Stock picking is all about finding GREAT trading and investing ideas. And that’s exactly what this article will teach you. Sound good? By the time you’re done reading, you’ll be very comfortable finding your own stock picks.
It’s important stuff. Because once you can reliably find profitable trend following ideas, then the stock market can become your personal piggy bank. Seriously!
Now I know:
You might be skeptical that this article is your golden ticket. And I don’t blame you. But when you learn the skills of intelligent trend-following, (1) you’ll see the stock market as a sea of opportunity. (2) You’ll know how to limit your downside, and (3) you’ll finally feel in control of your investment ideas. Plus at the bottom of this article you’ll get a link to my favourite stock screen. So…
Let me show you how to make this happen. But first, a quick introduction to Finviz.
Why FinViz is an Important Trend Following Stock Trading Tool:
Before I tell you exactly what I look for when it comes to Intelligent trend following stock picks, you should know that FinViz is the perfect tool for it. Specifically, the FinViz Stock Screener is my #1 destination when it comes to finding intelligent trend following ideas.
Do you know why?
The reason I like FinViz so much, is because… it has both fundamental and technical screening criteria. This means you can see the trend of your stock, but you can also look under the hood and find out how the company behind the ticker price is performing. While most classical trend-followers trade all different kinds of asset classes, intelligent trend following is focused on stocks and does take fundamentals into account. But don’t worry.
Because FinViz makes it easy! So even if you’ve never traded based on technical analysis, or looked at a financial statement, you can just follow my FinViz recipe to find intelligent trend following ideas that are worth further research.
Now let’s get into the details…
Setting-Up Your FinViz Stock Screen For Intelligent Trend Following:
If you’re going to be trend following, then stock screening can help you find ideas. But you need to know what to look for in order to make money. So let me point you in the right direction:
When it comes to intelligent trend-following, there are a few basic principles that you want to keep in mind, specifically:
- Find stocks in strong uptrends
- Avoid stocks that have big fundamental weaknesses or are drastically overvalued.
In terms of these items above, notice that #1 is focused on technical analysis, and #2 is focused on fundamentals. And that’s why FinViz is such a good choice. It has one tab in the stock screener for each of these. For now, we can skip the “Descriptive” task. Instead…
First, let’s turn our attention to the fundamental tab. Here’s an example of what you might want to look for:
Let me tell you what it means:
- Price/Free Cash Flow under 20 keeps you from paying too much for a stock. This is still a high ceiling, but we don’t want to be reaching into the stratosphere for stock picks
- EPS growth next 5 years and next year are positive because we want companies that are growing earnings. Plain and simple. Trends aren’t as likely to continue if earnings growth is slowing down.
- Return on Investment and Return on Equity should be above +0%. Again, we want companies that are making money and not losing it. These return hurdles are low and will allow a lot of companies through the screen, but they’ll help you avoid a couple potential dangers too.
- Debt/Equity is under 1 to help us avoid companies that have too much debt. This isn’t a perfect measure by any means, but it does reduce the chances of finding a company that will go bankrupt tomorrow and provide an abrupt end to your trend. Make sense?
For phase 2 of our FinViz experiment, let’s move our attention to the technical tab. Here are some of the parameters I like to use in this part of the trend following stock screen:
This part is actually pretty easy. As you might expect from a trend-following model, we want to buy stocks that are going up. With the FinViz stock screen, there are a number of ways to do this on the technical tab.
But here’s one of my favourites explained:
- SMA20 above SMA50 and SMA50 above SMA200 are a great way to find stocks that are in strong long-term uptrends. The up-sloping moving averages are very indicative of trends.
- The next thing I like to do is look for stocks that are close-to, or near all-time highs. I like to look for stocks that are within a few % of their 52 week highs to find those with the most momentum. The motto here is: Buy high and sell higher.
Finally, the thing I like most about FinViz is the way you can bring everything together. When you finish your screen and see the results, you can splice and dice the data in a number of different ways. But for trend following stock picks, my favourite way to look at results is by clicking on the “Charts” tab. Here’s what you’ll see from the screen above:
Now, this is a great start. And if you want to duplicate this stock screen yourself in real time, just click here. You’re close to getting set-up for success. But there a couple of other intelligent trend following ideas that you need to keep in mind. Nobody said making money was super easy. I still contend trend-following is simple, but that doesn’t mean you can profit without doing the legwork. So let’s look at a few more details.
Fine-Tuning Your FinViz Stock Screen For Trend Following:
While the stock screen above is a great place to start finding trend following ideas, there are lots of other variables that you might want to consider. This isn’t an exhaustive list by any means. But it should be a great start to get your creative juices flowing.
- The descriptive tab provides another layer of filters to help you refine your ideas. I particularly like the volume requirements and country requirements. You can also search by industry which can be helpful for finding the strongest sectors to trend-follow.
- The fundamental tab has more data that can help you find different kinds of companies. You can find fast-growing companies that are being acquired by institutions, or more mature stocks that might be under-valued and coming off a bottom.
- The technical tab also has a lot of parameters that are worth playing around with in more detail. If you think hard enough, you can find a lot more ways to identify strong up-trends. For starters: I recommend trying the gap-up, maribozou candles or strong upward channels. Now it’s your turn to get to work.
- If you’re looking for IntraDay data, you might also want to consider FinViz elite. This can help you find actionable ideas in real-time.
So there you have it: An Introduction to Trend Following with FinViz
The reality is, trend following is simple. And with tools like FinViz, (and this great stock screen) you can start finding potential trend following ideas fast. This free online tool is definitely worth spending some time with. And of course I welcome your own trend following stock screens in the comments section below.
There’s just one more thing…
If you like what you see, but are really busy or just want to take some of the legwork out of ideas research, then I recommend you take a look at my premium trend following services. This newsletter, alert and model portfolio service can help you save time and start finding trend following stock picks right away. See for yourself.