How To Pick Stocks For Day Trading: Uncover The Best Stocks

15 Price Action Patterns Insiders are Using If a hedge fund managers were using 15 specific price action patterns would you want to know?

The best day trading guide will teach you how to pick stocks for day trading. Day trading stocks have ample liquidity, which allows you to get in and out of trades fairly quickly at a reasonable price. Through this day trading tutorial, we’re going to break down the general principles and the best way to pick stocks for day trading.

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The best stocks for day trading in 2024 are the ones that move a lot from an intraday perspective. This is a key standard principle if you want to make money day trading stocks and find the best day trading stocks today.

Even if you’re the best day trader in the world, if the market doesn’t have enough volatility to provide you with good profit margins, you’ll never make any profit day trading. Typically, using the straddle option strategy, you can even trade purely on volatility and beat whether the volatility will go up or down. It will be useful for you to learn new trading tricks to take advantage of volatile markets.

In the long term, particularly for day traders, volatility is what allows us to speculate in the market and make a decent profit. Day traders have an advantage over the buy-and-hold investors of being in and out of the market very quickly.

Moving forward, we will go over what you have to do every single day to catch potentially winning stocks and how to pick stocks for day trading.

How To Pick Stocks For Day Trading

How To Pick Stocks For Day Trading

How to select the best day trading stocks?

Selecting the right stock for day trading is important, and it can make a huge difference to your profitability. Picking the wrong stock can lead to a lot of frustration, and it may be the reason why some trades won’t work out.

Often, the same-day trading pattern can have an entirely different outcome when trading it on the right stock.

Each stock that you choose to day-trade needs to go through a filtering process. We have used this process for many years. You can use this step-by-step guide on what is the best way to pick stocks for day trading and adjust it to your own needs.

Once you begin filtering the stocks for day trading it will become second nature, and you will find that whenever you trade stocks you’ll instinctively begin analyzing if the stocks fit all the checkboxes.

See below our stock selection process:

Choosing the Best High-Volume Stocks For Day Trading

The number one key factor is the best day trading stocks for today need to have a good trading volume. You want to day-trade stocks that have millions of shares traded every single day.

High Volume Day Trading Stocks
Day trading stocks 5

Why?

Because the more volume there is in the market, the easiest and quickest you can get in and out of your positions. As a result, the bid and ask spread is thinner on high-volume stocks.

Last but not least, the best day trading stocks for today are the ones that are less prone to manipulation. When it comes to day traders, we’re competing with the best high-frequency trading algorithms, the best traders in the world, the biggest hedge funds, and institutional traders.

The benefit of day trading high-volume stocks is that it will make it harder for smart money to manipulate the stock price.

Choosing the Best High-Priced Stocks For Day Trading

The second feature of the best day trading stocks in 2024 is the price of the stock. Normally, you want to avoid penny stocks and stick with stocks that are priced over $25. The triple-digit stocks are even more suitable for day trading.

Best Way To Pick Stocks For Day Trading
Day trading stocks 4

You can search this above in Tradingview.

The reason why we want to trade high-priced, and typically growth stocks is that often these stocks have higher intraday volatility than lower-priced stocks. We want to day-trade stocks with enough volatility, so always go for the high-priced stocks.

Choosing Stocks With The Best Spreads/Liquidity For Day Trading

Novice traders usually don’t pay too much attention to how the difference between the bid and the ask of a stock affects their profitability. Large stock spreads can damage your profit potential, that’s why we need to choose stocks that have narrow spreads. Also, read this guide on Day Trading for Dummies: 6 Tips Every Beginner Should Know.

Narrow Spreads Stocks
Day trading stocks 3

The spread is a byproduct of the daily trading volume. Naturally, stocks with large volumes will positively influence the spread.

The third feature the best day trading stocks need to have is an average daily volume of over 250,000 shares per day. Preferably, if you want to improve your performance, you want to day-trade stocks with an average daily volume of over 1 million shares per day.

Low-volume stocks can exhibit very wide spreads that can wipe out the profit potential.

Before going long on a stock, always make sure the difference between the bid price and the asking price is narrow.

Using The ATR To Find The Best Stocks For Day Trading

Another important factor you should analyze before entering the market is the daily trading range. Some stocks exhibit a relatively small trading range, which makes them not suitable for day trading. But a stock goes through different cycles, and every period of low trading ranges at one point will be followed by an expansion period.

So if today your favorite day trading stock has a low ATR, it’s best to simply wait for another day to enter the market when the trading conditions are more favorable.

As a day trader, the ideal period to enter the market is when the ATR shows expansion periods in the daily range. We’re going to show you a smart way to determine if significant range expansion is taking place.

Average True Range (Atr) In Day Trading
Day trading stocks 2

In a nutshell, based on our backtesting result, the ATR reading will signal a significant increase in the daily range once it breaks above the 100-day EMA. Simply attach the 100-day moving average on the ATR indicator. Most stock trading platforms will allow you to add studies over another technical indicator.

Analyzing Same Sector Stocks For Day Trading

Another big driving factor for individual stocks is their sector. Approximately 70% of all price stock moves in tandem with the sector they are part of. Gauging how other individual stocks in your chosen stock sector are moving can give you more clues in determining if they are suitable for day trading or not.

Take the price of Facebook and Twitter as an example. The majority of the time, the stock price moves in tandem. If you look at dozens of other stocks, you will see a very strong correlation between individual stocks that are part of the same sector.

Popular Day Trading Stocks
Day trading stocks 1

The best way to pick stocks for day trading is to follow our guidelines and use proper risk management strategies to protect your capital.

Conclusion – How To Pick Stocks For Day Trading

In summary, the best way to pick stocks for day trading is to focus on high-volatile stocks, because as long as we have volatility, we may generate consistent profits. Always use an objective method of analyzing your day trading stocks, otherwise, you’re setting yourself up for failure.

If you want to make money day trading the stock market, you have to put in the work and only look for those particularly attractive stocks that follow the guidelines outlined in this stock day trading tutorial. With practice, you will be able to pick the best day trading stocks by just taking a brief look at the market.

Thank you for reading!

Don’t forget to read our guide on the best stock trading strategies.

Feel free to leave any comments below if you have any questions about how to pick stocks for day trading, we do read them all and will respond.

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15 Price Action Patterns Insiders are Using If a hedge fund managers were using 15 specific price action patterns would you want to know?

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