Upbeat music plays throughout.
Narrator: Hello, traders. I'm Cotton Hensley from the Schwab Trade Desk.
You've developed your trading plan and created your watchlist, but you lack confidence in some of the signals that you're seeing.
On-screen text: Volume: The number of shares traded during a given time frame and can indicate the strength of a price move.
Narrator: The Unusual Volume scan will help you confirm your entry signals by identifying stocks that are on the move due to strong volume. To make your life even easier, I'm going to show you how to set up your platform to scan your watchlist automatically, and alert you when a stock moves on volume.
Okay, so we're in the platform now, and let's just go ahead and go over to the Charts tab.
Animation: The mouse clicks on stock symbols in the left-side Watchlist widget resulting in the chart changing to each symbol.
Narrator: While we're in the Charts tab, we've got a few different selections here from our left sidebar. Now, as you can see on my chart, I'm currently using the RSI, or the Relative Strength Index.
Animation: A chart of Eli Lilly (LLY) is displayed with the price in the top of pane, volume in the middle pane and the RSI indicator in the bottom pane. The RSI has one signal line, a reversal zone above 70 and another reversal zone below 30.
Narrator: With this specific indicator, it's pretty popular, the idea is that if we have a specific price action that's going up above this top line, we are in overbought territory, meaning that with historical information, this stock generally doesn't trade this high, and when it does, we tend to see a downward motion, it's overbought, so it might reverse. The opposite is true for the bottom line. That's the oversold area. With historical information, this stock tends to come back up after it's approached its oversold area. So knowing that with the RSI, I can then look through all of my different stocks over here on the left sidebar. Now, it's important to note that I'm just using the S&P 100 in this case. This might be a watchlist that you like to use that's your own personal watchlist that you've developed before.
But as I go through these stocks, I'm seeing quite a few stocks that are approaching their overbought section. That doesn't necessarily mean that we have a strong signal to buy or sell. We might just be having an up market. So in other words, I'm not confident in some of these signals. I may not want to get into this stock just because everything seems to be doing that.
If I look at Visa, for example, I can see that it has just hit its overbought area. And when I look at the price action, I can see a couple of candles that are green, meaning that it's gone up the last two days. When I look at the volume, I can see there's not a lot of volume on this stock. So I'm kind of in the middle of the road when it comes to what decision I need to make. So what can we do in terms of making an additional confirmation signal to help us feel confident in our trade?
So from here, let's go over to the Scan tab. We can use this tool to help figure out additional signals in the list that we've already pre-made. So with the S&P 100 being over here on the left, I can actually load that into the Scan tab up here at the top. So you'll notice that All Stocks is a section. We're currently scanning in all stocks, and I've got a couple different categories I can choose.
Now, if I go to Categories, I can see all stocks. If I go to a personal watchlist, I can choose a watchlist that I've made myself. Since we're using the S&P 100, I'm going to go to the Public S through W, in this case, and simply select that list. So with S&P 100 being loaded up, I want to use the Unusual Volume scan to help me figure out what stocks have unusual volume.
Animation: The mouse clicks on the X at the far right of a filter to delete it. There are three filters deleted. Then the mouse clicks on Add filter which opens a list. Study is selected from the list.
Narrator: After I delete my filters, I'm going to add in a study filter. What a study filter is, it's a scan of a chart. We're going to use the same study that we're using the chart and scan for movement on the market.
Animation: The mouse selects ADXCrossover, which is the default for the filter. A list appears and the mouse rests over Volume. A new list appears which includes Unusual_Volume, which is then selected.
Narrator: I care about volume, and luckily, we have a section here called Volume already. When we go to Volume, Unusual Volume is a scan that we can choose. When we select Unusual Volume, we can see a couple of presets that are already in here. A current volume has increased 20% from the typical average over 50 periods. What is a period? In this case, the Increment is set to daily, so that means 50 days. So in other words, this scan is saying, "Find me stocks where the volume has increased 20% above the 50% typical volume average."
