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How to Find the Best Stocks to Day Trade

Jimmy Khan

Nov 03, 2022 17:54

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You may trade thousands of stocks on any one day. Choosing the most active stocks each day might help you focus your thoughts.


Untrained eyes may find the potential quantity of trading chances to be overwhelming. Do you choose well-known stocks to trade, such as Apple or Google? Or do you just invest in initial public offerings and hope to profit from the hype? The answers to each of these issues must be included in your daily trading strategy.


Your daily objective should be to search the market for the top "stock movers today." Finding stocks that not only match your trading strategy the best but also are the greatest market movers is your objective. Having a list of high-volume stocks that you can trade every day and earn a ton of money is not enough to complete the assignment.


Begin your day early by looking for pre-market winners.


Whichever method best suits your day trading style, getting an early start to the trading day is a need for any selection procedure.


The days of arriving at 9:15 am, logging on to your broker and making trades are long gone. With the rising trading volume from hedge funds, the market is moving at an ever-increasing pace. You should, at the very least, begin your preparations around 8 a.m. market time.


You'll have ample time to do your morning research and set up your monitors with the stocks you're going to be actively following today. You should pay particular attention to the pre-market gainers that are showing up in your scans during this process. These stocks are often the best ones for day trading.

The Best Stocks to Day Trade are Those with the Largest Pre-Market Movers

Those of you who have been trading for some time will be aware that one of the street's favorite tactics to take advantage of you is during the pre-market.


[1] A stock may rise 6% before the market opens, only to rise 2% when it opens at 9:30. Due to the little volume that might move a stock in any way outside of the usual trading session, significant price fluctuation is the result.


We advise beginning your scans precisely at 8:00 am, long before the opening bell. This allows you a full hour and a half to do your homework before the market starts. In that vein, the following is a list of qualities you should search for in the top stock movers "today".


Stocks with at least a 2-5% differential. Healthy gaps must exist. However, pre-market stock movers have been gapping higher and higher ever since 2020 and the pandemic.


The volume must be a little heavy. Look the other way if you see a stock up 20% on 200 shares. Relative Volume should ideally be far over 100%.


When a stock is rising on a big volume, you should investigate the story and determine if dilution risk exists.


Make sure you examine the futures market's overall worth for the key indexes (Dow, NASDAQ, and S&P). Despite the fact that breakouts might move independently of the market, it is always a good idea to move in the general market's direction.

Getting Ready for the Biggest Premarket Movers of Today

The pre-market movers should be provided by your trading platform, however, if the scans are insufficient, the following resources are listed:


Pre-market NASDAQ prices


Pre-market movers are listed each morning in stock market analysis.


Stock Market Watch shows the top gainers and losers as well as the main indexes' pre-market valuation.


There are more powerful scanners available, but the truth is that all you really need is a way to identify the biggest winners and losers. But at TradingSim, we provide a streamlined scan filtering engine that will enhance your training. Finding the largest premarket stock movers is the best approach to getting started.


Throughout the day, there will likely be a persistent thirst for additional information, which might result in overtrading or overconfidence.


In addition, some of these scanners might be rather expensive. Before upgrading to the more expensive alternatives, you must demonstrate that you can generate revenue from the most basic of scans.


Trade Ideas and Finviz are two examples of these more expensive scanning services. These websites more than makeup for any aesthetic flaws with an abundance of scans that exceeds your wildest expectations.

Which Penny Stocks Make the Best Trades?

After discussing the more cautious viewpoint for pre-market trading, let's explore the riskier aspect of investing: low-float equities.


As a result of the large price swings, low float stocks are not suitable for everyone. [2] These low-float stocks are probably penny stocks or stocks that trade for less than $5. The popularity and liquidity of these penny stocks have greatly increased after the 2020 COVID fall. Some of them could trade in the hundreds of millions of shares. However, they could be dangerous.


Do not utilize more than 5% or 10% of your bankroll for each transaction if you want to follow this route. This is more of a game where you play the pop and don't invest for the long run. These stocks are probably inexpensively priced for a cause and are likely to fall fast in the future.


