Most people find it difficult to call on their broker and take intra-day positions, they are more comfortable in holding stock for a longer period of time and ride the wave. Day trading in the stock market may be an art besides being exciting and extremely rewarding. Day traders probably miss an opportunity when the stock opens up with a gap up and continues it up journey without giving a day trader to buy at reasonable price, while resulting into phenomenal return to the investors. However, you can even loose your shirt and every other thing if on bad news or company performance stock opens gap down and continues adversely without giving investor an opportunity to exit or book loss.

Stock Selection

Wouldn’t it be great if you could find stocks with the potential to produce enormous gains, maybe increase five or 10 times in value over the next year or two? It’s easy to find plenty of stocks that have already done that, but how do you spot them before they take off?

William J. O’Neil, pondered with same question some years ago. But unlike most of the people, O’Neil was in a position to find out. He amassed a large database containing fundamental and price action data on thousands of stocks and used the database to pinpoint the 500 stocks scoring the biggest gains over the 40-year period from 1953 to 1993. He then analyzed the list to find out what these winning stocks had in common before they started their big move and discovered seven characteristics shared by most of the biggest gainers and combined them into a strategy for finding future rockets.

Based on his research we have tried to explain his selection strategy and termed it as HEIGHTS, an acronym of the seven required factors for stock selection.

At its heart, HEIGHTS is a momentum system, requiring fast earnings growth combined with a strong price chart. But it also includes other requirements not usually identified with momentum investing.

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