In day trading , traders buy and sell stock several times per day to exploit inefficiencies in the market. However, there are ways to help reduce the fail rate and put the odds in your favor.
One of the biggest issues new traders have is trading the right stocks. Stocks that are gapping up or down compared to the previous days close are a great place to start when looking for the best stocks to day trade.
To find stocks that are gapping up or down, you need the best scanning tool like Trade Ideas or by checking out market news outlets like Benzinga, MarketWatch, Yahoo Finance or Google Finance. Trade Ideas is a custom scanning tool that scans the entire market based on the criteria you have entered into your scans. There are thousands of different ways to build the scanners which helps you fine tune your strategy and find only the best setups on stocks that have a news catalyst.
Volume is one of the most overlooked aspects of day trading with relative volume being the most important indicator to watch. It helps to indicate how many times a stock has been bought or sold within a given time period. There are securities that trade less while others trade more each day and knowing which ones are trading above normal volume is vital for day traders. One thing you need to know is that the relative volume indicator helps to inform traders and investors on how much volume a stock has compared to its recent trading volume history.
That is why stocks with high relative volume have much higher volume than average which means the stock will usually make larger, more predictable moves. As a trader or investor, you need to look for stocks with a high relative volume. It is displayed as a ratio, so when you see a relative volume of 2, that means that it is trading 2 times the normal trading volume. As a day trade you want to see relative volume at at least a 2.
It is also wise to choose stocks with low float. In trading there are tons of stocks to trade but knowing where the action is at is important to surviving as a day trader. Making sure that a stock has a fresh news catalyst is helpful in finding stocks that have more traders watching them and will likely result in higher volatility.
Volatility is important because it creates opportunity to make money and is why finding stocks with a news catalyst is so important. Experienced traders and investors use social media platforms like StockTwits, news outlets like Market Watch or streaming news feeds like Benzinga to find the latest news on stocks. By opening an account with the selected platform, you will receive news in real time about different stocks. This allows you to find the most active stocks.
Did you know that US stock exchanges list more than 7, securities? Trying to track all of the stocks is a losing strategy and why traders need to focus on a handful of stocks that have the above requirements as they are the best stocks to day trade.
Once you establish your watch list, then you will be able to cancel out the other market noise and focus on waiting for your setups to trade. Whether you are a beginner or an experienced day trader, you need to know how to find the best stocks to day trade. To select the best day trading stocks, look for stocks gapping up or down, seek stocks with a high relative volume, look for stocks with news catalysts and finally, create the best watch list.
Check out these penny stocks to watch! Here are tips to help you find the best day trading stocks. Look For Stocks That Are Gapping Up Or Down Stocks that are gapping up or down compared to the previous days close are a great place to start when looking for the best stocks to day trade. Look For Stocks With A New Catalyst In trading there are tons of stocks to trade but knowing where the action is at is important to surviving as a day trader.
So, how do you hunt for new catalysts? Final Thoughts Whether you are a beginner or an experienced day trader, you need to know how to find the best stocks to day trade.More...