I have a set of criteria which a stock must meet before I will consider it for this play. First of all, a stock must fall at least $2.00 for consideration. The more points a stock falls, in the shortest period of time, the better. Think of the process of pressing down hard on a spring and then letting go. Generally, if a stock has dropped more than 2 points ($2) in 10 to 60 minutes, it will bounce at least a point. If a stock drops 4 to 6 points or more in a 10 to 60 minute (or longer) time period it will retrace most of the time. In other words, it will retrace a percentage of what it has just so violently lost.

I primarily focus on this play during the first three market reversal times of the day but find the best times are 9:40 to 10:10 and 12:00 to 1:00 EST. In addition, around 9:37 quickly scan a Falling Since Open scan with the same parameters as above except leave advanced filters blank (do not change them at all). You just want to see the biggest losers and their Relative Volume since the open. I always play the biggest loser with the most Relative Volume increase, as this will usually provide the largest point bounce.

Execution is critical; watch the stock fall with your finger on the buy button; after the stock bottoms, buy it on the way back up. Sometimes I can get within a penny or two of the bottom, most of the time I try to buy approximately 20 cents off the low on the rise from support. I sell when I'm happy with the profit or the stock stops going up. IMPORTANT: if the stock drops below your perceived bottom/support, sell, since you haven't found the bottom; if this happens go to another trade or keep trying till you get the desired move off the true low.

If you are using Wizetrade, you will be buying with the lights all red, or maybe a fresh green 1-minute chart, and if you are lucky, maybe your next 2- or 3-minute light to the right of the 1-minute will be green.

I hate to be wrong or have a losing trade as much as anyone, but executing this play, I do incur small losses sometimes; but since the average move on the stocks that fall within the guidelines listed earlier are well over $1.50, (sometimes I catch a move of over 3 points) my rationale is as follows: when executing this play I only have to be right 50% of the time to be very profitable. For example, if on 20 trades I lose an average of 15 cents per trade, that's $3 thousand dollars I've lost; but if on 20 trades I profit on average of $1.50 per trade that's $30 thousand dollars I've made (plus commissions of course) so I’m $27 thousand to the good, and very satisfied. I trade one thousand shares on most plays. Many thanks to MarketGauge and everyone responsible for such a revolutionary product.

HotScans has a dynamic upgrading process. New strategies and features are continually under development and added frequently. For the longer-term swing and position trader, HotScans is developing a strategy which will effectively identify strong monthly, weekly, and daily charts along with the power of MarketGauge technology to quickly spot the most powerful moves. Look for this upgrade in the next 30 to 60 days. Swing and position traders will not only be able to identify fresh crosses on the daily, weekly and monthly charts, but also to evaluate which plays offer the most potential.

In the next 2 to 3 weeks, HotScans will introduce the most powerful day-trading tool ever available on any scanning platform. As most professional traders will tell you, playing the opening range can be among the most lucrative trades of the day. Until now, this favorite play of the professional trader has been a complicated procedure involving just a few stocks, evaluating their opening range and volume, and making rapid decisions. Once the opening range had been established, the trader had to remember considerable data in order to take trades with the least amount of risk and greatest upside potential. Although maintaining and utilizing all of this data is the key to effective day trading, it has been extremely difficult for a day trader to execute because of the many variables involved. This upgrade will provide a methodology for tracking the opening range of all stocks throughout the day. A special field is being provided with icons showing a map of the market (the price of a stock) and where it is in relation to the range it established during those crucial opening minutes of the market. You will always be in sync with the bias of a stock and with the principle that the opening range is critical in setting up trades for the day. This complex task has been computerized and promises to be one of the most effective and sought after day-trading tools ever developed for day and swing traders. As Keith Schneider, president of DataView says: "All day and swing traders must be aware of a stock’s opening range at all times, otherwise, it’s like trading with a bag over your head."

In your Wizetraders’ Guide to Effective Day Trading, you endorse HotScans. Has this brought you many questions and responses?
I receive many e-mails every day. Some of them are very complex, but most people want to know which setups I use the most. Traders also want to know what other software I use. I have used only HotScans to find trades since I was a beta tester many months ago.

At DataView, we are often asked the best way to use HotScans. How would you answer this question?
The bottom line is that HotScans will find whatever I ask for. It’s not rocket science—HotScans is very intuitive and easy to use. But, I have to know what I want to find. When people ask what setups I use, that’s the same as asking what kind of trades am I looking for. I would rather people ask me how to find plays that fit their trading style. I cannot teach people to day trade in an e-mail. Let me give an example. I had an e-mail yesterday from someone who complained that they were finding stocks that had already run up. If this person was looking for a relatively fresh cross, then all he had to do was set the Previous Period (Advanced Filters) to be flat or down with the day and current scan period to be up—now he would only be shown stocks in a long trend that had consolidated and were moving up again—simple.

What are your favorite setups?
I adjust to market conditions. We have been in a rally for the past few weeks and last Friday I simply scanned for big volume at the open with the price set to Greater Than 0 in the Advanced Filters. Within minutes of the open I had a very short list of stocks that were in play. These included BSTE, EXPE, TSCO, and ERTS—all $2 or better. Once I know what stocks are in play, I leave them on the board all day for repeated trades. Now, if the market tanked at the open, I would also have a reversal popout open looking for dead-cat bounces. I also look for rally blow offs later in the morning, usually around lunch time. One of the wonderful features of HotScans is the ability to have multiple scans running simultaneously using the Popout feature and self-refreshing every minute

Do you have any tips for new HotScans users?
I discovered early on that simple settings often do the job. I often scan for price change only and evaluate which potential trade has the most relative volume. Another tip, and I still get caught in this trap, is finding a stock with a huge increase in relative volume, for example, 1200%, evaluating the stock, and then moving on when the charts seem to indicate that nothing is happening. HotScans often brings you to the party early. Dozens of times, that stock that seemed dormant, made a huge move a few minutes after I stopped watching it. A huge increase in relative volume often is a pre-signal that there is great interest in the stock. I hate myself every time this happens to me—at it seems to happen on a regular basis.

What do you like most about HotScans?
I like the fact that it’s so easy to use and that I can run multiple strategies simultaneously. I also do not miss all the time I used to spend on setup work. Now I find excellent trades every day, in every kind of market, simply by watching HotScans. My job will become immensely easier when the new opening range strategy is put on line.

Thanks for your time Mel.

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