I set my scan to look for % losers that have a minimum average volume of 200k/day and a daily volume of at least 250k. I have chosen not to look at anything above $3.00 a share, but, depending on the trader, this could be any amount. I wait for the market to open, and I have the Power Scan set to update automatically every 2 minutes. I am looking for a big loser to catch my attention early in the day, usually before 10:15 a.m. ET. (By big loser, I mean greater than a 30 percent loss for that morning.)

Once something catches my eye, I look at it on a daily chart. I want to make sure that the chart looks as bad as it can. The steeper the slide, the better. I then look for news. I want to make sure that there is news that has affected the price and that it is not just beaten down because insiders are dumping it. Once I know it's a stock I want to purchase, I follow four steps.

Step 1: If all looks bad, but it also looks as though the stock won't be delisted for a while, I pick an entry point and place an order. Almost always, this is in the area of 50 percent loss for the day. So, for example, if a stock closed at $1.00 the prior day, I will place an order to buy 3,000 shares at $.50. My first order is always $1,500.

Step 2: As soon as it is filled, I put in 2 more orders, one to buy 7,500 shares at $.40 ($3,000) and the other to sell 3,000 shares at $.60 (20 percent or $300).

Step 3: Depending on which one gets filled first, I cancel the other. If the $.40 order gets filled first, I place an order to sell 10,500 at $.50 (a profit of $750) and an order to buy 20,000 shares at $.30 ($6,000).

Step 4: If the $.30 order gets filled (which is very rare), I will sell it all at $.40 a share (a $1,700 profit).

I have hit the fourth step only one time since I've been using this strategy, and I considered it a rescue mission, so to speak, at the time. Two reasons make it a rescue mission for me:

• The stock has fallen more than 70 percent in one day, indicating to me that there are many more troubles than what has been released.
• Probably, most importantly, it is getting beyond my personal risk-tolerance level. I would rather break even or make a small profit than risk $10,500 for a long period of time.

Another thing: Whenever I am out, I don't look back and kick myself because a stock's price went to $1.00 or higher. There are too many fish out there and I just wait for them.

An example of this would be ATHM. On August 17, 2001, it closed at $.87. It gapped lower on the morning of the 18th, so I put in an order for $.45. It never hit the next level, and I sold it at $.54.

I know that this style will not be for everyone, but it is perfect for me. I'm in cash most of the time, and I don't get emotional about a stock that I am holding. Plus, if nothing is moving on a particular day, I am out the door by 10:30 a.m. or so with the rest of the day to myself.

In terms of income, I am able to draw approximately $5,000 a month out of my account using the above posted dollar amounts. That might not sound like much to a big city dweller, but I live in a very rural area where the cost of living is pretty low. Also, the account I draw from is $50,000.

The scanner works within eSignal, MarketCenter LIVE and the desktop companion of QuoTrek, as well as on its own.

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