May 19, 2024

Choosing Stocks to Day Trade

Day traders need to identify what to trade first before establishing how to make a profit from their chosen venture. Choosing the ideal day trading stocks involves separating the prevailing market trend from external factors and exploiting the trend to make profits. Here are some tips to help you choose stocks for day trading with ease.

Assess Your Position

The stocks you pick for your intraday trading strategy should align with your personal situation and goals. Remember, there is no universal approach in day trading. Determine the amount of capital you have, your preferred investment option, and risk tolerance. Further, you need to discount your research.

One of the best ways to conduct market research is through reading and evaluating company financial statuses, determining sectors that reflect your personal needs best, values, and personality. You should also start your trading day early. Timing yourself based on market openings is a great idea.

While day trading investors should control their emotions and avoid getting attached to any specific stock. Day trading involves analyzing patterns to determine the right time to enter and exit a position to lessen your losses and make a profit.

Successful traders monitor the news to determine the earnings season and assess the economic calendar. Doing so enables them to spot potential stocks for their intraday trading venture.

High Volatility and Liquidity in Day Trading

Liquidity in the financial markets is the frequency with which an asset can be purchased or disposed of. It can also be how trading impacts the price of the security.

Apart from ease of trading, liquid stocks are often more discounted than other stocks and that makes them cheaper. Further, the equity that high market financing corporations offer is usually more liquid than what low market financing corporations offer. The reason for this is that finding sellers and buyers for the stock in hand is easier.

Highly volatile stocks play a crucial role in day trading strategies. As a result, the stock could be volatile if its issuing firm experiences excess cash flow variance. Markets usually foresee these variations but when diminishing conditions occur day traders can exploit asset mispricing. Unpredictability in the marketplace generates the proper day trading condition. Monitor some of the financial services online as they usually list highly volatile and highly liquid stocks across the day.

Trade Volume Index and Trading Volume

Day traders leverage the trade volume index (TVI) regularly to determine the right time to purchase a stock. The index calculates the total amount of cash flowing out and in an asset.

The volume of the traded stock is calculated by determining the number of times it is either sold or bought in a certain period, usually within one trading day.

Increased volume suggests higher stock interests, either negative or positive. Often, an increase in the stock volume suggests a potential price movement.

Financial Services

Financial services firms offer great day trading stocks. For example, Bank of America is among the most traded stocks per trading session per share. The BoA is a critical day trading candidate even though many people view the banking system skeptically.

Bank of America has a high trading volume making it somewhat liquid. Wells Fargo is also another popular stock for day trading. Both of these firms experience unpredictable industrial conditions and increased trading volumes.

Social Media

The social media sector has been a popular stock for day trading. The increase of online media companies has triggered increased trading numbers for their stocks. However, debate is still ongoing on the ability of social media companies to revolutionize the broad user bases into a reliable revenue stream.

Stock prices usually represent the economical cash flows of the issuing corporation. Recent valuations also consider the revenue potential of the firms. As a result, some experts say this has increased stock valuations more than fundamentals predict. Still, social media remains one of the most common stock groups for intraday trading.


Day trading may be a risky investment strategy but it is also highly lucrative and quite common among traders. To become a successful trader you should first choose the ideal broker that aligns with your needs. Research also helps you understand day trading before investing your hard-earned money.