The stock market is huger and it’s overwhelming to see thousands of stocks to choose from especially when you’re strategy is day trading. And what you need is an easy way guide on how to find day trading stocks.
To know more about easy day trading, you can learn day trading with our Beginner’s guide to day trading.
What Day Traders Look For?
Some traders look for new stocks every day to trade. The might look for stocks that are showing unusual patterns or the most volatile. Other traders find for stocks that are consistently volatile. They trade these stocks for weeks to end.
Additionally, some other traders would trade the same day stocks all the time. This is ideal for day traders as they don’t need to constantly find new stocks.
What to look for day trading stocks?
A day trader needs sufficient stock volume to enter and exit trades on demand. The higher the volume, the easier it is to enter or exit positions with little or no slippage.
Further, majority of day traders trade stocks with at least 1,000,000 in daily volume. One good example is the S&P 500 SPDR, which is an ETF.
A common approach for day traders is trading a stock with strong movements throughout the day. Each stock is unique. On average, it might move 0.5% per day, 1% per day, or even more than 5%.
Moreover, when choosing a stock, make sure to consider your trading personality, trading style, reflexes, and broker.
To learn more about volatility, check out How to Conquer a Volatile Market.
Trend or Range
The trend or range is another aspect to look for. These 2 aspects are useful if you are utilizing a certain strategy. But if you like trading ranges, only trade the ones which have a tendency to range. Similarly, if you use a trending strategy, only trade stocks that have a trending tendency.
How to look for day trading stocks
Find Stocks with pre-market movers
Pre-market is one of the financial world’s favorite ways to fake you. A stock can rose 6% in pre-market only to open up 2% after the opening bell. The reason for this is because of the thin volume.
To avoid this, here’s what to look for when looking for stocks during the pre-market session:
- Stocks greater than $5
- Volume needs to be heavy. No exception for a stock that rose 20% on 200 shares.
- When you see a stock that meet the 1st two requirements, check the volume average for the last 30 days. You’ll filter out the stocks that normally trade thinly which are not good for day trading.
Only trade stocks with high volume
Just as mentioned above, you only need to trade stocks with a higher volume. If you have a broker account, the brokerage must have a list of the most active. Look for stocks that can provide you opportunities, but are not being tracked by investors.
In addition, find stocks that are rising on high volume relative to themselves. If your platform doesn’t give you a good list for high volume stocks, there are other great resources available on the internet.
Watch the earnings calendar
Reporting of earnings is an event that can bring a significant amount of increase in volatility. Keep track of which stock is up for the week. That way, you can start to monitor how the stock is trading going into the announcement.
Furthermore, you can also make use of social media or news sites to see which stocks are trending. However, don’t let this be your basis if they’re good for day trading.
Social media only serves you to see which stocks are worth monitoring.
Focus on few stocks
If you find it tiring to look, watch, and react quickly on different stocks on a daily basis, then you might want to focus with one or two stocks.
When choosing a stock to trade, you have two ways on how to approach this. The first one is selecting the most popular stock. The second is picking your favorite stock based on your past trading performance.
Here are the top 10 best day trading stocks.
|1. S&P 500||128 million|
|2. Apple||53 million|
|3. Facebook||50 million|
|4. Micron Technologies||34 million|
|5. Microsoft||33 million|
|6. General Electric||31 million|
|7. Micron||30 million|
|8. Ford||27 million|
|9. Tesla Motors||10 million|
|10. Google||6.6 million|
Read more about the different types of Stocks and their Classifications.
There are a lot of ways to select the best stocks for day trading. And along the journey, you’ll surely find other ways that are suitable for you. Just remember, don’t try to figure it all out in one day. It might take time to master the ways of day trading, but it’ll all be worth it at the end of the day.
You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!