek Melchin

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


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