Volume

[Justin]

I scan for setups on stocks that have at least 1M average daily volume. I use 1M as a minimum because of a trade I encountered years ago when I was brand new to Fibonacci - the stock hit my number and I tried to sell it but there were no buyers, so I watched it drop until I sold it at a lower price. This experience turned me on to watching volume as a factor in determining whether to get into the trade.

I'm curious what others on this forum volume requirements are before considering a trade in a stock? How many of you consider thinly traded stocks and what's been your experience with them?

Thank you,
Justin

[FibMaster]

Justin, I apologize for not answering earlier. At first I wanted to give someone else a chance, then later I forgot to check back here.

1 million shares per day is a good level as a minimum. Yes lack of liquidity is a definite problem. Years ago I used to trade stocks intensely. At that time I used to write mathematical scans to look for the best candidates. I would exclude any stock with less than an average of 500,000 shares per day, and later increased that. For exactly the reason you noticed (slippage), and one more reason.

Stocks with more liquidity, respond to Fibonacci levels better than thinly traded stocks.