How Do You Choose the Best Day Trading Stocks?
Since not all traders use the same trading style and strategy, it is difficult to label any stock as the “best” day trading stock; however, many traders tend to look for these characteristics in the best day trading stocks:
- Spreads are tight.
- Volume is high.
- Price movement is heavy.
It is much easier to make a quick profit from a stock that has a heavy price movement if it has a lot of movement. Despite the fact that all stocks fluctuate and the market is constantly changing, the following 10 day trade stock picks currently meet the three previously listed traits and are good choices for most day traders.
Best Day Trading Stocks:
- How Do You Choose the Best Day Trading Stocks?
- Top 12 Best Day Trading Stocks
- Invest in the Best Day Trading Stocks
It has become more common to trade fractional shares in today’s market. Traders can choose the dollar amounts they wish to invest, even if it means not purchasing full shares. That means you could buy $50 worth of a stock that sells for $250 per share.– Antoroy
1. You need to do your homework
For day trading, traders must understand basic trading procedures, do their homework and keep up with the latest news and events that could affect stock prices. Keep track of all the stocks you are interested in trading, and stay informed about what’s going on with those companies and the market as a whole.
2. Decide how much you are willing to risk
For each trade, day traders are willing to risk 1-2% of their account. If you have a $50,000 trading account and are willing to risk 0.05% on every trade, your maximum loss will be $250. Set aside extra money to trade with, money you’re willing to lose. You may or may not lose money.
3. Make Time for Yourself
Trading on the day-to-day takes a lot of time. To be successful, you need to follow the market throughout the day and act quickly when opportunities present themselves. Therefore, you’ll need to spend the majority of your day watching the market.
4. Begin small
You should start day trading by focusing on just one or two stocks. Thus, it will be easier to monitor the market closely and spot opportunities as they arise.
5. Limit orders should be used
Limit orders are orders to buy a stock at a specific price. By setting both the buy and sell prices for limit orders, investors are able to trade more precisely.
6. Timing is crucial
Traders who follow the market closely are often able to identify patterns and make successful trades as soon as the market opens. Since many investors execute their trades as soon as the market opens, pricing can be volatile in those first 15 to 20 minutes. It is strongly recommended that you not make any trades within the first 20 minutes if you are new to day trading. Beginners should stick to the middle hours of the day when the market is less volatile.
7. Don’t be unrealistic
You won’t win every trade. Many day traders only win half the time. It’s important, though, that they make more money when they win than when they lose. By limiting the risk of each trade, they avoid heavy losses.
Successful day traders follow a strategy closely. As a result, they don’t let their emotions get in the way, and they win in the long run.
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Top 12 Best Day Trading Stocks
- Twilio Inc. (TWLO)
- Tesla Inc. (TSLA)
- Etsy Inc. (ETSY)
- Advanced Micro Devices Inc. (AMD)
- Roku Inc. (ROKU)
- Facebook (FB)
- ZIOPHARM Oncology Inc. (ZIOP)
- Synergy Pharmaceuticals Inc. (SGYP)
- Bill Barrett Corp. (BBG)
- Basic Energy Services Inc. (BAS)
- Amrep Corp [NYSE: AXR]
- Aegon N.V. ADR [NYSE : AEG]
Twilio Inc. is a technology company that provides cloud services to large businesses. Twilio meets all the requirements for day trading. The company’s stocks trade at a volume of more than 4 million, providing an extremely liquid market. Additionally, Twilio’s stock has a monthly volatility rating of above 4%, indicating that it features plenty of movement. Its stock prices are currently on an upward trend with a gain of more than 47 percent since January 2019.
Due to its recent popularity in the headlines, Tesla is familiar to many investors. It’s a trendy company that’s great for both retail investors and day traders. Tesla’s stock trades at an average of more than 8.5 million shares per session. Although its stock isn’t as volatile as others, its average true range (ATR) exceeds 10. Tesla’s volatility has been exceptional lately, as the average true range is based on the past 14 sessions.
