There isn't a perfect day trading stock, as trading styles vary by trader. That said,most day traders prefer tight spreads and lots of volume. A lot of price movement is also something many day traders seek; it is easier to jump in and out for a profit in a stock that is moving a lot, compared to one that isn't.
Key Takeaways
Ideal stocks for day trading include those with high volume and tight trading spreads.
Lots of price movement and liquidity are trademarks for day trading stocks.
A good day trading stock can typically be traded for several months or more before conditionschange, however.
The following stock combines liquidity with excellent intraday price movement, making them ideal for most day traders. Conditions do change though, so while these stocks currently offer what day traders are looking for, weeks or months from now they may not.
Example of Day Trading Stock
Stocks with high trading volume is the first thing to look for. ZIOPHARM Oncology, Inc. (ZIOP) hasa100-day average volume of2.4 million shares per day. The stock hasa high average day range (from high to low).
Look for stocks that are shortable, but note that a high short interest can make the stock hard to borrow some days. The below ZIOPHARM chart shows the 6-month daily price history, daily volume, and the performance of the stock (percentage) over the 6-month period.
Many ideal day trading stocks are priced below $20. A lower share price allows day traders to trade stocks with volatilityand volume at an affordable price for smaller trading accounts.
For those seeking greater volume, theSPDRS&P 500 (SPY) is popular among traders of all types. For those seeking significant volume and volatility, the iPath S&P 500 VIX ST Futures ETN (VXX) orVelocityShares2x VIX ST ETN (TVIX) are currently offering both in abundance.
As well, other ETFs worth considering include Financial Select Sector SPDR (XLF) and Invesco QQQ (QQQ). Specific industry ETFs that are ideal for day traders include the VanEck Vectors Gold Miners ETF (GDX) and iPath S&P 500 VIX Short-Term Futures ETN (VXX).
In the simplest form, look for high volume stocks with a high beta, such as Advanced Micro Devices (AMD). Other stocks meeting that criteria include Twilio (TWLO) and Tesla (TSLA).
The Bottom Line
These types of stocks are of potential interest to day traders because they provide liquidity and significant daily percentage price movements each day (usually). No specific direction or trade is recommended. Anyone who day trades should have a sound strategy they trade and be prepared for the volatility these stocks offer.
Conditions do change though. A stock with high volume currently could see it reduced (or increased) in the weeks ahead. volatility could also increase or decrease.A good day trading stock can typically be traded for several months or more before conditionschange enough to consider trading something else. Some day traders trade theexact same stock, ETF, or several stocks and ETFs for their entire career.
Stocks with a positive price trend – where the price is consistently moving upward – can provide excellent day trading opportunities. You can identify these trends by using technical analysis tools like moving averages, which smooth out price data to help identify the stock's trend direction over a specific period.
Assuming they make ten trades per day and taking into account the success/failure ratio, this hypothetical day trader can anticipate earning approximately $525 and only risking a loss of about $300 each day. This results in a sizeable net gain of $225 per day.
It is a high-risk and high-rewards venture. Around 1% – 20% of traders earn a profitable margin at the end of the day. The low success rate often discourages the newbies who learn new ways from an online course or television. Studies have shown that around 97% of day traders have lost their money in two years.
Stocks are among the most popular securities for day traders — the market is big and active, and commissions are relatively low or nonexistent. You can also day trade bonds, options, futures, commodities and currencies. Typically, the best day trading stocks have the following characteristics: Good volume.
Higher volume also typically equates to a tighter spread, which can benefit day traders. Therefore, traders may focus on stocks that trade at least one million or more shares per day, and often multiple millions. Volume spikes can be used to find stocks that are seeing a lot of interest.
The type of trading platform most folks use depends on the type of trader they are. While Interactive Brokers might be one of the best options for day traders, other types of traders may like the variety of Charles Schwab or the versatility of Fidelity.
Investors can make trades in various markets, including the stock market, foreign exchange market, and options market. Many markets are available to anyone with a simple internet connection. Day traders commonly choose the forex market for its low barriers to entry as well as exchange-traded funds.
It is not a hard and fast rule, but rather a guideline that has been observed by many traders over the years. The logic behind this rule is that if the market has not reversed by 11 am EST, it is less likely to experience a significant trend reversal during the remainder of the trading day.
A common approach for new day traders is to start with a goal of $200 per day and work up to $800-$1000 over time. Small winners are better than home runs because it forces you to stay on your plan and use discipline. Sure, you'll hit a big winner every now and then, but consistency is the real key to day trading.
A typical day trading profit per day is between 0.033 and 0.13 percent. This corresponds to a monthly profit of between 1 and 10 percent for successful day traders. However, only a few traders are successful in the long term - most make losses.
Many people put in multiple years before breaking into consistent (or even any) profitability. It takes at least a year to consistently make money from day trading or swing trading, if working at it full-time or with a mentor, and only working one (maybe two) strategies. Six months is the…
Some professional traders make a living from day trading. If you enjoy this strategy enough and make it work for you, it could become your primary profession.
It can help you learn how to earn money in the share market daily.
Scalping. Scalping is a strategy that involves buying and selling assets in tiny increments (typically in less than 5 minutes) to make small profits in the short term. ...
Is Day Trading Profitable? Day trading is tough. A University of Berkeley study found that 75% of day traders quit within two years. The same study found that the majority of trades, up to 80%, are unprofitable.
Day traders commonly choose the forex market for its low barriers to entry as well as exchange-traded funds. Long-term investors are often attracted to the commodities market and the market for contracts for difference.
Specific industry ETFs that are ideal for day traders include the VanEck Vectors Gold Miners ETF (GDX) and iPath S&P 500 VIX Short-Term Futures ETN (VXX). In the simplest form, look for high volume stocks with a high beta, such as Advanced Micro Devices (AMD).
Introduction: My name is Errol Quitzon, I am a fair, cute, fancy, clean, attractive, sparkling, kind person who loves writing and wants to share my knowledge and understanding with you.
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