How to Scan and Pick Stocks for Day Trading

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

How to Pick Stocks for Day Trading

  1. Here’s how to pick stocks for day trading:
  2. Have a good stock scanner.
  3. Scan the premarket.
  4. Look for stocks with premarket volume. Ideally 100,00+.
  5. Look for stocks that have news catalyst.
  6. Check out the float of a stock (low float most volatile).
  7. Map out support and resistance levels.
  8. Narrow down watch list to between 3-5 stocks.
  9. At open, look for volume and watch for breaks of premarket highs.
  10. Keep scanner running during market open to scan for momentum plays.

Day trading tends to be fast paced, think quick way to make money in the market. There are so many different stocks that you can chose from to day trade.  In this post we’ll be discussing the different 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 going to be successful. Lets take a look at some must have’s before you pick the wrong stock to day trade.

Criteria

  • Liquidity in the stocks you day trade is probably the most important aspect of day trading. Stocks that are liquid have huge volume on the day. Look for stocks with at least 2x the daily relative volume. I also prefer 50k shares per 1 minute candlestick or I tend to not want to trade the stock.
  • Prints in the stock market lets you know there’s shares trading hands, every time shares are bought/sold counts as a print. If there a lot of prints, you can get in on some of that action.Day trading is fast and precise therefore you don’t want to be stuck unable to close your position from lack of volume or shares trading hands. I look for stocks with prints over 1000 a day, more shares trading hands on average is always better in my book.
  • Volatility is something else you need in the stock you’re day trading. High volatility can be dangerous because of the extreme price movement, so you need to make sure you’re getting a good entry at the 9EMA 5 minute before entering the trade, or you could be chasing and get a terrible entry. Are you trading a stock that’s trading sideways for weeks in a tight range? That is low volatility and might not be best for your strategy.
  • News. Is there a catalyst causing the stock to run? There should be a reason WHY people are buying the stock. FDA approval? Earnings? Did Elon Musk tweet something? If you find the why behind the move, and its positive or negative, you’ll have a better shot at knowing if you are on the right side of the trade when you buy and sell. Day trading stock picks with news is a big help.

Having a scanner like Trade Ideas will alert you to the best stocks with volatility and volume. Another resource to take advantage of is a trade room. The Bullish Bears Trading Room has traders from all over the world talking plays and strategies.

Entry and Exits

Learning how to pick stocks for day trading is only the first step. Learning how to get a good entry and exit is crucial to profiting on 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, and picking winning stocks to trade is only half the battle. Knowing when to pull the trigger is key, and when to jump ship (sorry I just love using analogies).

The market moves up and down. Finding the trend of the stock will tell you which way to go. When the trend is bullish you can ride it up and buy the dips. When the trend is bearish you can short the stock and cover at support.. Having a broker that allows you to short is good. Click on our post to read our review of Interactive Brokers.

How to Pick Stocks for Day Trading

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’re shorting a stock you never want to enter at resistance. Make sure you’ve got the right entry when placing your order. If you don’t know the right entry…well you’re in luck because we’ll teach you right here on this site how to do it.

Wait for the Pullback

How to Pick Stocks for Trading

When you’re learning how to pick stocks and you see them moving fast, you don’t want to miss the action. When 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 stock long and get a bad entry, now you can’t stomach the pull back as well, and may get stopped out on the pull back. Instead, wait for the pull back. Even if you miss your long or short entry, at least you’re not chasing. Self control people!

Price will always want to come back to equilibrium. The price will come down, I promise. Wait for the pull back so you can buy the dip and sell the rip. Never buy the rip otherwise you’ll be watching your account turn red more often than not.

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

How Do I Set up Stock Screeners for Day Trading?

  1. Here’s how to set up stock screeners for day trading:
  2. Choose a scanner like Trade Ideas, Finviz, Black Box Stocks, StockstoTrade.
  3. Set up your scanner criteria based on your trading style.
  4. Columns such as symbol, name, volume, float, short float, relative volume.
  5. Customize columns such as momentum plays, parabolic movers, surging volume.

Following the Trend When Choosing How to Pick Stocks for Day Trading

When you know how to pick stocks for day trading, you know how to follow the trend. The trend is your friend. Stocks move like waves in an ocean. Up and down up and down. Yes, some stocks

Following the trend allows you to take advantage of the up and down moves. Find the sectors that are hot that day, week, month or year. Trade stocks within those sectors with good chart setups. When a sector is hot, stocks that relate to it are going to move, regardless of whether or not they are good companies sometimes. Take a look at the pot stock sector for example. Stocks with 5 employees and a basement office in someones moms basement will  run when the whole sector is running. (bookmark our stocks lists page which is updated daily by 9 pm est).

DAY TRADING STOCK PICKS

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 and moving averages and comparing those short term candlesticks to daily indicators.

Patterns can tell you if a stock is a pump and dump, especially when trading penny stocks. Being able to spot 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 more about technical analysis basics, how to read stock charts, find patterns and pump and dumps.

How Many Stocks Can You Trade in a Day?

  • 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.

Watch Lists: How to Pick Stocks for Day Trading

If you know how to pick stocks for day trading make a stock watch list. Putting them in a watch list keeps them organized for you to look at the next day.

Only trade the stocks that have good setups. You don’t have to make a trade just because you have the  stock on your watch list. Sometimes sitting out is the best play of the day.

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