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The Scan My #1 Student Uses to Find Overnight Gainers

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Written by Timothy Sykes
Updated 4/18/2022 5 min read
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We’re in a bear market. Take a look at this chart of the S&P 500 ETF TRUST ETF (NYSE: SPY). It’s been on a decline since January…

Finding quality plays has been tougher. For example, I only made three trades last week.

But when it comes to my niche — day trading penny stocks — I don’t need to trade all the time. I only trade when I see a perfect setup.

That’s how I’ve been able to stay profitable for over 20 years in the markets.

The truth is, I’m not even that great of a trader. Some of my students do better than me. Like Tim Grittani. He’s managed to profit over $13.5 million in his trading career.

You can learn something from a trader with that incredible record. Here’s how he crushes it in bull and bear markets…

The New Scanner

how to determine support
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For the last year, Tim’s been working on algorithmic trading.

He got so good at regular day trading, now he’s building computers to do it for him.

But last week in a live video webinar, he admitted to some difficulties with the process of building an algo. (Here’s a sneak peek of the webinar. )

Apparently, it’s pretty tough to quantify his strategy.

So in the meantime, he’s still doing some trading and teaching. One pattern Grittani likes to play is the overnight gap-up.

Here’s a video I made on the strategy…

Basically, a stock runs for the day and closes at least 10% above the open. Then the price gaps up the next morning.

Back in 2020 and the beginning of 2021, gap-up plays were a regular occurrence. Now that the markets are slower, there are fewer.

But professional day traders don’t just twiddle their thumbs waiting for the next hot market. We look for volatility.

Here’s where we can learn from Grittani (again). He created a stock scanner that assesses the probability of overnight gap-ups.

Read on for the criteria, and I’ll also show you how to plug this scan into the StocksToTrade platform…

How to Build the Scanner

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For this part, you need some trading and scanning software. There are a lot of options out there, and some are better than others.

For example, the StocksToTrade platform allows me to quickly scan for the hottest stocks while trading. So I don’t miss anything…

Here’s where you can start your two-week trial.

Tim Grittani’s newest scanner has four main factors…

  • Prev. close > Prev. open: This finds stocks that have spiked at least 10%
  • Open > Prev. close: This finds stocks that gapped up overnight at least 5%
  • Price ≤ $5: Search for penny stocks, which are more volatile than higher-priced stocks
  • Yesterday’s volume > 1 million: High trading volume ensures liquidity

I would also add a fifth crucial factor — whether the stock has a history of running. Stocks that have spiked can spike again. I look at the chart to find this.

Here’s what the scanner should look like in StocksToTrade…

More Breaking News

Source: StocksToTrade.com

How to Use This Scanner

In the stock market, history repeats itself. That’s why I said former runners can run again.

Here’s the best way to use market scans: build watchlists.

This scan helped Grittani find recent spikers like Houston American Energy Corporation (AMEX: HUSA)…

… and Mexco Energy Corporation (AMEX: MXC) …

But just because he found a bunch of stocks that gapped up doesn’t mean they’ll continue to run.

You have to trade safely.

So he adds the best-looking plays to a watchlist and waits for a pattern to set up.

There are tons of different stock patterns out there. But Grittani and the rest of my millionaire students trade this 7-step framework the most.

It’s the same as when I discovered it two decades ago. And I’ve been teaching it to other traders ever since.

Follow in the footsteps of over two dozen millionaires…

Apply for my in-depth day trading course today.

If my team thinks you’re ready, I’ll see you in chat!

How do you use scans to find hot stocks? Do you search for any of the same criteria as Grittani? Leave a comment to show me you understand these lessons!

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”