There are over 2000 shares listed on the Australian Securities Exchange and it can be difficult to find the diamonds amongst the rocks that are scattered through the market.
Fortunately the D2MX Trade Tools make it easier to find the opportunities by allowing you to quickly filter out shares that you are interested in. This approach to the market is known as bottom up trading, identifying the shares that are doing well regardless of the current state of the market or bigger picture of the economic environment.
The main tool you can use to quickly scan the markets is the D2MX Analyser. This allows you to identify shares that meet your criteria, whatever they may be. However with a wide range of indicators and criteria to choose from how do you know which is the best to use?
To make money in shares you buy at a lower price and sell at a higher price. It sounds easy, but is it? Here we are going to use a filter that identifies shares that have gone up 20% in the last month, because rising share prices is how you make money.
From the indicator drop down list select the indicator Price Change Above Below. Set the parameters to Close Price, % Increase, 20, 30. These parameters identify shares where the closing price is more than 20% above the price 30 days ago. A nice simple filter, but very effective.
One challenge with this scan is you will pick up a lot of illiquid shares. A share that trades very low volume and is below 10 cents can easily add 20% in a month. It only has to move 2 cents to achieve this. You can filter out these shares using the Filter Settings in the D2MX Analyser Wizard.
Click on Filter Settings and you can filter by price, volume or both. In the screenshot above the price has been set to 0.10 (10 cents in Analyser, which is different to what is displayed elsewhere in the program). The volume has been set to 500,000 and this volume applies to the last trading day only, it is not an average. A word of caution is necessary when setting this volume filter; volumes are very low at the start of the trading day in all shares. If you were to run a scan at 10.30am you will find more shares filtered out than if you ran the same scan at 3.30pm.
Select the watchlist from Analyse Lists and you can now run a scan on your chosen watchlist. In a future release you will be able to scan the whole market, but for now you can scan up to the Top 300 shares or any of your User Watchlists. In the Quote screen, you can use the Navigator, and then click Industry. You can save the list of shares in an industry sector as a User Watchlist and then run a scan on that watchlist. By creating a watchlist for each sector you can then scan the whole market. The results of the scan are displayed in the list. You can then quickly flick through these shares using the black buttons at the top of the D2MX chart.
Keep flicking through until you find a share that looks interesting from a technical analysis point of view. Typically this means a share that is rising steadily from bottom left to the top right of the chart. You can quickly add it to a watchlist with a right click on the chart then Add to Watchlist, and select the watchlist you want to add to.
Once the shares are in the watchlist you can analyse them further. Set up your screen with different charts and data windows, and use the D2MX charts to view the shares. You can also take a look at the fundamental info by opening the Security Info tab located under the Security menu.
Once you have your screen configured the way you want it use the Broadcast function to analyse the shares in more detail. Right click on the share in the watchlist and click Broadcast to update all the open windows.
While the timing may not necessarily be right for immediate entry into these trades you have quickly identified potential opportunities. Even though you are effectively ignoring the bigger picture of what is happening in the markets, this approach will highlight more shares in the stronger sectors and also more shares when the markets are strong as well. Using this approach you can quickly narrow down the choice of shares you wish to trade and find those diamonds in the rough.
Jeff Cartridge
Education Manager
