My suggestion is, firstly, one way to actually cut down very quickly the number of stocks that you will need to look at the chart is by filtering or screening through the trading liquidity of the instruments they are looking at.

So for example, a scan through the trading liquidity of the 700 SGX Listed Stocks. And once you have done that, you are trimmed out by a lot already. And after you do that, I will show you an example later on, just let me run through this part of the presentation first. Then once you have run through that, you will narrow down the list very, very significantly. And I believe from most exchange that is the case because the reality is most listed stocks out there are very illiquid. So just by using this method, you can actually narrow down the list significantly.

And then once you have narrowed down the list significantly then my next suggestion for you is open the charts of those narrowed down lists one by one. So are these lists that you have we are not talking about putting them into a watchlist. You still need to do the next step which is to open a chart one by one and just take a quick glance at the chart and also how the price moves to see whether that chart or this particular stock actually has a price action trading characteristics or not.

And of course those price action trading characteristics has got to be based on your trading timeframe and horizon. Which means that if you are like a long-term swing trader like myself, then you’ve got to be looking at the chart from using a daily candle perspective. If you’re going to be an intraday or super short term swing trader kind of angle, then you probably got to look at four hourly chart or one hourly chart to see whether that particular stock has that kind of price action trading characteristic for you or not.

So it’s not just blindly open a daily candle and just look at it and say, “Oh, it looks like it’s a good price action trading instrument,” and then you try to trade intraday using that daily chart. So that’s not the case. So, take note, trading characteristic must be based on your trading timeframe and horizon.

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Philip Teo

Founder & CEO at Traderwave Pte Ltd
Philip Teo is an entrepreneur, speaker and trading coach who specialises in the field of Technical Analysis of the financial markets. He is currently the Founder and CEO of Traderwave Pte Ltd, a financial technology company that offers a web charting application to global traders. He has conducted many trading seminars and appeared on national television before. He is also currently an official speaker and trainer with SGX Academy. Learn more about him at his Google+ Profile, LinkedIn Profile and Facebook Profile

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