As we all know, in stock markets, we have access to thousands of stocks. This usually makes many of us have the difficulties to choose which stocks to focus on, especially if we decide to do day trading. Some traders choose stocks that break out patterns, like the most volatile.
Other traders, choose stocks that are consistently volatile. To help you decide, here are the qualities in day trading stocks that you need to consider.
Volume
To actively day trade stocks, you need stocks with sufficient volume that allow you to enter and exit the trades on demand. Stocks with higher volume usually give easier access for a day trader to both enter and exit the trades.
Besides, those stocks also offer minimum slippage. Slippage is when your stop loss or market order fills at a different price than the ones you have expected. It usually happens when the order is bigger than the number of shares on the bid or offer.
Day traders usually trade stocks which have at least 1,000,000 daily volume. To help you narrow your stock choices, you can utilize a stocks screener.
Volatility
Day traders, commonly choose stocks with strong movements throughout the day. Basically, each stock owns different volatility.
Some of them move 0.5% per day, while some others move around 1% or 5% per day. In choosing these stocks you need to consider your trading style.
Some traders think that stocks that move around 0.5% to 2% are tolerable. While some others think that stocks with bigger swings are better.
Traders usually also choose stocks on news that highly affect the stocks.
Trend or Range
The last thing to consider is the trend or range. You can be a trend trader, range traders, or you can be both. Choosing between these stocks may seem simple.
But, once you choose trending ranges, then, your stocks have a high tendency to range. On the other hand, if you choose a trending strategy, you will only trade stocks that have the tendency to trend.
A stock screener can be a big help here. It classifies stocks that trend or range. You just need to consult your trading strategy before making the decision.
