How to Pick Stocks for Day Trading

How to Pick Penny Stocks for Day Trading

Knowing how to pick stocks for day trading is good for being profitable. Day traders buy and sell stocks multiple times daily to take advantage of the price action. They are finding these stocks’ short-term, medium-term, and long-term trends and trading the momentum. Search for stocks with a lot of volume, breaking news, liquidity, and are having major chart breakouts.

Do you know how to pick stocks for day trading? Day trading tends to be fast-paced and a quick way to make money in the market. There are so many different stocks that you can choose from to day trade. This post will discuss the indicators you can use to help pick stocks for day trading.

Finding the right stock picks for day trading will have some different criteria that a trader needs to follow to ensure you’re successful.

Criteria on How to Pick Stocks for Day Trading

Keep these in mind when learning how to pick stocks for day trading. 

Entry and Exits

A scanner like Trade Ideas will alert you to the best stocks with volatility and volume. Trade rooms are another resource to take advantage of.

Learning how to pick stocks for day trading is only the first step. Knowing how to get a good entry and exit is crucial to profiting from the trade. You may have the perfect stock, but if you mistime your entry or exit, it can be costly. No one likes to lose at anything. Trading is no different; picking winning stocks to trade is only half the battle. Knowing when to pull the trigger is key.

The market moves up and down. Finding the stock’s trend will tell you which way to go. When the trend is bullish, you can ride the trend up and buy the dips. You can short the stock and cover at support when the trend is bearish. Having a broker that allows you to short is good.

Example on How to Pick Stocks for Day Trading

Picking GDX to Short

Check out the short setup here! Very nice action in \$GDX due to meeting all the criteria above for day trading.

Using moving averages and VWAP to alert you to the best entries and exits is an excellent tool. Those indicators can be used as support and resistance.

Unless you are shorting, writing an option, or entering a put stock, you never want to enter at resistance. Make sure it is the correct entry when placing your order. If you are unsure of the right entry, we will teach you right here on this site how to pick stocks for day trading.

Stock Trading Companies and Brokers Stock Trading Tools List of Stock Market Books
DESCRIPTION Trading companies list that includes free trading brokers, day trading brokers, futures trading, and investing brokers
Trading tools list that includes stock scanners, charting software, journaling, apps, and simulators Stock market books list that includes the most popular day trading, swing trading, and options trading books

Wait for the Pullback

When learning to pick stocks, I often see them moving fast. But I don’t want to miss the action. When the price is flying, the candlesticks get overextended away from the moving averages and cause FOMO or “fear of missing out. This is where most people are impatient and chase the trade. Often, it results in getting a bad entry, buying on emotion just to get stopped out on a pullback. Instead, wait for the pullback.

Price will always want to come back to equilibrium. Wait for the pullback so you can buy the dip and sell the rip. More experienced and aggressive traders often buy the rip, so do not try to catch a falling knife. Always wait for a setup and stick to your game plan.

Shorting is a different story if the trend is reversing. If you want to ride the move down and cover when the price starts to move back up,

Following the Trend

When picking stocks for day trading, understand how to follow the trend. The trend is your friend.” Stocks move and fluctuate throughout the day, up and down.

This allows traders to take advantage of the price action. Find the hot sectors that day, week, month, or year and trade stocks within those sectors with good chart setups.

When a sector is hot, related stocks will move, regardless of whether or not they are good companies.

How to Pick Stocks for Day Trading

Find the Patterns

Knowing how to pick stocks for day trading helps when you can find patterns. Patterns tell you which direction the stock is headed. You can use the daily chart to find the patterns and the minute charts to get in and out. Trendspider is good for looking at short-term time frame patterns, moving averages, and comparing those short-term candlesticks to daily indicators.

Patterns tell you if a stock is a pump and dump, especially when trading penny stocks. Spotting these patterns allows you to know when a pullback is coming. You can wait on an entry instead of taking a loss.

Marijuana stocks and bitcoin sector stocks are notorious for pumping and dumping. Take our stock market courses to learn about technical analysis basics, how to read stock charts, find patterns, and pump and dumps.

Final Thoughts: How to Pick Stocks for Day Trading

Knowing how to pick stocks for day trading, make a stock watch list. Putting them on a watch list keeps them organized for you to look at the next day.

Only trade the stocks that have good setups. Do not force trades to make a trade because of the stock on your watch list. Sometimes, no trade can be the best play of the day.

If you need more help, take our day trading course.

Frequently Asked Questions

  • Choose a scanner like Trade Ideas, Finviz, Black Box Stocks, StockstoTrade
  • Set up your scanner criteria based on your trading style
  • Columns such as symbol, name, volume, float, short float, relative volume
  • Customize columns such as momentum plays, parabolic movers, surging volume

How many stocks can you trade in a day? If you have at least $25,000 in an account then you can trade as many stocks as you want. If you have less than $25k then you will get hit with the PDT rule, which means that you can only do 3 day trades within a 5 day calendar period.

Look for a stock with volume, volatility, news, and liquidity. It would help if you had those to day trade stocks. 

This is where scanners come in handy. They can help you find stocks with good pre-market volume, float size, and market cap. 

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