If I wanted to be a bit more aggressive with that, I could type in 25. Since I already had the S&P 100 loaded into my list, I know that that's the only thing this scan is going to scan within. And once I click Scan, I've got two results, UNH and Charter.
So what do we do now? We've completed our scan, so we might want to just test these results, and take a look at them. So I'm going to go back to Charts, and I might look at UNH. And this is interesting because UNH is in oversold territory, it has completely dropped off, and if we just look at the volume, it's increased quite a bit.
Our other option was Charter, and this was actually very similar to Visa earlier. We can see that it's approached the overbought section, and we've got an increase in price action, and our volume has once again increased. So if I'm looking at this stock, this might give me a little bit more confidence to say, "Well, I mean there's a lot more going on here." Not only is the price action increasing, but I have an additional volume factor to consider to give me a better idea of the breadth of the market.
Now, let's say that we liked that scan a lot. We can actually save that scan. I like my results. All it is, is the S&P 100 with unusual volume. So if I were to save this scan right now, I could go up to the top right-hand side, and click the middle three-line menu, and my results will be Save scan query. Once we click on that, we can give this an original name. I'm just going to call this S&P 100 Unusual Volume. You'll notice that my scan results disappeared.
So if we go to Charts, I can actually load in that scan on the left sidebar. I'm looking at the S&P 100 now, but if I click on the current watchlist, and I go to my Personal section, I can see that S&P 100 Unusual Volume, with this pink symbol next to it to let me know that this is not just a regular watchlist. It's a dynamic watchlist. It's a watchlist that will scan every five minutes. So if you like, it will constantly look at the S&P 100, and every five minutes it will scan for unusual volume again, and any results that pop up in here will change and refresh. So you can keep an eye on any of the stocks that pop in here.
Now, I can take this a step further, and I can actually be alerted whenever more things have been added to this list. So if I go back to the Scan tab, and then I just click scan to refresh my results, I have a three-line menu down here on the right side, and whenever I select that, I can Save as Watchlist or I can Alert when scan results change. Now, it's important to note that Save as Watchlist is just a screenshot. It's not really a dynamic watchlist or anything like that. It's just going to save these two stocks, and they won't change, and it won't scan for you. So in this case, what I kind of talked about was the Alert when scan results change, and we have an additional menu that we can choose just to alert me whenever a symbol is added. Now, we're not going to use this example, but I also have the ability to use A symbol is removed. So if I want to be alerted when one of these symbols has changed, then I can do that too. Or I could also say A symbol is added or removed. Now, you'll probably guess that you're going to get a lot of alerts from that because you're being alerted anytime something has added or removed, so just keep that in mind.
We're going to stick with A symbol is added, and we can see it's scanning and S&P 100 Unusual Volume. We'll create that alert, and our alert has already gone off.
So whenever we look at our alert menu, that's going to be located in the MarketWatch tab. And we can click on the subtab Alerts. We'll see that our scan has been created, and we can see that it also says A symbol is added to scan results, letting us know that the alert is already set up, and our status shows Active.
So with that in mind, now we've got a scan that we've created, a watchlist over on the left, and if we need to step away from our computer or anything, then we have an alert set up to where it will ding in the platform to let us know that our scan results have changed, and possibly there are more stocks that we can take a look at from the S&P 100 that have unusual volume.
Now, if I were done with this alert, all I would need to do is come over here to the right side of the alert menu, and I could click the cancel button. It will ask me, "Are you about to cancel all active alerts?" I can click Yes to confirm that.
And that's how you would create a scan, in this case, on the S&P 100 for unusual volume.
The Unusual Volume indicator can make your life a little easier by scanning your watchlist for stocks with higher volume that may be confirming your other signals. Then use a dynamic watchlist scan to send you alerts so you can complete the analysis. Try out the Unusual Volume indicator on your watchlist to see what you think, and set up the alerts, so you don't have to be tied to your computer all day.
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