How To Find Stocks To Day Trade

Summary

This video script delves into the art of identifying stocks with high potential for day trading, focusing on the importance of volume and float. It explains that high volume and low float can lead to significant price movements, making them ideal for quick gains. The script also emphasizes the role of news as a catalyst for stock movements, advising viewers on how to use news scanners and stock screeners to find stocks with promising news before the market reacts. It concludes with the presenter's personal strategy for consistent gains, highlighting the value of combining technical analysis with strong news catalysts for confident trading.

Takeaways

• 📈 High volume stocks are attractive for day trading due to the increased price movement they offer.
• 👀 Volume indicates the level of interest in a stock, with higher volume suggesting more eyes on it and potential for larger price spikes.
• 💧 Liquidity is crucial for day trading; higher volume ensures there are buyers when you want to sell your position.
• 🔍 The float, or the number of shares available for public investors, affects stock movement; a lower float can lead to higher price volatility.
• 🎯 Day traders should look for stocks with a float of 20 million shares or less to capitalize on scarcity and potential price movements.
• 🚀 Stocks with high volume, a low float, and positioned as top gainers can experience significant volatility, making them ideal for day trading.
• 📰 News is a critical catalyst for stock price movements; positive news can lead to substantial price increases.
• 🕗 News articles are often released in batches during specific hours, with the most important ones typically coming between 7am and 9am EST.
• 🔎 Using a news scanner can provide an advantage by identifying significant news articles before the price movement occurs.
• 🛠 A news scanner with customizable filters can help traders focus on stocks that meet specific criteria, such as price range, volume, and float.
• 📊 Traders can improve their ability to identify good news articles with experience, and a list of keywords can assist beginners in evaluating news quality.

Q & A

What is the key factor that can make a stock a great candidate for day trading?

A stock becomes a great candidate for day trading when it has the potential to make massive moves, often indicated by high volume and a low float, which can lead to significant price spikes within a short period.

Why is volume important for day traders?

Volume is crucial for day traders because it indicates the total quantity of shares traded and the level of interest in a stock. Higher volume suggests more buyers and sellers, leading to greater price movement and more trading opportunities.

What is liquidity and how does volume affect it in stock trading?

Liquidity refers to the ease with which buyers can sell their positions. High volume provides better liquidity, as it ensures there will be another buyer on the other side of the transaction, making it easier to exit a position.

What is the role of 'float' in identifying stock movement?

The float represents the total number of shares available for public investors to buy and sell. It plays a role in stock movement by affecting supply and demand dynamics. A lower float can create scarcity, leading to larger price movements.

Why is the float of a stock significant for day trading?

A lower float is significant for day trading because it indicates a smaller supply of shares, which can result in higher demand and more significant price movements, making it more attractive for quick trades.

What is the importance of news in day trading?

News acts as a catalyst in day trading, as it can significantly impact a stock's price. Positive news, such as a breakthrough or a partnership, can cause a stock to spike, providing opportunities for traders to capitalize on these movements.

How can a news scanner help in day trading?

A news scanner helps in day trading by constantly refreshing and identifying news articles that could affect stock prices. By getting the news first, traders can enter trades before the price movement, potentially increasing their gains.

What are some strategies to find news articles relevant to day trading?

Strategies include using a stock screener to watch top gainers, checking financial news platforms like Yahoo Finance for recent articles, and utilizing a news scanner with filters to find relevant news articles as they are released.

How can a stock screener be used effectively for day trading?

A stock screener can be used effectively by setting filters for volume, float, and other criteria to identify stocks with potential for price movement. Watching the screener during key times can help traders spot stocks with news catalysts before the price spikes.

What is the significance of relative volume in day trading?

Relative volume indicates how many shares have been traded in relation to the stock's usual trading volume. A high relative volume, such as 60 times the normal, often suggests a significant news catalyst and potential for price movement.

How can a trader determine if a news article is likely to lead to a positive price movement?

Traders can determine the potential impact of a news article by looking for key words and phrases that suggest positive developments, such as breakthroughs, partnerships, or earnings beats. Experience also helps in identifying which articles are likely to have a significant impact on stock prices.

