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Sunday, January 17, 2010

Introducing Stock Screeners

The purpose of this post is to keep track of my progress on optimizing stock screeners I’ve been using for many years.

Basically, for long candidates I search very strong stocks and try to buy them when a bullish reversal bar is formed on a way of a bigger pullback; For short candidates I search very strong downtrend stocks and try to short them when a bearish reversal bar is formed on a way of a bigger bounce. I have screener to search breakout on volume surge for long and breakdown on volume increase for short too. But I found generally, if without manually pick up the screen results, buy dip/sell bounce setup is marginally better. The manual pickup requires experiences and besides psychologically most people aren’t comfortable in chasing high or selling low. So personally I feel perhaps it’s better to focus on screeners for buying dips and selling bounces. The chart below illustrates the back test result. As I don’t have super super powerful machine (Intel Core 2 Quad CPU shouldn’t be very bad, should it? So what more can I ask?), so testing on all stocks takes more than an hour so I have to use Nasdaq 100 components for testing each optimizing conditions to save time. Not perfect, but that’s the reality.


Below is the current back test for buying dip/selling bounce for all the stocks trading on the market. The results are not as good as that of Nasdaq 100, but not very bad I think.


And below are how the stop loss is automatically adjusted for the back test. Use them as general guidance for trading buying dip/selling bounce screeners.


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