Finding Stocks for Day Trading: A Step-by-Step Guide
What Makes a Stock a Great Potential Candidate to Day Trade?
Day trading can be an exciting and profitable venture if you know how to identify the right stocks to trade. While most blue-chip stocks may take years to see significant gains, there are certain stocks that can skyrocket in just a matter of hours. These stocks present great opportunities for day traders to make substantial profits. However, the challenge lies in finding these stocks before they make their massive moves. In this article, we will explore the key factors that make a stock a great potential candidate for day trading and how to identify them.
The Importance of Volume
Volume plays a crucial role in day trading. It refers to the total quantity of shares traded by traders for a specific stock. The higher the volume, the more buyers and sellers are actively trading the stock. Volume is an excellent indicator of a stock’s popularity and can determine its potential for significant price movements. When there is a lot of volume, the price tends to move more, providing day traders with more trading opportunities. On the other hand, stocks with low volume tend to have less price movement, resulting in fewer trading opportunities. Additionally, volume is also essential for liquidity purposes. If you want to sell your position, you need another buyer to take it. Low volume can make it challenging to find a buyer, making it harder for you to exit your position.
The Role of Float in Stock Movement
Another crucial factor in determining a stock’s potential for day trading is its float. The float refers to the total number of shares available for public investors to buy and sell. Different stocks have varying amounts of shares in circulation. Stocks with a low float tend to have more scarcity, which can lead to more significant price movements. When there is high demand (volume) and low supply (float), the price of the stock is more likely to rise. Day traders often prefer stocks with a float of 20 million shares or lower, as they tend to exhibit more volatility and offer greater trading opportunities. It is essential to check the float of a stock before considering it for day trading.
The Role of Catalysts and News
Catalysts and news play a significant role in day trading. A catalyst is any event or news that can potentially impact a stock’s price. Positive news, such as a company’s breakthrough in research, a partnership with a major company, or impressive earnings, can result in a significant spike in the stock’s price. It is crucial for day traders to stay updated with the latest news as it can provide valuable insights into potential trading opportunities. News articles are usually released every trading day, with the most important ones coming out between 7 am to 9 am Eastern Standard Time. Identifying good news articles early on can allow day traders to enter trades before the price movement occurs, maximizing their potential gains.
Finding Stocks with High Volume, Low Float, and Good News
To find stocks with high potential for day trading, it is essential to combine the factors of volume, float, and news. Stocks with high volume and low float are more likely to exhibit significant price movements. Additionally, identifying good news articles can provide valuable insights into potential trading opportunities. There are several ways to find these stocks:
1. Use a stock screener: Some brokers offer stock screeners that allow you to filter stocks based on specific criteria such as price, volume, and float. This can help you identify stocks that meet your requirements.
2. Utilize a news scanner: A news scanner constantly refreshes and provides the latest news articles. By setting filters based on your preferred criteria, you can focus on stocks with high potential for day trading.
3. Stay updated with news platforms: Some brokers have news sections on their platforms that provide recent news articles. While this method may not be as effective in filtering out irrelevant articles, it can still provide valuable insights.
Frequently Asked Questions (FAQs)
1. What is the significance of volume in day trading?
Volume is crucial in day trading as it indicates the level of interest and activity in a particular stock. Higher volume often leads to more significant price movements, providing day traders with more trading opportunities. Additionally, volume is essential for liquidity purposes, as it ensures there are enough buyers and sellers in the market.
2. How does the float impact stock movement?
The float refers to the total number of shares available for public investors to buy and sell. Stocks with a low float tend to have more scarcity, leading to more significant price movements. When there is high demand (volume) and low supply (float), the price of the stock is more likely to rise, presenting day traders with potential trading opportunities.
3. How can I find stocks with high potential for day trading?
To find stocks with high potential for day trading, it is essential to consider factors such as volume, float, and news. Utilizing stock screeners, news scanners, and staying updated with news platforms can help you identify stocks that meet your criteria. Look for stocks with high volume, low float, and positive news catalysts for the best trading opportunities.
