In intraday trading, we define an explosive stock as one that demonstrates exceptional price movement, typically exceeding 30% within a single trading session. The U.S. stock market’s vast size and high trading volume create frequent opportunities for such dramatic price actions.
MomentumDetector’s primary mission is to help you identify these high-potential stocks before their significant moves occur. Trading explosive stocks offers a key advantage: capturing a small percentage of a 50% move is often more easier and manageable than trading stocks with minimal 2-3% movements. This principle guided our development of MomentumDetector.
Explosive stocks criteria
Low Float:
Float represents the total number of shares available for public trading – essentially the stock’s supply. Following basic economics, when supply (float) is limited and demand increases, prices tend to rise dramatically.
Our Float Categories:
- Nano Float: Below 5 million shares
- Low Float: 5-20 million shares
- Medium Float: 20-50 million shares
We primarily focus on stocks with floats under 20 million shares, as these typically offer the highest potential for significant price movements.
Low priced:
While not an absolute rule, explosive stocks typically fall within specific price parameters:
- Range: $1-20
- Sweet Spot: $2-$10
- Minimum: Above $1 (avoiding penny stocks)
Typically these stocks are priced over $1. Under $1 is considered a penny stock. Penny stocks risk delisting from the exchanges (and moving to OTC market) and some traders avoid stocks under $1 altogether. So although you may find huge movers under $1, the pollution it brings to our scanners makes them not worth including… not mentioning the commissions and fees you may have to pay to purchase enough of them. The optimal price range is under $20, with many traders preferring stocks under $10.
High of Day:
When low-float stocks reach new daily highs, it often signals emerging momentum. These HOD breakouts attract wider trader attention and can trigger cascading buying interest, appearing on multiple trading platforms’ scanners.
High Trades per second:
A unique MomentumDetector metric is our trades-per-second threshold. This measurement ensures genuine trading momentum rather than sporadic large trades that might create misleading price movements. High trading velocity helps confirm authentic market interest and reduces the risk of false signals.
Typical levels of interest for low float stocks:
- 0.5 trades per second: considered low activity. Minimum threshold allowed in pre-market (1 in RTH).
- 1 trades per second: considered moderate activity.
- 10 trades per second: considered strong activity level seen in the best momentum stocks.
- 80+ trades per second: considered extreme activity. This represents the highest level of activity seen in highly volatile stocks.