How To Find Stocks To Day Trade

Introduction

Finding the right stocks to day trade can significantly enhance your trading results. This tutorial will guide you through the essential requirements for selecting stocks to add to your watchlist, helping you make informed decisions and potentially pick better winners when day trading.

Step 1: Identify Volatile Stocks

• Look for stocks that show significant price movement. High volatility increases the potential for profit during day trading.
• Use stock screeners to filter stocks based on volatility. Aim for stocks with a high average true range (ATR) or significant percentage changes in price throughout the day.

Step 2: Monitor Trading Volume

• Choose stocks with high trading volume. This ensures there is enough liquidity, allowing you to enter and exit positions easily.
• A good rule of thumb is to look for stocks with a daily trading volume of at least 1 million shares.

Step 3: Analyze Market News

• Stay updated on relevant news that could impact stock prices. Earnings reports, product launches, and market trends can influence stock movements.
• Use news screeners like Scanz to find stocks that are making headlines or experiencing news catalysts.

Step 4: Utilize Technical Analysis

• Analyze charts using trading software like TradingView. Look for key patterns, support and resistance levels, and indicators that suggest potential price movement.
• Focus on indicators like moving averages, RSI (Relative Strength Index), and MACD (Moving Average Convergence Divergence) to identify entry and exit points.

Step 5: Create a Watchlist

• Compile a watchlist of stocks that meet your criteria based on the previous steps. Regularly update this list as market conditions change.
• Consider using a trading journal like TraderVue to track your performance with the stocks on your watchlist, noting what works and what doesn’t.

Step 6: Implement Risk Management

• Establish a clear risk management strategy. Decide how much capital you are willing to risk on each trade (typically 1-2% of your total trading capital).
• Set stop-loss orders to minimize potential losses and protect your capital.

Conclusion

By following these steps, you can effectively identify stocks that are suitable for day trading. Focus on volatility, volume, market news, and technical analysis to create a robust watchlist. Remember to implement risk management strategies to safeguard your investments. Happy trading!