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If you’ve read our Why MomentumDetector guide, you understand our core philosophy: instead of overwhelming you with numerous low-quality alerts, we focus on identifying elite trading opportunities - stocks positioned for significant price movements.

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What are Explosive Stocks?

Explosive Stock Sample
For illustration purposes: charting NOT included. BTCT stock data as of November 12, 2024. Alert levels generated by the MomentumDetector. Please note: This stock exhibits atypical behavior. Past performance does not guarantee future price movements.
In intraday trading, we define an explosive stock as one that demonstrates exceptional price movement, typically exceeding 30% within a single trading session. The U.S. stock market’s vast size and high trading volume create frequent opportunities for such dramatic price actions. MomentumDetector’s primary mission is to help you identify these high-potential stocks before their significant moves occur.
Trading explosive stocks offers a key advantage: capturing a small percentage of a 50% move is often more easier and manageable than trading stocks with minimal 2-3% movements. This principle guided our development of MomentumDetector.

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Explosive stocks criteria

MomentumDetector’s scanners are precisely calibrated to identify stocks with high explosive potential. Here are the essential criteria we monitor:

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Low Float:

Float represents the total number of shares available for public trading - essentially the stock’s supply. Following basic economics, when supply (float) is limited and demand increases, prices tend to rise dramatically. Our Float Categories:
  • Nano Float: Below 5 million shares
  • Low Float: 5-20 million shares
  • Medium Float: 20-50 million shares
We primarily focus on stocks with floats under 20 million shares, as these typically offer the highest potential for significant price movements. However, we set our scanners to detect stocks with floats under 50 million shares to ensure we don’t miss any potential opportunities: some stocks with slightly higher floats can still exhibit explosive behavior.

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Low priced

While not an absolute rule, explosive stocks typically fall within specific price parameters:
  • Range: $1-20
  • Sweet Spot: $2-$10
  • Minimum: Above $1 (avoiding penny stocks)
Typically these stocks are priced over $1. Under $1 is considered a penny stock. Penny stocks risk delisting from the exchanges (and moving to OTC market) and some traders avoid stocks under $1 altogether. So although you may find huge movers under $1, the pollution it brings to our scanners makes them not worth including… not mentioning the commissions and fees you may have to pay to purchase enough of them. The optimal price range is under $20, with many traders preferring stocks under $10.

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High of Day:

When low-float stocks reach new daily highs, it often signals emerging momentum. These HOD breakouts attract wider trader attention and can trigger cascading buying interest, appearing on multiple trading platforms’ scanners.

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High Trades per second

A unique MomentumDetector metric is our trades-per-second threshold. This measurement ensures genuine trading momentum rather than sporadic large trades that might create misleading price movements. High trading velocity helps confirm authentic market interest and reduces the risk of false signals. Typical levels of interest for low float stocks:
  • 0.5 trades per second: considered low activity. Minimum threshold allowed in pre-market (1 in RTH).
  • 1 trades per second: considered moderate activity.
  • 10 trades per second: considered strong activity level seen in the best momentum stocks.
  • 80+ trades per second: considered extreme activity. This represents the highest level of activity seen in highly volatile stocks.

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Why Trades per Second (TPS) is a better metric than volume

Traditional volume scanners compare trading activity by analyzing how current volume differs from historical averages at specific minute of the day. For instance, they might compare trading volume at the 8:46 AM minute to the average volume at that same minute over the past 10 days. When current volume significantly exceeds the historical average, these scanners trigger alerts. However, this approach has significant flaws, particularly for low float stocks. These stocks often have minimal trading activity for extended periods, so even a single large trade can trigger misleading alerts. Consider a scenario where one trader places a 50,000-share block trade - traditional scanners might flag this as a 1000% volume increase in the minute the trade was executed, despite it being just one isolated transaction. This is why measuring trades per second (TPS) provides a more accurate picture of market activity. Using our previous example, that 50,000-share block would count as just one trade, resulting in less than one TPS - far below the threshold for genuine momentum. Through experience, we’ve found that true momentum stocks consistently maintain at least 10 TPS, while exceptionally volatile stocks can exceed 100 TPS. This metric better reflects real-time market interest and participation, filtering out the noise of isolated large trades. MomentumDetector integrates these criteria into a comprehensive scanning system, helping you identify potential explosive moves early in their development. For a deeper understanding of how to incorporate these elements into a complete trading strategy, explore our free educational blog content.
Once a potential explosive stock appears on your scanner board, has a news catalyst and sustained trade-per-second activity, do not discard it immediately if it doesn’t maintain upward momentum. It might be worth monitoring for potential continuation throughout the rest of the day.