Etsy is a popular e-commerce retailer that allows smaller vendors to sell their unique products online. Customers shop Etsy for the unique products that cannot be found at larger companies such as Wal-Mart. Etsy meets all the criteria necessary to be considered one of the best day trading stocks. Etsy trades around 3 million shares per session, and its monthly volatility is about 4.6%. Its share price is trending upward both monthly and annually at over 14% and 42%, respectively.
Advanced Micro Devices Inc.
Advanced Micro Devices has had a great year, with its stock up more than 100% from last year. Such upward growth is unusual for an established company like Advanced Micro Devices. Day traders have been flocking to this stock despite its significant gains throughout the year.
Adv Micro’s stock is extremely liquid, with a daily volume exceeding 85 million shares. Its monthly volatility is approximately 4.6%, meaning that it has plenty of movement for a promising day trade. Due to its recent agreement with Google regarding the creation of hardware for Google’s new gaming platform, Stadia, investors have kept an eye on Advanced Micro. The stock of Advanced Micro is sure to move when the new platform launches, so day traders should keep an eye on the headlines.
Roku Inc. While trend lines can be helpful for new traders, it’s important to study the market and learn when the stock’s price is about to change and not just rely on the drawn trend lines.
The company, Roku, makes streaming technology for smart TV makers and everyday consumers. Also this past year, this stock has taken off with an upward trend of more than 100%. Having a volume of over 14 million, Roku is a favorite of many day traders. Roku has a short share float of over 15%, which is often viewed as a bad quality; however, if traders are already positioned in the stock, a higher short float may be beneficial.
Facebook is a good stock for new day traders, especially those who trade trendlines. A trader studies the stock chart, marking the low points. Since the low points in the zigzag pattern line up, it is easy to draw a rough line across them, thus creating the lower trend line. When the stock drops to that line, the trader knows it will jump back up.
In the case of Facebook, the lower trend line is provided for you, but you should ensure the stock chart provides you with the 50-day moving average so you are able to see the current trend line.
Traders also like to draw trend lines over the stock’s highs. They can see when Facebook’s stock reaches that top trend line, indicating a drop is likely. The volume of Facebook shares is roughly 13 million, so it is quite liquid, and new traders will be able to easily exit a position.
ZIOPHARM Oncology Inc.
ZIOPHARM Oncology Inc. has a volume of approximately 3.9 million shares per day over 100 days. The price range over the past 100 days is 6.9%, and it fluctuated daily by more than 4% between May and July. It might be difficult for day traders looking for shortable stocks on some days to borrow ZIOPHARM’s stock, but it is possible if you time it well.
Synergy Pharmaceuticals Inc.
One of the top day trading stocks is Synergy Pharmaceuticals Inc., but it highlights a problem with relying on average statistics. During a couple of days in June, the stock saw a large amount of volume and movement, making it appear more liquid and volatile than it actually is.
The stock has an average daily volume of 9.2 million shares over the last 30 days, but only 4.3 million shares over the last 100 days. Synergy typically exchanges 2 to 3 million shares in a single trading session, with an average percentage movement ranging from 3% on low volatility days to 10% on high volatility days.
Bill Barrett Corp.
Another good day trading stock is Bill Barrett Corp. Volume and volatility have remained stable and consistent since 2014. Bill Barrett has an average daily volume of 2.5 million shares for both short- and long-term analyses. Over a 100-day period, it has an average volatility of 7.29%, ranging from a low of 4% to a high of 10%.
Basic Energy Services Inc.
Basic Energy Services is another one of the best stocks to trade. With a 30-day average of 7.28%, its average falls just under 3 million shares per day. In its lower volatility days, the stock falls around 4%; however, a price movement of 5% or more is more common.
Invest in the Best Day Trading Stocks
The concepts and guidelines used to determine the best day trading stocks are by no means universal. Every trader has their own approach to investing and trading. As you trade more, you can develop your own trading strategy and determine what principles you prefer to follow.
To earn a profit from day trading, you need to invest time and energy into research and analytics. Experienced investors can assist you with this process. The Raging Bull team is ready and eager to provide you with the training and tools you need to excel at day trading.
A number of free resources are available on Raging Bull’s website, including a seven-day bootcamp that teaches you how to become a better trader. You’ll get the tools you need to start day trading intelligently from Raging Bull’s top trainers!