There are currently about 700 stocks listed on the Indonesian stock exchange. Of course, it doesn’t work if you have to look at each of these stocks one by one to decide which one is the best. It is necessary to select stocks that will or are in an uptrend.
Fortunately, the feature already exists? stock screening app that you can use now by using this application You can automatically select all stocks available in IDX using the criteria you create. This article goes over how to screen trending stocks for your benefit.
1. Enter basic criteria.
The first step is to enter some basic criteria. you want These basic criteria, such as market cap, EPS, PER, ROI, ROE, etc., must be included. with these So that you don’t have to buy fried things.
You can also enter a dividend threshold to select a company that pays dividends over a period of time. For traders, dividends may not be their primary source of profit. But dividends are still the same as bonuses for traders.
After entering these criteria The automatic screening program will opt out of shares that don’t meet your criteria. This way, you can narrow the selection process for preferred shares.
2. Enter a multi-period moving average.
One of the basic ways to select stocks that are in an uptrend is to use Simple Moving Average (SMA) many moments at once This period can be 5 business days, 20 business days, 60 business days or 120 business days.
A stock can be said to be in an uptrend if the short-term moving average crosses the long-term moving average. For example, you use the SMA 5 and 20, then the stock is said to be in an uptrend if the SMA 5 crosses. SMA 20 etc.
This means that the short-term trend is increasing exponentially. So it can cut the long-term trend. On the other hand, if the long-term SMA crosses the short-term SMA, the stock is in a downtrend.
After you run this indicator The application will automatically cancel the shares that have entered the baseline. but does not pass this criterion
4. Using the Stochastic Oscillator
The stochastic oscillator is a technical indicator that compares the closing price of an asset and its high and low prices. The difference between the high and the closing price will be narrower. In addition, this indicator can also be used to detect overbought and oversold. Two things that cannot indicate a reversal But it is quite useful for predicting who is dominating the market.
in this indicator You will see two different colored lines below the price chart, the two lines are %K or Fast stochastic indicator and %D or Slow stochastic indicator. It is the intersection of the %D and %K lines that generates a trading signal.
However, the intersection of these two lines can occur in the overbought and oversold areas at the same time. To be able to indicate that the price will meet an uptrend and a downtrend at the same time. If you are looking for stocks that are in an uptrend. You should look for stocks where the intersection of %K and %D occurs in the oversold area. Because it means the stock is trading at a value below its intrinsic value. So there is a chance that it can increase.
5. Using the RSI indicator
The relative strength index (RSI) is an indicator used to assess the speed at which asset prices change. This indicator’s score ranges from 0-100 and is similar to the stochastic indicator above. The RSI score can also indicate overbought and oversold conditions. In this case, the asset is called overbought. If the score is above 70-80 and it is considered oversold if it is below 30 or 20.
In an uptrend market, the RSI ranges from 40-90, with 40-50 as the base low (support zone). Additionally, the trend is expected to be strong with continued breakdown of overbought and oversold. Therefore, you can use this indicator as a benchmark for stock selection.
This indicator will be more useful if you can choose stocks whose price chart is falling. But it was not followed by a lower RSI because that meant potential. bullish reversalyou can buy when weak.
You can use the Moving Average, Stochastic, Oscillator and RSI indicators separately or in combination. If used together, the downside is that the number of shares you can choose from is smaller from the initial 700, which can only be 10 or a dozen. But the advantage is that you will only select stocks that are trending higher and can see them individually for chart analysis.
6. Using Price Action
Although the number of stocks screened right now is only a few dozen. But of course you only need to buy a few shares. In addition to funding problems Of course, choosing some stocks will allow you to concentrate more on the analysis. Price action or trading blank charts is one of the last stock screening tools you can do.
In this way, you can observe different chart patterns. of dozens of stocks filtered above An example of price action is If the price candlestick creates a white three soldiers pattern. There is a candle that engulfs the bull market. or a falling wedge pattern, for example. This price pattern often indicates a bullish reversal. Or the price that was initially reduced will increase again. To provide opportunities for traders to open open positions.
Why is it the last resort? This is because you can’t analyze price patterns on 700 stock charts on the exchange, right? So you have to choose from a variety of fundamental and technical factors first using the application or the automatic stock filtering feature. Only when stock has 10 or dozen. You can check them one by one.
That’s how stocks are screened for uptrends. Please note that the numbers shown in the description above are guidelines only. Traders can choose the above indicators with other high and low limit values according to their taste.
Stock screening is the only tool for selecting this tool. Which indicators are used and the minimum and maximum amounts that traders still draw themselves, so make sure you plan your trades and enter the indicators according to your trading plan.