How to Find Stocks for Pump and Dump Trading. Working with Finviz Filters. Part 5.

How to Find Stocks for Pump and Dump Trading. Working with Finviz Filters. Part 5.

This is the fifth article in the "Stock Selection on Finviz" series. In this article, we will discuss how to use the Finviz screener to select stocks for Pump&Dump trading strategies.

Proper asset selection for trading is an essential component of any profitable trading strategy. In previous articles, we have reviewed each filter in the Finviz screener and demonstrated with examples how to select stocks for intraday trading.

In this article, we will explore how to select stocks for trading based on 4 strategies from the Pump&Dump 2020 course.

Previous articles:

• How to Select Stocks for Trading: Working with Finviz. Part 1;
• How to Select Stocks on Finviz: Fundamental Parameters. Part 2;
• Stock Selection: Technical Analysis Parameters in the Finviz Screener. Part 3;
• How to Find Stocks for Intraday Trading. Working with Finviz Filters. Part 4.

How to Find and Select Potential Pump and Dump Stocks? 

Pump&Dump trading involves searching for active stocks that are either starting to rise sharply with increased activity, or have already significantly increased in price and show signs of a potential decline. Let's go through some examples.

Example 1. Selecting Stocks for Dumping Cheap Stocks on Pre-market To trade dumps on the pre-market, you need to select stocks that have already shown significant growth on high volumes. For this, the following filters are suitable:

From the Descriptive tab:

• Average Volume — select over 50k (more than 50,000), as this is the minimum average volume required for the next filter to work properly.
• Relative Volume — select over 1, since it's important that the stock is being traded more actively than usual.
• Price — select Under $5, since the strategy focuses on cheap stocks.

From the Technical tab:

• Change — select Up 10%, since the strategy plans to short stocks that have risen sharply.

As a result, from more than 7,000 stocks to analyze, less than 10 active cheap stocks will remain, which can be traded according to the “Short Pre-market” strategy.

How to Find Cheap Stocks - Selecting Penny Stocks on Finviz

Example 2. Selecting Stocks for Pump and Dump Intraday Trading For trading the "Short Intraday" and "Long Intraday" strategies (trading with pullbacks), the stock selection parameters are similar to those for selecting on the pre-market. You need to select stocks that have already risen sharply on high volumes. Also, there's no need to limit yourself to cheap stocks, as intraday trading allows you to more easily manage risk with a smaller deposit. The following filters are suitable:

From the Descriptive tab:

• Average Volume — select over 50k (more than 50,000), as this is the minimum average volume required for the next filter to work properly.
• Relative Volume — select over 2, since it's important that the stock is being traded significantly more actively than usual. In the previous example, pre-market volume being greater than average indicates increased activity. In this case, when the market is open, the criteria for selecting increased activity need to be stricter.

From the Technical tab:

• Change from Open — select Up 5%, since 10% is too much and might cause you to miss promising active stocks at the beginning of their movement.

As a result, from more than 7,000 stocks to analyze, less than 50 active stocks will remain, which can be traded according to the “Short Intraday” and “Long Intraday” (trading with pullbacks) strategies.

Example 3. Selecting Stocks for Trading Cheap Stock Pumps as an Investor For the "Long Investor" pump strategy, the stock selection parameters differ from the previous two options. You need to select stocks with increased volumes, but where the price movement upwards has been small. It's preferable to limit yourself to cheap stocks, as cheap stocks are "easier" to appreciate than higher-priced stocks. The following filters are suitable:

From the Descriptive tab:

• Average Volume — select over 50k (more than 50,000), as this is the minimum average volume required for the next filter to work properly.
• Relative Volume — select over 1, since it's important that the stock is being traded more actively than usual.
• Price — select Under $5, as the strategy targets cheap stocks.

From the Technical tab:

• Change from Open — select Up, since the strategy plans to buy stocks, and it's preferable to enter a position before the main price movement happens.
• 20-Day Simple Moving Average — select Price above 20 SMA, to filter out stocks that have been actively sold recently, indicating a short-term downtrend.

As a result, from more than 7,000 stocks to analyze, less than 50 active stocks will remain, which can be traded according to the “Long Investor” strategy.

Thus, you can use the Finviz screener to trade another set of strategies.