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Finding the best stocks to day trade can be challenging as there are simply thousands to choose from around the world. Even if you find the best stocks to trade, there is no guarantee that you will find successful trading opportunities as skill, emotional resilience and risk management also play a role.
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However, day traders can increase their chances of success by identifying stocks that exhibit certain characteristics that will help drive the stock price higher or lower. For example, it will be important to choose stocks that have high volume and liquidity over those that have low volume and liquidity.
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In this article, we explore some characteristics to watch for when trying to find the best stocks to day trade this year.
When trading stocks today, the first goal is to identify stocks that are likely to move in a certain direction for the long term. No trader can predict the future and know for sure what the best stocks to trade will be.
Identifying high volume stocks is key for day traders. After all, if there is only a very small amount of daily volume (buy or sell trades) then the difference between the bid price and the sell price (the spread) is likely to be larger which can eat into any profits, which of course are not guaranteed.
Small volume stocks can also move in a much more random manner, where a large buy or sell order can cause large movements. High volume stocks mean that there are many traders active in those stocks which provide more liquidity and therefore lower spreads.
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Source: Admirals MetaTrader 5, #TSLA, M5 – Data range: from November 7, 2022 to November 15, 2022, accessed on November 15, 2022. Please note: Past performance is not a reliable indicator of future performance.
The MetaTrader 5 trading platform offered by Admirals includes a quantitative indicator. This can help day traders identify high volume stocks as well as when a stock’s volatility is increasing or losing momentum.
For example, the 5-minute chart above shows Tesla’s stock price over several days. The vertical lines, or dotted line as it is called on the platform, shows the end and the beginning of a new day. You may notice that there is a tendency for the volume to increase around opening time and decrease towards closing time.
However, with Tesla being considered a high volume stock, there is still good movement in the stock price throughout the day. The volume indicator can help identify when buying/selling pressure is increasing or decreasing.
How To Find The Best Stocks For Day Trading 2023?
There are many types of traders involved in day trading in the stock market. This includes speculators, hedgers, arbitrage traders, mean banks and many others. To find the best stocks to day trade, it is important to find out what type of trader you are.
Due to the rise of algorithmic trading, most retailers can only try to compete with strategic speculators. This means identifying stocks that show trends like a signature is key.
What are the different ways to find trending stocks? This is where technical trading indicators can become useful. Some of the most common day trading indicators to help identify trends are:
Source: Admirals MetaTrader 5, #MCD, M10 – Data range: from 12 October 2022 to 15 November 2022, accessed on 15 November 2022. Note: Past performance is not a reliable indicator of future performance.
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The 10-minute chart above shows McDonald’s stock price over several days. There are periods where the price is above the 100-period exponential moving average (blue line on the chart) and where the MACD and alarming oscillators are above zero.
During these times, stock prices have been bullish and have shown strong trend like characteristics. All these day trading indicators are available from the MetaTrader 5 trading platform offered by Admirals.
Did you know you can keep up with the latest market moves and trends by tuning into Admirals three times a week live trading webinars hosted by experienced traders for free? Sign up for your free space below.
While day traders may focus their efforts on lower time frames, there are many other types of traders who will also trade higher time frames. Therefore, using multiples analysis can be very useful to find the stocks that are moving.
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Keeping track of what’s happening across multiple time frames can be challenging. However, the Admirals Symbol Info indicator can help with this. The indicator is available by upgrading your MetaTrader 5 platform to Admirals MetaTrader Supreme Edition for free.
This version comes packed with a wide range of technical indicators and other features such as a mini terminal for advanced order trading, correlation matrix and more.
Source: Admirals MetaTrader 5, #AG, M10 – Data range: from 28 October 2022 to 15 November 2022, accessed on 15 November 2022. Note: Past performance is not a reliable indicator of future performance.
The 10 minute chart above of First Majestic Silver Corp also shows the symbol information indicator in the upper left. This indicator shows what is happening on 1-minute to weekly chart timeframes in relation to EMA 14, MACD 12, AO, PSAR and CCI 14 indicators.
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Since most of the dots are blue, this means that most of these indicators across the eight timeframes are showing bullish signals. This is a great way to follow the indicators on higher time frames.
The more time frames that show bullish or bearish conditions, the stronger that trend is likely to be. Download Admirals MetaTrader Supreme Edition for free below and see for yourself.
Below is a list of some stocks that are showing high volume for day traders. However, the amount of stock will change over time. Be sure to update your business listing based on the features you’re looking for and whether those features are still relevant.
Shares in Alphabet currently have a beta of 1.05. A stock’s beta measures its volatility relative to the overall market. The overall benchmark for most stocks is the S&P 500 which has a beta of 1.0.
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A stock with a beta greater than 1.0 is considered more volatile than the benchmark. A stock with a beta lower than 1.0 is considered to be less volatile than the overall market.
Occidental Petroleum currently has a high beta of 1.98 meaning it is almost twice as volatile as the overall market as determined by the benchmark S&P 500 index.
The recent announcement that billionaire investor Warren Buffett has purchased a significant stake in the company is likely to have caught the attention of both traders and investors.
Amazon currently has a beta of 2.41 which means its price changes are much more volatile than the benchmark. The stock also has a high two-month average volume of 79.84 million shares.
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One of the best ways to start trading stocks is to use a demo trading account. This is an account that allows you to trade in a virtual environment to build your skills and confidence. When you’re ready to go live, you can simply switch to a live account.
You can also try MetaTrader Supreme Edition with a demo account, but you need a live account to access premium analytical features such as automated technical analysis trading ideas.
Stocks that exhibit high volume and trend like characteristics over multiple time frames will provide an ideal starting point for day traders. This includes stocks like Amazon, Tesla, and Occidental Petroleum, among many others.
Since Brexit, the UK has had the lowest share market activity among the G7 nations. Most day traders focus on US stocks for day trading. UK stocks can show some days trading characteristics but the price change is much lower than US stocks.
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Unfortunately, all markets are difficult to trade on a daily basis. While it can be done, it takes time to build the right skills and confidence. Most day traders focus on stocks that exhibit the high volume and volatility that tends to be present in the US stock market.
Jitanchandra is a financial market writer with more than 15 years of experience trading currencies, indices and US stocks. He is an accredited marketing technologist with a BA Hons degree.
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