How To Choose The Most Profitable Day Trading Stocks
The three best techniques for evaluating trading activity are to filter stocks by:
• Price
• Volume
• Volatility
Some day traders also look for news catalysts, but typically, shares outpace the news, Insiders and automated traders make money from news before they have a chance to act, The message can also be used to confirm price, volatility or volume changes.
Price
Day traders typically look for three characteristics in prices that indicate increased activity and opportunities to profit from price changes.
Trend
Which direction is the stock heading? Is there a trading margin? If the price moves in that direction, a high-probability intraday is likely to move in that trend direction,The best short selling opportunities tend to be in falling stocks, When the market moves sideways, traders will look for a "breakout" of the range.
Break Out
A breakout occurs when the price crosses an important threshold, Day traders often buy stocks, so a breakout occurs when the price rises above a key price level and starts to rise, Since prices haven't moved into this new area for a while, it suggests buyers are more eager than sellers.
Gap
A price gap occurs when price moves from one level to another without crossing the level in between, Investors will be looking to buy stocks that have gapped due to increased activity,
The opening gap method is a commonly used intraday trading method for beginners, Using the scan tool, you can find stocks with an opening spread greater than 5%, as well as the size of the spread itself.
Volatility
Volatility measures how much price changes over time, High volatility is what we crave as day traders! The more volatile a stock is, the more likely it is to be bought low and sold high.
Beta is a common metric used by investors to measure stock volatility, It measures its volatility relative to a standard index such as the S&P 500, The higher the beta, the more volatile the stock is relative to the index, In contrast, low beta stocks are only allowed to move 1%, while the index moves 2%.
Volume
The term "volume" simply refers to the total number of shares that changed hands in a given time period An increase in the stock's trading volume means it's grabbing investors' attention Large batches can be a sign of inventory accumulation (buy more) or spread out inventory (sell more).
The stock screener allows day traders to choose between filtering by volume or value Alternatively, you can only look for trades that trade in volumes greater than the stock's typical daily volume.
