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How to Beat the Market Makers at Their Own Game: Uncovering the Mysteries of Day Trading by Fausto Pugliese

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CHAPTER 5 Picking Tradable Stocks, Part I

Now that you're armed with all of this new credible data, you're probably asking, “What exactly do I do with this information?” or “How can I make this work for me?” Knowing about direct access and how trading works is only the first part of achieving success as an active trader. The second part is knowing how to act on the information you have and how to utilize it to its maximum potential. In particular, you must know which stocks to trade and how to trade them. In this chapter, we're going to discuss how to locate and pinpoint tradable stocks.

With several thousand stocks to choose from, it might seem that finding the right stock is like looking for a needle in a very large haystack. Fortunately, that isn't the case. Only a tiny percentage of stocks meet the stringent criteria to make them tradable, given what we're trying to accomplish in a single day-trading session.

Remember, as active traders, we're not interested in a particular stock for the long haul. We're not trying to build a massive, steady portfolio that we can pass on to future generations. We don't have the luxury of 5 percent growth rate playing with mutual or index funds—we need to earn a paycheck now. Specifically, we are trying to make $200 on our trades each day. While that might not seem like much, it's more than most people make in an eight-hour day. Over the course of one year, that's an additional $50,000 for just a few extra hours of work each day—that's not ...

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