Traditional volume scanners compare trading activity by analyzing how current volume differs from historical averages at specific minute of the day. For instance, they might compare trading volume at the 8:46 AM minute to the average volume at that same minute over the past 10 days. When current volume significantly exceeds the historical average, these scanners trigger alerts. However, this approach has significant flaws, particularly for low float stocks. These stocks often have minimal trading activity for extended periods, so even a single large trade can trigger misleading alerts. Consider a scenario where one trader places a 50,000-share block trade – traditional scanners might flag this as a 1000% volume increase in the minute the trade was executed, despite it being just one isolated transaction. This is why measuring trades per second (TPS) provides a more accurate picture of market activity. It is the true measure of momentum. Using our previous example, that 50,000-share block would count as just one trade, resulting in less than one TPS – far below the threshold for genuine momentum. Through experience, we’ve found that true momentum stocks consistently maintain at least 10 TPS, while exceptionally volatile stocks can exceed 100 TPS. This metric better reflects real-time market interest and participation, filtering out the noise of isolated large trades.
MomentumDetector integrates these criteria into a comprehensive scanning system, helping you identify potential explosive moves early in their development.
Conclusion: Through our analysis, we’ve identified key patterns in explosive stock movements. The most promising candidates typically share these characteristics:
- Price Range: The sweet spot falls between -$2 and $20 per share
- Float Size: Ideally between 0-20 million shares, though stocks with up to 50 million shares can still show significant potential
- Price Action: Must be making new highs during the trading day
- Trading Activity: Minimum of 10 trades per second, with higher volumes generally indicating stronger momentum
By focusing on stocks that meet these criteria, traders can more effectively identify potential explosive stocks on the intraday horizon. Think of these parameters as your initial screening tools – they help narrow down the vast market to the most promising candidates for the day.
The MomentumDetector stock scanner integrates all these essential parameters into one powerful tool. Start your free trial today and discover how it can streamline your market analysis, helping you identify the best intraday trading opportunities in real-time.