A good stock pick in day trading is those stocks that lead them to fully leverage and profit from a trader’s strategy. Successful day traders usually have discipline and a good plan for each of their trading decision. Thus, with that personality and the knowledge to get a good stock pick, these people will gain significantly high profits.
The Minimum Requirement for a Good Stock Pick
Before a trader chooses a stock for their trading, there are several minimum requirements. These requirements usually depend on the individual trader personality, risk profile, and also the amount of capital he or she has.
The minimum requirements for good stocks are:
Share Price
Stocks with lower prices usually have a bigger risk. The reason for that is the market has little to no chance to know these stocks. Besides, these stocks usually also lack analytical coverage.
Many traders like to trade penny stock. Yet, this kind of stocks is not good for average traders, since they mostly have high risk.
On the other hand, stocks with a high price also own issues. First, these stocks may be inaccessible for traders with limited trade capital. Second, these stocks usually get tied up in an inordinate percentage of capital on a single side.
Average Daily Volume
Thinly traded stocks are those shares of stocks traded only for hundreds to tens of thousands daily. Consequently, trading these types of stocks may make traders get in or out of the trading.
Thus, try to find those shares of stocks averaging way higher daily volume in order to have an easier entrance and exit.
Institutional Ownership and Shares Outstanding
Companies that issue a lower number of shares available in the marketplace (trading floats) tend to be difficult to be liquidated. Consequently, these stocks present a higher risk than those stocks with a bigger number of shares outstanding.