How to Find the Best Stocks to Day Trade

With an abundance of stocks in the market, an inexperienced player will find it difficult to find the best stocks to day trade without professional help. Do you go for the mavericks or the tried and tested old guns? The only way these queries can be clarified is by establishing a trading plan.

Scouring the market looking to find the best equities to come under your trading plan and actually finding the best stocks to day trade can be quite difficult. I will show you 7 ways on how to spot the best stocks to day trade.

Whichever approach you tread upon, one golden rule applies — start early. Begin your prep work before 8 am. Beginning your day early provides you with ample time to check and research about the trades you will do throughout the day.

1. Choose your picks for the day

Experienced traders will have by now learned to take pre-market movers with a pinch of salt. Pretty often, it is seen that a stock which is 8% up in the pre-market opens up just by 2–3% when day trading begins.

Keeping this in mind, I typically start my trading day at 8 am, way prior to the bell. This yields a good hour and a half during which I look out for some key points in the stocks I’m interested in:

  • Heavy Volume stocks — Don’t even bother if you see a stock increasing by 25% on 500 shares
  • Stocks greater than, say, $5 — While penny stocks have their charms, they don’t leave much room for profit.
  • Once you find a stock that fits the above-mentioned, you need to check the average volume for the last 30 days.
  • Keep an eye on the general value of the future trades of the major indices. It is always better to swim in the general direction of the market.

Ideally, your trading platform needs to give you a good idea of the pre-market movers. If not, then there are a variety of online tools which can help you do so.

2. Volume is important

As any experienced trader may tell you, capital is important when you are in this game. Specifically, capital is what will enable you to make the high volume, high return trades that give the best results. Keeping this in mind you need to find stocks with sufficient volume which will enable you to swiftly enter and exit the trade.

Typical brokerage account programs display an active list, though these contain just the top 20 stocks or so. In addition to these, you need to keep an eye out for stocks that are rising in volume compared to their normal prices. Again, as before, if your trading platform does not give you a robust screening for stocks with high volume, you need to go out on the internet and find some other resources to help you. Yahoo Finance and Bar Chart are a few effective, free tools used even by experts.

3. Make your own watchlist

They say an efficient trader is one who does not need to look beyond their watchlist to make profits. Watchlists are probably the best weapons in a trader’s arsenal, albeit one that develops slowly. Due to the wide variety of options out there, it’s best to focus on a few specific sectors, like banking, precious metals, automotive industry, pharmaceuticals, and the internet.

Once you zero in on the sectors you would like to follow, keep track of the movements of the top stocks. It takes a few months of constant surveillance to help you make even small predictions regarding their future. Moreover, keep yourself well-informed of the key events and happenings in these sectors, especially the ones that may have marginal effects on your stocks. A successful investor not only knows the market, but they also understand it.

4. Learn from your triumphs (and mistakes)

They say that experience is the best teacher. In no business is this more pronounced than in the stock market. A regular glance over your trading history will give you more ideas than most experts.

I often find myself gravitating towards certain favorites, which I keep buying over and over again. If you find this happening to you, by all means, go ahead. Similarly, trust your instincts and past experiences when it comes to stocks that have lost you money in the past. Over time, you will begin seeing patterns in these that will help you make better decisions.

5. Keep an ear out for rumors and gossip

In today’s age, social media and internet make sure that many key stock tips and information circulate through the web. While many of these turn out to be baseless, if you know exactly where to look, they can be quite useful.

StockTwits, StockCharts, and TradingSim are a few such useful market networking sites that often come in handy during your day trading sessions. Ideally, it’s best to use these sites for research during your morning pre-market sessions. Alternatively, Twitter also comes in handy when researching stocks. Just look out for the number of tweets it generates to get a good gauge of the public mood.


6. Stay informed about the earnings calendar

Stocks experience the greatest volatility during the earnings reports, hence, it’s a good idea to keep track of who is up for the week. Let me be clear — it is absolutely inadvisable to place a trade before the earnings are reported; that’s nothing but gambling. However, it’s best to know who are the likely movers, so that you can keep an eye on them. Many online websites such as Yahoo Finance, Morningstar, etc., will help you keep an eye out for this.

7. Pick your winners

Naturally, once I have listed all the points related to watching the market, a natural question which may come up in your mind is — how do I keep up with these?

If you think that scanning and keeping a close eye on the market is difficult to adhere to from time to time, you can go with a simple solution of looking to trade in the same one or two options every day.

This, of course, has to be after careful consideration for which we have given 2 options you can use:

  • Pick your favorite stock based on its past performance OR
  • Select the most popular one.


We have discussed multiple ways to better your trading practices. But remember, Rome wasn’t built in a day. Similarly, trading cannot be mastered in a few attempts. So we would recommend that you assess high-volume stocks carefully. A good trading application can go a long way in helping you, but ultimately, your skills and your intuition are the only real tools you can depend on.


Leave a Reply

Your email address will not be published. Required fields are marked *