The Best Day Trading Stocks

The best day trading stocks are ones that provide opportunities in price movements and have ample volume so you can get in and out of those opportunities quickly. These two factors are known as volatility and volume. Following how much volatility and volume there are helps you pick the best day trading stocks or funds for your trading style and personality. Just remember: Day trading may not be for every investor, so make sure you’re prepared.

Volume and Volatility When Day Trading

Some day traders like lots of volume without much volatility. The price of a stock or fund could move 1 cent at a time and a day trader could scalp that small movement. Other day traders may prefer high volatility and volume, which equates to lots of action in the stocks or exchange-traded funds (ETFs) they trade.

Volume and volatility do change over time, though. Specific events may make a stock or ETF popular for a while, but when the event is over, the volume and volatility dry up. This cycle may repeat over and over again.

Beta and Volatility

Beta is a baseline for determining volatility. It measures how much a stock moves relative to an index like the S&P 500. A beta above 1.00 or below -1.00 means the stock is more volatile than the S&P 500. Betas between -1.00 and 1.00 mean the stock tends to be less volatile than the S&P 500. If a stock’s beta is 1.00, it moves in tandem with the index. Keep in mind that ETFs track their own indexes, not just the S&P 500—unless they’re specifically designed to track the S&P 500 (such as SPY).

Trend or Range When Day Trading Stocks

The trend and range of investments are other components to consider. There are range traders, trend traders, and those that do both effectively.

Range trading refers to the difference between a stock’s low and high prices in a specific trading period. For example, you may partake in range trading if you decide you’ll buy a stock at $25 per share and sell when it reaches $30 or higher. You would do this over and over again as long you believe that the stock price would stay in this range.

Trend trading refers to the general direction of a stock’s share price. The price could be continuously moving up or down, signifying an uptrend or downtrend. It could also move up and then down, showing a sideways trend. Trends can change, too, so it’s not the only way to analyze a stock or ETF.

A stock screener can help you isolate stocks that trend or range so that you always have a list of stocks to apply your day trading strategies. Finding stocks that conform to your trading method will take some work, as the dynamics within stocks change over time. It’s time well spent though, as a strategy applied in the right context can be much more effective.

Best Stocks and ETFs for Day Trading

Below is a list of the best day trading stocks and ETFs to consider. The most consistently popular ETF among day traders is the SPDR S&P 500 ETF (SPY). This ETF has a high volume that allows you to trade smaller or larger position sizes based on volatility.

Conclusion

While these stocks are commonly favored by day traders due to their high volatility, liquidity, and volume, it’s essential to conduct thorough research and analysis before making any trading decisions. Additionally, day trading carries inherent risks, and traders should implement proper risk management strategies to protect their capital. By focusing on stocks with the right characteristics and staying informed about market developments, day traders can increase their chances of success in the highly competitive world of day trading.

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