See our post on the 1-3 pm Bloodbath Setup for an illustration. It's an excellent strategy for shorting penny stock movers.


Find a Clean Pattern in the Stocks with the Highest Volume Pre-Market


You should stay away from early charts with little volume, as we already indicated. How can you tell whether you are working with a low-volume chart? Just have a look at the picture below.


Basically, the level is too low if it seems like you are listening to stars at midnight. When we refer to stars, we don't really mean candlesticks; rather, we mean actual dashes on the charts.


It is entirely up to you what pattern you exchange. Others could like red-to-green configurations, while some of you might prefer ascending triangles (meaning the stock starts lower but later exceeds the morning highs).


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Searching every day for the Biggest High Float Market Movers

You should go for the largest volume equities with a high float if low-float penny stocks are not your thing. How come high float?


These are the stocks that, with a morning move that is more assured, can protect your money.

You'll often discover 2 to 5 equities that meet both the volume and float criteria to be a true market mover.


You should focus on trading only one or two of these setups each day.


As you can see, a small number of stocks, on both the long and short sides, are probably strong possibilities for an initial range breakout or breakdown trade.


After thoroughly discussing pre-market movers, let's return to alternative strategies for finding excellent day trading chances utilizing the day's most active equities.

Discovering Today's Highest Volume Stocks

You will need a stock with adequate volume to enable you to easily join and exit the transaction if you have hundreds of thousands of dollars available. Our personal minimum is roughly 40,000 shares in each 5-minute span. However, everyone's standards may vary.


Naturally, this is based on the stock's price and float. You may not have a sizable account. Check out our tiny account plan if you haven't already.


If you have a brokerage account, your company ought to have a list of the most active stocks.


Although it will only include the top 20 or so stocks, this is a decent place to start. You'll need a scan that is somewhat wider and alerts you to trade possibilities that not all investors are keeping an eye on. Find equities that are surging on high volume compared to their typical volume if you can.


For instance, it is noteworthy if a company trades 5 million shares before 10 am when it typically trades 2 million shares each day. These will likely appear among the most popular stocks on my trading platform; you may be thinking. This is regrettably not always the case. Once again, your trading platform could only return a certain amount of stocks (i.e., top 10, 20).


The resources listed below are excellent if your trading platform does not provide you access to a thorough screener for the highest volume stocks:


Providing Unusual Volume is Yahoo Finance. There is a list of more than 200 symbols in [3] Bar Chart. For those of you penny stock enthusiasts out there, The Street offers not just high-volume stocks but also a scan for companies selling under $5. [5]

Create a Watchlist of Daily Market Movers for yourself

You must create your own list using the stocks you regularly track. Again, it's preferable to concentrate on certain industries since there are so many companies listed in the markets. Popular ones are listed below:


Precious metals banking


Semiconductor \sAutomotive \sPharmaceuticals


Retail \sInternet


Track the progression of the major concerns after you have identified one or two industries you want to pay attention to. Give yourself a few months to continuously monitor the price changes of the stocks and sectors.


Following the Richard Wyckoff approach will teach you that each sector and stock has an "operator" who directs the market's activity. The market makers or group of investors who have the largest investment in the stock are this operators, and as a result, they own a controlling stake.

Using the Example of Gold

Let's use the market in 2008 as an example.


At 10 AM every day, the stocks Royal Gold (RGLD) and Golden Star Resources (GSS) would abruptly reverse direction. With these precious metal companies, a method of buying or selling short on breakouts of the morning trading range would often be unsuccessful.


The observe and learn strategy may be used to study how a certain market operates in order to obtain an advantage over other traders, even when experience would have advised you to stay away from this sector for six months.


The one difficulty with creating a list is whittling down the number of companies you track within 1 or 2 sectors to the most active market participants. You are manually following these stocks to get a feel for their trading patterns. You should only follow a maximum of 10 stocks in each sector, giving you a total of 20 equities you may follow at any one time.


This should help you get a sense of the sector's stocks as well as whether or not true stock movers are there and whether or not they align with your approach.

