How To Use Finviz For Pre-market Scanning And Strategy

Finviz.com is a powerful, free (with a paid elite option) web-based platform that provides a wealth of information for stock market traders and investors. While it offers numerous features, its screener is particularly valuable for pre-market scanning. Identifying potential trading opportunities before the market opens can give you a significant edge. This post will guide you through using Finviz to create effective pre-market scans and develop trading strategies based on your findings.

Pre-market scanning allows you to react to overnight news, earnings reports, and other catalysts that can significantly impact stock prices. By identifying stocks exhibiting unusual activity or meeting specific criteria, you can formulate a plan of attack before the opening bell, increasing your chances of profitable trades. Let's dive into how Finviz can help you achieve this.

1. Understanding the Finviz Screener Interface

The Finviz screener is the heart of your pre-market analysis. To access it, simply go to Finviz.com and click on the "Screener" tab. You'll be presented with a table and a set of filter options. These filters are categorized under three main tabs:

  • Descriptive: This tab allows you to filter stocks based on fundamental data like market capitalization, industry, sector, and country.
  • Fundamental: Here, you can screen based on financial ratios such as price-to-earnings (P/E), price-to-sales (P/S), earnings per share (EPS) growth, and dividend yield.
  • Technical: This is where you'll find filters based on technical indicators like moving averages, RSI (Relative Strength Index), volume, and candlestick patterns. This is the most useful tab for pre-market technical scanning.

Familiarizing yourself with these categories is crucial for building effective screens.

2. Defining Your Pre-market Scanning Criteria

Before you start clicking filters, it's essential to define what you're looking for. What kind of stocks are you interested in trading? What catalysts are you trying to identify? Here are some common pre-market scanning strategies and the corresponding Finviz filters you might use:

  • Gappers (Stocks Gapping Up or Down): These stocks experience a significant price difference between the previous day's close and the current pre-market price. This often indicates strong momentum.

    • Filter: Technical -> Gap Up/Down. You can specify a percentage gap (e.g., "Up over 5%") to narrow your results.
    • Considerations: Look for stocks with high relative volume in the pre-market to confirm the gap's validity.

  • High Volume Movers: Stocks with unusually high volume in the pre-market often indicate strong interest and potential for significant price movement.

    • Filter: Technical -> Relative Volume. Set a minimum value (e.g., "Over 2").
    • Considerations: Combine this with other filters to identify the reason for the high volume (e.g., news, earnings).

  • Stocks Breaking Key Levels: Identifying stocks poised to break through resistance or support levels can present excellent trading opportunities.

    • Filter: This requires a bit more manual analysis using the Finviz charts. Look for stocks approaching key levels on the daily or weekly charts. Use the "Price" filter under the Descriptive tab to narrow down stocks within a certain price range.
    • Considerations: Confirm the breakout with volume and candlestick patterns.

  • Earnings Season Plays: During earnings season, stocks often experience significant volatility. Scan for stocks that have reported earnings recently and are showing unusual price action.

    • Filter: News -> Earnings Date. Set a range (e.g., "Past Week").
    • Considerations: Analyze the earnings report and news surrounding the stock to understand the market's reaction.

3. Building Your Finviz Pre-market Screen

Let's create a practical example: a screen for stocks gapping up with high relative volume.

  1. Go to the Finviz screener.
  2. Click on the "Technical" tab.
  3. Select "Gap Up" from the "Gap" dropdown menu. Let's specify "Up over 3%".
  4. In the same "Technical" tab, select "Over 2" from the "Relative Volume" dropdown menu.
  5. Examine the results. The table will display stocks meeting your criteria.

This simple screen identifies stocks showing significant upward price movement and high pre-market volume, suggesting strong buying interest.

4. Analyzing the Results and Developing a Strategy

Once you have your list of potential trades, it's time to analyze them further. Don't blindly jump into a trade based solely on the screen.

  • Review the Charts: Look at the daily and weekly charts to understand the stock's overall trend, key support and resistance levels, and potential price targets.
  • Read the News: Understand why the stock is moving. Is there a news catalyst, earnings report, or sector-specific event driving the price action?
  • Assess the Risk: Determine your entry point, stop-loss level, and profit target. Calculate the risk-reward ratio to ensure it aligns with your trading plan.
  • Consider Volume: High volume confirms the validity of the price movement. Low volume can indicate a false breakout or gap.
  • Develop a Trading Plan: Based on your analysis, create a clear trading plan outlining your entry and exit strategies, risk management rules, and position sizing.

Example: Let's say your screen identifies "XYZ" as a gapper with high relative volume. You review the chart and see that it's breaking above a key resistance level. You read the news and discover that the company just announced positive clinical trial results. Based on this information, you decide to enter a long position with a stop-loss below the resistance level and a profit target based on the next resistance level.

5. Refining Your Screens and Adapting to Market Conditions

The market is constantly evolving, so your pre-market scanning strategies should too. Regularly review your screens and adjust them based on your trading results and changing market conditions.

  • Track Your Results: Keep a record of your trades and analyze your performance. Identify which screens are generating the most profitable trades and which ones are not.
  • Experiment with Different Filters: Don't be afraid to try new filters and combinations. The Finviz screener offers a vast array of options, so experiment to find what works best for you.
  • Stay Informed: Keep up-to-date with market news and trends. This will help you identify potential catalysts and adjust your screens accordingly.
  • Consider Sector Rotation: Sometimes, entire sectors move in tandem. Modify your scans to focus on leading sectors.

6. Common Mistakes to Avoid

  • Over-Filtering: Using too many filters can limit your results and cause you to miss potential opportunities. Start with a few key filters and gradually add more as needed.
  • Ignoring Volume: Volume is crucial for confirming the validity of price movements. Don't trade stocks with low volume, especially during the pre-market.
  • Chasing Gaps: Gaps can be powerful, but they can also be traps. Don't blindly chase gaps without analyzing the charts and news.
  • Lack of Risk Management: Always use stop-loss orders to protect your capital. Don't risk more than you can afford to lose on any single trade.
  • Emotional Trading: Stick to your trading plan and avoid making impulsive decisions based on fear or greed.

Conclusion

Finviz is an invaluable tool for pre-market scanning and strategy development. By understanding the screener's features, defining your scanning criteria, and analyzing the results, you can identify potential trading opportunities and gain a significant edge in the market. Remember to refine your screens regularly, adapt to changing market conditions, and always prioritize risk management. Pre-market scanning with Finviz, when combined with a well-defined trading plan, can significantly improve your trading performance. Now, go forth and scan!