Today, I’d like to wrap up our three part series centered around Wall street’s flawed benchmark for volatility, beta, and how best to improve upon it. In case you missed either of the first two installments, you can access them here:
The One Thing Wall Street Gets Consistently Wrong
How to Fix Wall Street’s Most Consistent Mistake
In part one we discussed the most commonly used measurement of volatility, beta, and how it is inherently flawed and may give misleading signals. In part two I provided a far superior (in my opinion) measurement of volatility, Average True Range. In today’s final part, I’ll show you how I use ATR (along with some additional criteria which can be found in my book, The 10-Minute Millionaire) to identify the most volatile stocks with even greater accuracy!
Click below to watch!
If you need additional information on how to run these scans through the website I recommend, Stockcharts.com, here’s a detailed guide…
How To Run Market Scans on Stockcharts.com
First, you must calculate the MV discussed in the video (and page 137 of the book) by dividing the 14-day ATR by the previous close price, then multiplying by 2. To find the ATR, enter the ticker symbol in the search field (located near the top of the page, in the middle) and click “Go”.
From the chart that appears, use the drop-down boxes to remove all Overlays and Indicators, except for “Avg True Range (ATR)”. Once you click “Update”, the current 14-day ATR will be displayed in the to-left corner of the chart.
Now, in order to run the market scan, access the Members Dashboard (note: you will need a paid membership to stockchats.com to do so. They offer a 30-day free trial to new members). Once there, in the Your Scans section, click “New Scan”.
You will be taken to the Scan Criteria page, where you will input the criteria as shown on page 142. Then, enter the MV you’ve just calculated. Finally, click “Run Scan” to scan for a list of stocks which move twice as fast as the S&P 500 Index.
Great trading and God bless you,
D.R. Barton, Jr.
P.S.: Keep an eye out for an additional series I’m planning, in which we’ll delve into the list of stocks we get from these market scans, and analyze the results to find profitable investments.
10-Minute Millionaire Insiders are given a free copy of my book, The 10-Minute Millionaire, just for signing up! Contained within is an in-depth analysis of the concepts I discuss in the article above, plus many more of my best trading secrets! To become an Insider and get your copy now, click here.