There are different niches in trading. One is called daytrading stocks which means that traders open and close multiple transactions during a day picking the right companies for that purpose. At first, daytrading was practised by financial institutions because they had more possibilities to leverage the transactions so they could get the most out of them. But nowadays, many brokers offer a trading platform where day trading is also an option for individuals. It is, however, quite risky and you must be not only patient but have proper knowledge as well.
Proper selection of daytrading stocks
Some stocks fit the daytrading style better than others. Here we will explain what you should focus on when choosing the ones for your trading.
All people are different and there is no one solution that answers all the problems. Likewise, one type of instrument may be good for some groups of traders but not for all. That is why you must think about your own preferences.
You have to consider what amount of money you have in the account and how much you want to invest in a single trade. A very important thing to assess is how big a loss you are ready to take.
As I said, day trading is opening and closing positions during a day. Start your session early, when the market opens, to seize the most opportunities. Do not get stuck with one option. Take various stocks into account but remember to check the news regularly to predict what might happen in the particular area of investments.
Highly volatile and liquid stocks
For good results in day trading search for the stocks that are highly volatile and liquid. Stocks are more volatile when the issuing company undergoes greater fluctuation in cash flow. And liquidity is related to the speed with which an asset can be bought or sold in the market. You may find better discounts on liquid stocks as well as higher capitalizations.
The volume of the stock
The volume says if the asset can be bought and sold during a specific period many times. The bigger volume the greater interest in this instrument. This interest may be as well positive as negative. Volume trading can be part of a day trading strategy. High trading volume certainly favors daytrading stocks.
You may find out it is a good idea to target the social media industry. They are highly popular and thus characterised by high trading volume.
Also, financial-services corporations such as Bank of America are a great choice for day trading thanks to their liquidity and high volume.
Do not limit yourself to the stocks close to you geographically. Go beyond the boundaries and seek good trading opportunities further around like for example in Honk Kong or London. Depends on where you are trading. Think global.
Daytrading stocks summary
Day trading is extremely popular even among individuals. Remember you have to think well through your trading strategy and risk management. There is no one good answer to what type of stock will be best for you. Generally speaking though, you should focus on the more liquid, volatile and high volume stocks.
Consider different industries to invest in. Look at the bigger picture and do not limit yourself to the ones closest to you.
Do not forget that before you start investing your money you have the chance to practice in the demo account. IQ Option offers it for free. A demo account can be utilized as a day trading simulator. You can test and evaluate your day trading strategies before using it with real money.
Wish you good trading results!
General Risk Warning: The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?