When trading stocks on the day it is necessary to master two essential skills. The first and easiest one is to master the art of stock selection. The second option is the most important and most difficult. How do you make these investments tradeable? What I mean by the way trading these shares is to make the best entry and exit. If you don’t have this, you’ll not be successful in your day-to-day trading business.
Finding suitable stocks for day trading isn’t difficult as there are more than 50k stocks available on the US Stock Markets. The most important thing to be aware of is that you’re NOT an investor. You are more of an individual trader who does not keep positions for indefinitely. There is no need to think in the about the long-term. With this information in the forefront of your mind and focusing on the price fluctuations in the intraday market of your stocks.
There are a few rules you must adhere to when stock selection. These guidelines have been designed by various successful day traders with years of experience. The first rule that narrows the list of stocks you could choose to invest in is to you should only select stocks that have a daily volume of one million shares or greater. This means that the stock has the average volume per day of approximately one million shares per day for the past few months or weeks instead of being able to trade this volume on an odd day.
This guideline should be followed with a strict adherence by those who are selecting stocks during day-trading. Try to stay away from low-priced stocks that have large volumes and also high priced stocks that have small volumes. I will explain this later in this paragraph.
After you’ve narrowed the list of stocks you can use for day trading, you have to reduce it further using this rule. This rule states that you should select stocks that trade between $10 to 100 cents per share. A price that is lower than $10 means that the company isn’t well-known and could indicate that there are issues with the company. A price over $10 gives an indicator that the business is in good health and that the stock doesn’t have serious liquidity issues. It is evident that the liquidity of the company you select is crucial. To ensure that liquidity, you only picked stocks that trade in the average of a the volume of one million shares.
Stocks that are priced above $100 could be priced too high and are extremely volatile, with large ranges of retracing. Stocks in the range of $10 to $100 exhibit regular intraday price pattern and are the best to day trading. If you choose the stock within the price bracket, be aware of the price movement in its intraday. Examine the last three days of data and then observe the patterns of the intraday chart to observe the price moving around between levels of support and resistance in the intraday. You’re looking for a stock with a strong intraday swing.
Avoid trading stocks restricted by regulations of the government. For instance stocks that are pharmaceutical or biotech stock might not be a good investment. Imagine that an approval is still pending with FDA! The stock is traded as FDA declares that more tests are required before granting the green light. You can imagine what might take place. In the same way avoid stock exchanges that trade in the morning of companies working on merging.
Day trading in Forex can be the better choice in comparison to stocks that you trade on a daily basis If you’re committed to day trading. The currency market is enormous with an estimated $3.2 trillion in transactions each day. Take with all stock exchanges across the world, and they don’t make up the trillion-dollar mark. The currency market is open 24/7 unlike the market for stocks. Therefore, you can trade in currency when it matches your needs. The six main currencies that account for over 90% of transactions in the business market. This is in contrast to the thousands of stocks on the stock market that need an extensive amount of technical and fundamental research. By trading just two of these important currencies, you could make lots of dollars. Give day trading on forex a trial. It’s a better choice!