Best Stocks for Day Trading

Traders are often asking "What are the best stocks for day trading right now?" It's a common question asked by day traders and it's a good question because there are certain characteristics that set apart the better choices from the weaker ones. In this article, we'll take a look at those characteristics. There is also a YouTube video posted at the bottom of this page that reviews an example of a day trade that meets many of these criteria.

Characteristics of The Best Stocks for Day Trading

1. Volatility. Volatility simply means that a stock is moving. It is going someplace. I don't care if it's moving up or down, but it's kind of difficult to day trade a stock that isn't going anywhere at all! So, one of our first criteria is that price is moving. One of the reasons that I look at the morning gaps every day is that these stocks generally have plenty of volatility.  That pre-market volatility often carries into the rest of the morning.

2. News. This volatile price movement can be caused by a variety of factors. In the example given in the video below, the volatility was caused by the news that OMER (a biotech company) had passed certain Phase II clinical trials on a new drug. For biotech stocks, this is a huge milestone and it is often met by a hungry market ready to swoop in and buy "the next big thing".

The news that can cause volatility can also be in the form of earnings reports, merger rumors, a change in the C-Suite, etc. So, while I don't chase stocks that are in the news, it is helpful to know what is causing that day's price volatility.

3. Volume. One of the scans I run each morning is for stocks that have gaped up or down by a certain percentage and that also meet certain volume criteria. This one scan incorporates two of my criteria for finding the best stocks for day trading: volatility and volume. The scan helps me create a short watch list which I can place in front of myself and the members of the StockTalk chat room. It narrows my focus to a small group of 20-30 stocks each day so we're not scrambling around and looking for something to trade after the market opens each morning.

4. Sectors. I've already mentioned the biotech sector. It is perhaps the most volatile sector in the market right now, but other sectors can also produce a good list of stocks for day trading while some sectors and stocks provide little opportunity. Other sectors that are showing plenty of volatility as I write this article are mining stocks (gold, silver, copper, etc.) and oil stocks. 

Chart of Omer

Here's the chart for OMER that I mentioned earlier in this article. This is the stock that I also analyze in the video posted below. There were actually four different times that I posted a buy alert for this stock in this morning's chat room (8-18-2015). And that didn't include the opportunity for shorting this stock as well as taking it long.

While I don't consider "short availability" a requirement, it is nice when a stock is available for trading it long or short. This can often increase the volatility and the number of day trades that can be executed on a single stock.

If you are interested in day trading stocks in a chat room, then I encourage you to check out my chat room.  I've been leading a day trading chat room for about 10 years now, so it must be working!  Click this link to learn more about Bob Joiner's chat room.


Here's the YouTube video I mentioned earlier:

You might also be interested in this related article at Investopedia:  click here.