How to find Momentum/Volatile Stocks???

[nishantsomani]

Hello Everyone!

Is there any method to determine the highly momentum based and/or volatile counters?

And as i'm not sure if i've used the word "momentum" correctly which i'm exactly looking for, hence putting an example to you all:

Say, a stock namely "A" is currently trading at 5000 levels. And on an average (considering all the rangebound and trending period) it moves about 100 points on an intraday basis. That is about 2% of the current price.

There is another stock "B", trading at 1000. It moves 40 points on intraday basis. That is about 4%.

So i want to explore for stocks of the kind "B" which have high intraday movement (in percentage terms, 4% intraday movement as against 2%). Is there any specific indicator(s) which may be used because determining the counters by calculating manually for a long period is pretty cumbersome.

I'm not sure if i used the term "momentum based" correctly? If i'm wrong then please let me know the correct term that i'm looking for as described in the aforementioned example.

Regards

 

[TheBramble]

Momentum relates primarily to the closing price of stocks and the rate at which then are declining or rising. You'll need volume and closing price delta to establish that within your paramters, so check out inds that cover those two factors or build your own bespoke ind.

Volatitly technically refers to the range (High Low) and again there are inds that'll give you a vanilla version, but you'r ebetter off designing one that meets your specific criteria. (I'd suggest you incorporate volume into that one as well.... )

 

[nishantsomani]

@TheBramble, Thanks for letting me know the elementary difference between momentum & volatile stocks. So it means that what i'm looking for is primarily volatile stocks and not momentum counters.

 

[marktheman]

I would start with a sample of 50 stocks. I would download the historic data from yahoo finance. I would transfer the data to a single excel page. For the day's range for each stock simply divide the day's high by the day's low, use this simple formula
=((a1/b1)-1)*100 where a1 is the cell that contains the day's highand b1 the day's low. This gives you the day's % change or volatility of the stock.
Then simply copy and paste the formula to match all the data. You then have the daily % change for the stock. You can use this data to create average daily changes etc.

 

[TheBramble]

Without taking the Volume transacted into account, any calculation of that nature is going to be theoretical at best.

Your suggested formula does not give you % change for the day on the stock, it gives you a derivation of the relationship of the High to the Low. For % change you'd need to be working with closing values.

High and Low without Volume is largely irrelevant. A wide range on Low Volume within the context of the previous price and volume action says far more than any one bar in isolation, especially without Volume.

 

[marktheman]

If you are looking at tracking stocks with the most daily price movement and you do this with 10 years of daily prices and then compare the results with other stocks the user will determine the stocks which show the greater daily change.

 

[nishantsomani]

@marktheman, thanks for the input. But what you have suggested is something i've already put and tried. BUT the only reason i was primarily looking for any kind of indicator (if it exists as i dont know) is that it will save loads of time, because sampling and calculating manually is pretty cumbersome. Might be there is some kind of indicator which gauges the volatility of stocks which provides big consistent intraday movement as compared against large cap stocks.

@thebramble, Volume thing is absolutely perfect. No doubt about the fact that volume is prime indicator in analysis and to me too. But volume is something which can be put to use at the time of late research and/or real trading, as prima facie i'm looking for things which will help in sorting out the stock if they are volatile. I read in an article that stocks are largely volatile all because they are illiquid. But i believe its a myth. I've seen lots of counters which have liquidity and they are volatile too. What i'm trying to do is first look for volatile stocks via some method which isn't tedious to perform over a large sample of stocks. Then volume is brought into play for further research.