How to Research Volatile Stocks

Volatility is a wide-ranging term, as there are different criteria, mathematical models, calculations and concepts applied to measure and assess volatility. Different traders may have their own criteria for volatile stocks. A few examples:

  • For some, volatile stocks may simply be the ones having the largest difference between the high and low price of the day,
  • For others, they may be the most active stocks with the highest volume.
  • For the rest, they may be those screened based on mathematical models and complex calculations taking historical data into account and so on.

Traders need to identify and select their own definition of “volatility” and then figure out a way to keep an eye on those sorts of stocks. Fortunately, great software, tools, and applications are available to do that for you.

key takeaways

  • A lot of good options exist to help traders track volatility (however they define it) in the market, along with individual volatile stocks.
  • The official stock exchange website, which is free of charge, is a good starting place.
  • There are also free third-party apps, such as Yahoo Finance and Google Finance, that display market data.
  • More sophisticated traders and investors might prefer a paid tool or platform, for the ultimate in investment range, customization, and real-time information.

Defining Volatility

Volatility-based trades can be categorized into two streams:

  • Currently volatile: a stock that is currently showing high swings
  • Expected to be volatile: a stock that is currently stable, but expected to break out in the near future with high volatility

We'll focus on the first stream, as the second one relies more on future expectations rather than current actions, and may remain dependent on expected earnings reports, the outcome of a large project that the company may have bid for, etc.

Volatility Criteria

Most trading based on volatile stocks is aimed for instant action. Simple volatility criteria may include:

  • Most Active by Share Volume
  • Most Advanced
  • Most Declined
  • Most Active by Dollar Volume
  • Additionally, parameters in the corresponding derivatives market (open interest, volume, put-call ratio, implied volatility, etc.) can also be used to assess the volatility in the underlying stock.

How to Track Volatility

It is best to directly hit the official stock exchange website, which is free of cost. Usually, exchanges across the globe maintain a real-time live-updating dedicated section for the above-mentioned criteria.

NASDAQ Most Active Stocks Section:

nasdaq most active stocks

NSE India Live Market Report Section:

nse live

Free Tools for Tracking Volatile Stocks

Besides the exchange-based live data, one can look at various available applications (which include browser-based interfaces and mobile apps), using which defined criteria can be selected or set for a quick view of highly volatile stocks. Here is an indicative list:

  • StockTA: The “Advanced Stock Screener” section of StockTA offers a good mix of technical indicators including those for volatility on U.S. and Canadian Stocks.
  • StockFetcher: This site offers a customizable tool where one can literally write (set) one's own criteria to screen the stocks matching a desired pattern. Here is an example of picking up the volatile stocks with a simple query:
  • FreeStockCharts: This site offers charts, widgets, and related information across a lot of technical indicators.
  • Yahoo Finance and Google Finance: Two internet giants, Yahoo and Google, have their dedicated finance portals for quick access to market data and selected technical indicators. Functionality available includes Stock Screener (screenshot from Google) where one can pick and choose the available criteria.
google stock screener
  • ChartOasis: Offers downloadable technical analysis software along with market data files to generate the required analysis, breakout patterns, and other indicators including those based on volatility. It is also useful for backtesting any trading strategy on historical data.

Free tools have their challenges. Among them:

  • Not everything may be free. Usually, basic quotes and charts may be free with other premium features (with/without a trial period)
  • Free content available may not always be real-time, but delayed by a few minutes to one day
  • Free tools may not cover all desired markets and regions
  • Limitations in terms of available criteria and functions, where user-desired functionality may not be available to the full extent
  • No options for customizing

Paid Tools for Tracking Volatile Stocks

The above-mentioned constraints may force active traders to look for paid tools, or alternatively, one can also go for dedicated software products from big market data players which come at a premium price. Here are a few examples:

These dedicated products may come at medium-to-high costs and may often need long-term subscriptions. Before sign-up, please ensure that the available functionality matches your requirements. Your best bet is to take a trial version and test it thoroughly during the evaluation period.

Building Your Own Tracking Tool

Active traders can explore building their own quick app, program, or interface to get their own desired volatility stock screeners. Although it may need considerable studying to set up, and require a lot of trial and error, a customized tool or platform can go a long way, facilitating a lot of tasks for traders. Commonly used activities include using programs (like Perl scrappers) to extract real-time live data from exchange websites or market data portals and further parsing it in the program according to the desired criterion and getting the desired screening of stocks.

The Bottom Line

Tools, software, programs and websites act as good source of content in multiple forms (data, charts, indicators, patterns, etc.). Using volatility based parameters for day trading can yield profitable opportunities, provided the set criteria are clearly understood and the right tools are selected to be used with the right precision. 

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