How to find trending stocks in real time

Traders love to find trending stocks. But what exactly are “trending stocks"? What does it mean when someone says a stock is “trending"? In this post, we explain the various interpretations of “trending stocks", and how our own stock screener does it.

(Read on, or go straight to our Trending stocks screener.)

Trending stocks, as defined by price action. This is our method.

Price action is the movement of a stock's price plotted over time. Specifically, it means primary data items like Open, Close, High, Low, Volume, Change and Change%.

Our stock screener examines the price action over the current 5 days (inclusive of today). We use data analytics and chart pattern recognition, to determine if a stock is moving along a defined price channel. If they qualify, we list them here as trending stocks today.

An uptrend is defined as an upwards price channel, accompanied by higher highs and higher lows.

Find trending stocks - SBUX
Starbucks (SBUX) trending higher



find trending stocks
Our Trending Stocks screener.


A downtrend is defined as a downwards price channel, accompanied by lower highs and lower lows. We display them here as today's downtrend stocks.

Find downtrend stocks
Screening for downtrend stocks

Find trending stocks - IQ
IQIYI (IQ) trending lower


Trending stocks, as defined by social media

This would describe stocks that are being talked about in social media. In Twitter, users often talk about a stock by using its ticker combined with a $ sign. This is also known as a cashtag. For example, if they were talking about Apple. they would use $AAPL.

$AAPL on Twitter
$AAPL trending on Twitter

However, there is no hard evidence as of yet, to suggest that stocks which are discussed on social media produce positive or superior returns.

Additionally, most of the chatter on social media is viewed as unstructured “noise". It is considered extremely difficult to determine context or to aggregate sentiment from unstructured noise.


Trending stocks as defined by volume

Many traders will look at the Most Active/Top Volume list to see “what's trending".

The limitation of this approach is that the Most Active/Top Volume lists are often dominated by the same few names.

source: tradingview.com

ETFs always feature in this list, as do certain stocks due to the size of their free floats, market capitalization, institutional interest, and high daily average volumes.

Trending stocks as defined by news

Traders have to process multiple sources of information every day. This means checking multiple websites, news feeds and TV channels, to get a good grasp of stocks that are in focus today.

This is a very human, and a very discretionary method, of trying to ascertain which stocks are in the news today.  It's virtually impossible for any single human to tabulate all news articles and rank the stocks with the most number of news articles today.

Institutions try to get around this problem by subscribing to elementized news feeds. These are news feeds that come with APIs, tags and attributes, allowing in-house personnel to sieve thru large volumes of data and keywords.

However, the cost of subscribing to these services is considerably high, and out of reach for most traders.


Trending stocks as defined by TA

Trending above the 200-day moving average.

For technical analysis, there are several methods to establish if a stock is trending. The most widely-used is the 200-day moving average. The perception is that, if a stock continues to hold above or go higher than the 200-day moving average, it is in a long-term uptrend.

There are several variations of this method:

1) Using short-term moving averages to determine short term trends, for example, 10, 30, 50 or 100-day MAs.

2) Crossovers – where the shorter MA crosses above the longer-term MA.

Other ways of using TA to identify trends, would include RSI, MACD, Bollinger Bands and On Balance Volume (OBV). Typically, a strong rising indicator value signals that a trend is in place.


Summary

1) There are many ways to define trending stocks, although most are qualitative rather than quantitative.

2) It could mean being discussed on social media, having a high traded volume, appearing in the news, or some technical analysis method.

3) We use the price action method to help traders find trending stocks. We measure price data to determine if a stock is moving upwards or downwards in a price channel, over the current 5 days.

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About the author

David Miller is the Market Data Engineer at Stockbeep. He has spent more than two decades working across dealing rooms, market data vendors and trading ISVs.

For short term trading, David employs a data-based approach to trade equities and derivatives. For long term investing, he prefers ETFs and fixed income.

Besides helping traders find actionable information from data, he is an avid fan of hockey, golf and fishing.