Day trading is all about getting in, making your profit and getting out as quickly and smoothly as possible. Ideally you are looking to identify two upcoming inflection points, open a position at one and then close the position at the other.
To accomplish this you need to identify stocks that will be moving enough that day that you can make a profit from trading them. The best day trading stocks will be changing every day, but there are 3 reliable methods for identifying the most likely movers of the day, making them the ideal stocks to day trade.
News Catalyst
Any stock that is in the focus of the market that day will be a prime candidate for major price movements. Whether it is an earnings report, a press conference or some piece of information, any news event that has some relevance to the price of a stock will bring that stock under the scrutiny of a much higher number of analysts and equity traders than it would normally face in any given day.
This higher level of scrutiny and potential trading means higher trading volumes and bigger price movements than you would see on an average day, which makes it an ideal stock for day trading.
High Pre-Market Volumes
A high pre-market volume indicates that a stock is showing extra interest from traders that day. Many institutional investors will have access to information that the average retail investor will not.
Regardless of whether that is valid information or just empty rumors, this buzz can create an increased level of interest in a stock and a corresponding trading in pre-market hours as institutional traders try to get a head start on the stock’s regular market day trading. High pre-market volumes, anywhere over 100k, is a good indication that a stock will be trading heavily that day with major price movements, which makes it an ideal candidate for day trading.
Low Floats
A stock’s float is the total number of shares that are available for trading at any one time. The float is not to be confused with the shares outstanding, which also include shares that cannot be traded without SEC approval or have other limitations placed upon them.
