Working With Stocks For Day Trading Is A Full-Time Job

Finding Suitable Stocks For Day Trading

When looking for stocks for day trading, there are two things to look for. You can find these stocks easily by reviewing an online stock screener or seeing which are the favorites of other day traders. When you find the perfect stock, you can trade on it every day till it shows signs of loosing the following qualities.

The two factors that you should look for are volume and volatility. The more the better. With volume, you want there to be a lot of volume because it makes it easier to get in and get out the second you think it necessary.

Volatility is important because day traders thrive on stocks that move quickly up or down. The more volatility the better.

Those are the main things that you use to find stocks for day trading. Once you have found the perfect stock, you need to know exactly when to get in and when to get out.

Much Risk

Day trading is risky. There are a few things you should know before you get started. There are also a few things you need. You need a computer. You need a trading account. And, you need money.

The vast majority of traders who start trading in day trading don't profit for at leas the first few months. This is why it is necessary that you only trade with money that you don't need. It is also important to understand your risk because you will be trading on margin.

Ill go over the four most common entry and exit methods in just a second.

The Two Types Of Analysis

Day traders have two forms of analysis they use when analyzing they're stocks for day trading. These two forms of analysis are the main forms used by all investors. Except, day traders react to them much more quickly since each stock that they buy gets sold the same day.

The two types of analysis are fundamental and technical.

Fundamental analysis is used in a different way than the way than more long-term traders use it. Obviously, since day traders get into and out of a stock quickly, they need they're information quickly.

For day traders, the extent of they're fundamental analysis comes from live news feeds. The main strategy that uses this technique is...

Momentum Trading

The first profitable technique to use with your stocks for day trading is momentum trading.

You need to get the news that will effect the price of a stock as quick as possible if you want to be a serious trader. Its best to get it even before the general public does. You can get this by subscribing to a news feed.

So, most day traders look at the news and try to react to it quickly.

For good news, it is possible to profit by either buying on the way up. Or waiting till price gets exhausted and shorting on the way down. Same for bad news, except vice-versa.

Many day traders leave this news feed running during they're whole day trading session, since it is good to refer to this even when you use one of the following strategies.

Scalping

Another strategy so use with your stocks for day trading is scalping.

Scalping is when you buy a stock thinking its going to go one direction. Then if it doesn't, you get out immediately. If it does, you also get out immediately.

The trick with this is to be right most of the time.

There are many patterns to look for when determining which way a stock is heading. There are two categories that these patterns fit into: reversal patterns and continuation patterns.

You can also find trending patterns using various oscillators and indicators.

That is the second of the four most common trading strategies. And the first to use technical analysis.

Daily Pivots

Daily pivots takes some of what your use for scalping.

With scalping, you look at the low or high of the previous days to determine if your trend reversal is legitimate. With daily pivots, you use both the low and high of the previous days.

This is quite simple to grasp. But not as simple to master.

When you invest with daily pivots, you basically buy at the what you think the low of the day will be and sell at what you think the high of the day will be. Or vice-versa, with the shorting of the stock.

Fading

The fourth and last method used to make money with your stocks for day trading is fading.

Fading is used when a stock moves up in price relatively quickly.

This kind of trading has proven useful because in this situation the stock is often overbought, people are ready to take they're profits, or the investors get scared out. Thus, you can play off other peoples' fears.

So, the day trader comes in and shorts the stock before it goes back down.

By now, you should now know the basics of finding a good stock to day trade. As well as some techniques that you can use.

Remember, day trading is extremely risky. Don't expect to profit within the first few months. And, never play with money that you cant afford to lose.