The tools that help traders catch quick price bursts
In the rapidly changing landscape of intraday trading, identifying the stocks that are set to make big and quick moves is the key to success, as these explosive price bursts can be the difference-maker for traders. Traders are always seeking an edge, and advanced tools analyse massive quantities of market data to find those opportunities.
In this blog, we will discuss some of the tools that can help traders identify these rapid price bursts and make timely and informed decisions.
Tools for identifying quick price bursts
Traders utilise various tools to track the market movements in an effort to identify potential breakout candidates. Some of the tools used by traders for these purposes are mentioned below:
Intraday screeners
An intraday screener is an invaluable tool for traders seeking to identify potential short-term price bursts. These screeners let traders filter through thousands of stocks based on specific parameters, like a surge in trading volume, percentage change, and volatility. For example, a screener can display the most actively traded equities by volume or value, showing where the trading interest is concentrated.
This helps the traders to narrow down their focus to a manageable, short list of stocks that are showing unusual activity and could be on the verge of a rapid price movement.
Momentum indicators
Momentum indicators are used by traders to determine the strength and speed of a price move. Indicators like Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD) and rate of change (ROC) are popularly used in identifying momentum stocks.
When these indicators point towards a strong momentum, it means that the stock is likely to maintain its momentum, which points towards a potential rapid burst in price movement. Momentum indicators are often used by traders who want to ride the trend for a short period of time instead of holding long-term positions.
Real-time market data and analytics
Access to real-time market data is the key for traders to capitalise on the quick price bursts. Platforms offering real-time analysis of top gainers/losers, price band hitters and overall market overviews are popular among traders. These dashboards provide traders with instant access to market activity and enable traders to react swiftly to developing trends.
For example, the use of tools that display the latest price (LTP), percentage change, and trading volume can be used to identify stocks that may have potential for rapid price movement.
Heatmaps
Heatmaps are visual representations of market data in a colour-coded format, which allows trends and outliers to be easily identified at a glance. For example, a heatmap might be showing up to 50 symbols within the index, and they might be sorted by percentage change.
This visual representation, therefore, allows traders to quickly identify which sectors or individual stocks are under significant movements, and thus, assists in identifying potential quick bursts in price movements.
Corporate filings and announcements
Tracking corporate filings and important announcements can give fundamental insight before a big move in prices. News of mergers, acquisitions, earnings reports or insider trading activities may provide a catalyst for rapid price changes.
Many trading platforms provide customisable dashboards to track corporate filings and end-of-day reports to help traders be informed of these potentially market-moving events.
Conclusion
Successfully catching quick price bursts in trading depends on the smart use of various tools. Intraday screeners, momentum indicators, real-time market data, heatmaps, and corporate filing dashboards are used in combination to make quick and informed decisions by traders.
By combining these resources, traders can easily navigate through the volatile landscape of trading to capitalise on rapid price movements.