4. How can I determine if a news article is good for trading?
Determining the quality of a news article comes with experience and practice. However, there are certain keywords that can indicate a potentially good news article. Some examples of positive keywords include breakthrough, partnership, impressive earnings, and positive clinical trial results. These keywords suggest positive developments that can impact a stock’s price.
5. Is it necessary to consider both volume and float when selecting stocks for day trading?
Considering both volume and float is essential for identifying stocks with high potential for day trading. High volume indicates active trading and the potential for significant price movements. Low float suggests scarcity, which can lead to more significant price movements. By combining these factors, day traders can increase their chances of finding stocks with optimal trading opportunities.
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Based on historical data scrolling up and smashing the like button under this video is a better investment than day trading
Hey nice video
I really want to trade but I have no deal and were to start I only have a phone
I aim for short term solid gains from market correction and I'd definitely jump on the boat if I knew a thing or two about day-trading, but then again what do I really know? I'm just looking for the right moves to grow and hedge my stagnant reserve of $370k from inflation.
Personally, I feel that this is impossible because it has grown exponentially
The Stock and Forex market is the world’s liveliest financial arena, when traded right it presents endless opportunities to earn a decent living I know for a fact!
bro can also make videos about crypto
I like you lessons, bro. Do more
I wanted to ask whether SCANZ is only for the US market or it can be customized for Indian market too .
Loved this? The Udemy course on the same topic is equally captivating. "Trading Stocks Mastery Course" by Stuart Mills
The short and sweet answer: tech stocks. 😂
I've learned more from this video than in 3 years of trial and error and other videos.. Thanks!
The collapse of Margin debt leads to a decrease in stock prices and triggers a wave of selling as investors try to cover their losses, Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $145K for some time now, my major challenge is not knowing the best entry and exit strategies … I would greatly appreciate any suggestions
Never disappoints with his content
https://youtube.com/shorts/wm64igvINkY?si=r0WWM1lZR02FLz__
Thanks bud for keeping us financially Educated! Regardless of how bad it gets on the economy, I still make over $28K every single week,
thanks for this awesome trading lessons🍈
if U got the know how . my fingers crossed . a little scripting needed . A I can help . question ? if possible a Video on the SCAN TAB having it Trigger Buy Sell Conditional Orders using the Custom tab . and Your Scrips what do U think .
This tutorial is GOLD, you just gotten a new subscriber 😀
I trade with acg and they have 0 commissions
Excellent video
From Nigeria i like your trading style i pray to be like you..
What is a good volume though? Or a good relative volume?
Can I trade stocks using smc strategies ?
I have an etrade account for simple trading , just a question about the news articles on it, are they quick news update , is the news quick enough for picking stocks , that are in trend, positive news about the stocks? or not??? im using power etrade for info and trading.
I progressively increased my stock purchases at the beginning of the year, but nothing major. Why am I treating this so harshly? I want to be the first person in my polygamous family to make a million dollars, even if others in my industry make six figures per person. I am well aware of the costs associated with working more hours in order to make more money.
Hit 200k today. I'm really grateful for all the knowledge and nuggets you had thrown my way over the last months. Started with 20k July 2022💙
U guys are great
I watched several YouTube videos on how to trade in the stock market but haven't made any head start because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands.
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement of about $150k. I want to know: Do I keep contributing to my portfolio in these unstable markets, or do I look into alternative sectors?
I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
what broker do you use?
how can you tell if a volume is high compare to other stocks?
If this is how you are gonna pick stocks and plunk your money down on hopes and dreams, good luck lmfao.
Well I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.
There are lots of mixed opinions about stocks and there projection in the next coming years, I aim for short term solid gains from market correction and I'd definitely jump on the boat if I knew a thing or two about day-trading, but then again what do I really know? I'm just looking for the right moves to grow and hedge my stagnant reserve of $370k from inflation.
Very good video, I have learnt a lot
OMG it´s soo easy 😂😂