Keep track of previous market movers.

Why not take a look at your own trading record rather than asking someone else for recommendations on the best stocks to day trade? You trade at least one stock on a regular basis for a variety of reasons.


The ironic thing is that you won't be able to articulate why you stay drawn to that security. Simply refer to it as your stock of choice or your soul mate. You'll feel like you "own" the stock's movements when you're familiar with it.


You can easily move in and out of stock and, typically, close each deal successfully.


I was really enamored with Baidu Inc. (BIDU). She was my Olivia for all of you Scandal viewers. Even if BIDU wasn't moving much, I would still follow her every day. I was able to anticipate her motions for some reason, so I never had to argue against the transaction.


So review your previous trading experiences. Do you have a trader that consistently appears on your list that moves the stock market?

Online stock market pumpers and movers

This method of market scanning is relatively modern. But it may be a little challenging. This is because browsing social media sites or reading news stories may have a favorable or negative influence on how you feel about a stock.

We advise you to make all of your trading choices based entirely on the stock's price and volume movement. Having said that, it could be worthwhile to be aware of any underlying attitude on social media.

Try out StockTwits

Investors' wishes and odd ideas for various equities are streamed on StockTwits. They even have a market mood indicator for each stock, which is shown at the top of each wall.


If you visit the site, you will notice a list of stocks across the top that are trending, which will give you an idea of which stocks are the most active stocks to day trade.


As Stocktwits plays, users are actively debating these stocks. These stocks are the ones that are mentioned in the news, as you'll immediately notice. However, on occasion, users will debate a stock move in the middle of the day before a news outlet can write a story about it.


The list of pre-market movers is, without a doubt, the finest way to use StockTwits. You may read the most recent press release from the firm or look at the news story that is driving the stock upward, of course, but StockTwits gives you a true sense of the market's pulse.


In fact, you may utilize StockTwits to verify the precise level of interest in the stock.


If a stock is up 10% but has only received two tweets, it probably isn't in play.


However, if you can locate a stock that is rising on high volume and the StockTwits board for that particular security is quite active, you probably have a stock in play.


Remember, what matters is if people are talking about the stock you are watching, not the degree of bullishness or bearishness on the board.

Swaggystocks.com List of Popular Active Stocks

The popular sentiment lists being watched on swaggystocks.com are comparable to StockTwits with a unique twist. In essence, Swaggystocks monitors a number of well-known social media sites, including Twitter, WallStreetBets, Reddit, and others. They create adorable tiny charts from the most frequently discussed equities that show you the current trends.


Swaggystocks.com has the great feature of providing a variety of social sentiment lists that are often updated throughout the day. This might provide information on the most active stocks for the retail trader. From this list, you could locate a prospective market mover or a stock with a large volume.


Of course, you should have a setup and a trading strategy, as with any stock that is in play. Don't cling onto your bags simply because AMC is often discussed on Twitter. Maintain your edge.

Historical Market Movers Scanner for TradingSim

A list of the top 50 losers and gainers for each trading session going back three years is provided by TradingSim's market movers scan. They don't record this information for the majority of brokers. As a result, it will be difficult for you to determine which stocks were hot on a certain day in the past.


You may choose any day from the previous six months and see the most active stocks for that day using TradingSim's market movers feature. Market movers do this duty for you automatically on historic days, just as you would study and follow the hot stocks each morning. You may then just concentrate on day trading practice.


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A summary

The finest stocks for day trading may be chosen in a variety of ways. Do not attempt to learn everything about trading in a single day. Just make sure your scan gives you the tools to trade large-volume stocks using a profitable sound technique.

If you do want to generate bespoke scans, you should concentrate on the following important factors:


high-volume securities


gappers


market-ahead movers


Moves from red to green and green to red


consecutively lit green or red candles


top gainers and losers in stocks


As a novice trader, the outcomes of these six scans will be more than sufficient.


We really hope that this post was useful to you in your search for the most active stocks for day trading. Come over to Tradingsim.com and check out our market movers to see how we can assist you even more. You'll no doubt benefit from our top stock mover advice.