How to Find Stocks to Day Trade

How to Find Penny Stocks to Day Trade

6 min read

New traders often ask us how to find good stocks to day trade. Well, you’ve probably heard of a famous expression in the trading community: “You are only as good as the stocks you trade.” There are thousands of stocks to choose from, and traders who have no idea how to find or even trade one. Besides that, they waste precious time and trading days mistakenly believing it’s the fault of the market they can’t trade. Watch our video on how to find stocks to day trade.

Your job as a trader is to know how to find stocks to day trade so you don’t waste your precious time. It’s important to understand that you can be the best trader in the world, but if the stocks you trade don’t move nor have sufficient volume, it’s impossible to profit. In my opinion, what sets professional traders apart from rookies is their ability to sniff out the stocks that move or are about to move with high volume.

These are the stocks you can make money from. Wasting time trying to trade a stock that doesn’t move is akin to throwing darts blindfolded; rarely will you hit the bullseye.

Before we begin, we must understand that every trader is different. I mean that one might prefer to trade baskets of stocks and indexes, whereas another might only trade ETFs. Conversely, others may trade an entire market with index Futures. Day traders are different. We have a different set of rules to find stocks in play.

Process on How to Find Stocks to Day Trade

  • Do you know how to find stocks to day trade?
  • 1:5 Risk Reward: shoot to make five times what you are risking per trade
  • News Catalyst: look for positive and negative news catalysts
  • Unusual Premarket Activity: look at morning gappers and see what’s running
  • High Premarket Volume: look for premarket volume with at least 500,000 shares
  • High Relative Volume: Look for higher volume spikes than are typically traded.

Traders need to have a routine and system for finding stocks with similar setups that they prefer to trade.

How to Find Stocks to Day Trade Example

1. Find a 1:5 Risk to Reward

Before jumping into a stock, ensure your risk/reward is high enough. I’m risk-averse and like a 1:5 ratio where your downside risk is $0.05, whereas your upside profit is $0.25.  

Some fundamental catalysts for stocks must make them suitable for day trading. Good examples are news such as earnings reports/surprises/warnings/pre-announcements, FDA approvals/disapproval, mergers/acquisitions, stock splits/buybacks/debt offerings. We check the news daily on Benzinga Pro.

2. Unusual Premarket Trading Activity

Typically, this means a 2% move up/down premarket. More often than not, this is caused by some news (see above), something happening, and somebody knows something. Any good scanner will pick up stocks starting to move in the premarket. To be a play stock, they must have traded at least 50,000 shares in the premarket with an average daily volume of 500,000. We update our gap scanner here daily so the community can find these stocks.

3. High Volume

I’ve repeatedly talked about the importance of high volume in previous blog posts. To summarize, volume confirms trends, verifies there will be buyers when you want to sell, and prevents slippage. Now, you’re probably wondering how high it is.

This is a personal preference, but some traders won’t trade anything less than a daily volume of 500,000 shares. To get more in-depth on volume,  study what volume means in stocks.

The relative volume compares the current volume to the average for the same time of day. To put this in perspective, many stocks trade millions of shares daily, like FB. Does this mean you should trade it? No. It would be best to look at more than a high total volume.

You must look at what’s normal for that stock and if it’s trading above average. Fifty million shares of FB might be normal, which means you do not want to try to trade it.

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Trading Rooms Stock Signals and Trading Alerts Stock Watch Lists
DESCRIPTION Bullish Bears offer trade rooms in our Discord. Our chat rooms include penny stocks, large caps, options, and futures We offer stock signals and trade alerts through our watch lists and Discord bots using Tradytics Swing trade and day trade watch lists with hand-picked symbols that have the best chance of breakouts. These are stocks to watch
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Trading Style

Picking stocks for day trading will depend on your trading style. Are you more of a momentum trader or a pattern setup trader? Do you need high volatility, or do you want to let the trade set up for a few hours? You can base picking stocks on your trading style.

Bullish vs Bearish

Ok, so you found the stocks. Now, you need to pick the right ones for YOU. Traders typically follow a routine to do this. If you want to pick the right stocks for day trading, then part of your routine will be analyzing the stock pattern.

Secondly, you will need to determine if you want to go bullish vs bearish, then search for patterns that are either bullish or bearish setups. I don’t have a preference and will trade either. If you’re looking for bull plays, you will want to trade bull flags, bull pennants, ascending triangles, and inverse head and shoulders patterns. Preferably, these patterns are clustered on your chart to give you a higher probability trade. 

Final Thoughts: How to Find Stocks to Day Trade

Luckily, you don’t need to stalk the internet looking for stocks to trade; that’s what scanners are for. You’re off to the races once you’ve decided your criteria and strategy to trade. The Trade Ideas Scanner is our most used and preferred scanner at Bullish Bears. Without a doubt, Trade Ideas will help you find exactly what you are looking for. And when I say exactly, I mean it; you can search for premarket gappers, morning gappers, all-day runners, and even after-hours movers. Trade Ideas truly is a game-changer. 

If you’re struggling with picking a trading strategy (i.e., ABCD pattern, bull flag momentum, VWAP trading, reversal trading, opening range breakouts, etc.), head to our website. We have thousands of free courses and materials to help you decide what might work best for you. Plus, we are offering 15% off Trade Ideas; how great is that?

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