Outlines

00:00

📈 Understanding Stock Day Trading Dynamics

This paragraph discusses the characteristics that make a stock a good candidate for day trading, emphasizing the importance of identifying stocks with high potential for rapid price increases early on. It introduces the concept of volume as a key indicator of a stock's popularity and potential for price movement. The speaker explains that high volume stocks provide more opportunities for trading due to their liquidity and the greater price movements they facilitate. The paragraph also touches on the concept of 'float' as a measure of supply, suggesting that a lower float can lead to higher price volatility and potential gains, especially when combined with high volume. The speaker recommends looking for stocks with a float of 20 million shares or less for day trading purposes.

05:02

🗞️ Harnessing News Catalysts for Day Trading Success

The second paragraph delves into the role of news as a catalyst for stock price movements, which is crucial for day traders. It highlights how positive news about a company can lead to significant price spikes, and the importance of catching these movements early. The speaker provides a strategy for finding news articles as they are released, particularly during key times in the morning when most news is published. The paragraph also discusses the use of a news scanner as a tool to identify stocks with high volume, low float, and positive news before the market reacts to it. The speaker shares a personal preference for a particular news scanner that offers live feeds and customizable filters to streamline the process of finding relevant news articles. Additionally, a list of keywords is provided to help traders, especially beginners, assess the potential impact of a news article on stock prices. The paragraph concludes by acknowledging that while news is a powerful catalyst, other factors like breaking resistance levels can also drive stock prices, and a combination of strategies can be employed for consistent gains.

Keywords

💡Day Trading

Day trading is the practice of buying and selling financial instruments, such as stocks, within the same trading day. It is a short-term trading strategy aimed at capitalizing on small price movements to generate profits. In the video, the speaker emphasizes the importance of identifying stocks with high potential for day trading, focusing on those that can make significant price movements within a short period, which is a key theme of the video.

💡Volume

Volume refers to the total number of shares traded for a specific stock during a given period. It is a crucial indicator of market activity and liquidity. The video explains that high volume can signal a 'hot' stock, which is attractive for day traders because it often correlates with significant price movements. An example from the script is the importance of volume for providing more trading opportunities and liquidity.

💡Scarcity

Scarcity in the context of the stock market refers to the limited supply of shares available for trading, which can drive up the price due to increased demand. The concept is rooted in the basic economic principle of supply and demand. The video discusses how a low float (the number of shares available for public trading) can create scarcity, leading to larger price movements that are desirable for day traders.

💡Float

Float denotes the total number of shares of a company that are available for trading by the public. It is a key factor in determining the supply side of the supply-demand equation for stocks. According to the video, a lower float can be beneficial for day trading as it can lead to more significant price swings due to the scarcity of shares available for trading, making it easier for demand to drive up prices.

💡News Catalyst

A news catalyst is an event or piece of news that can significantly impact the price of a stock. In the video, the speaker highlights the role of news in causing sudden price spikes, which are attractive to day traders. Good news catalysts, such as significant partnerships or positive earnings reports, can lead to substantial gains for traders who act quickly in response to the news.

💡Stock Screener

A stock screener is a tool that investors use to filter through stocks based on specific criteria, such as price, volume, and float. In the context of the video, the speaker mentions using a stock screener to identify top gainers and to monitor stocks with high volume and low float, which are potential candidates for day trading.

💡Relative Volume

Relative volume is a measure that compares the current trading volume of a stock to its average trading volume. A high relative volume indicates that the stock is experiencing heavier than usual trading activity, which may be due to a news catalyst or other significant events. The video suggests that stocks with high relative volume are worth investigating for potential trading opportunities.

💡News Scanner

A news scanner is a tool that constantly monitors and updates news articles related to stocks. It is used to identify potential trading opportunities by finding stocks with significant news catalysts before their prices have reacted to the news. The video emphasizes the effectiveness of news scanners in providing traders with the information they need to act quickly and capitalize on market movements.

💡Technical Analysis

Technical analysis involves studying past market data, such as price and volume, to predict future market trends. In the video, the speaker mentions that while news catalysts are important, some stocks may experience significant price movements due to technical factors, such as breaking through key resistance levels. Day traders may use technical analysis to supplement their strategies when trading stocks with low float and high volume.

💡Key Resistance Level

A key resistance level is a price level that an asset has difficulty surpassing as it rises. When a stock breaks through a key resistance level, it may experience a sharp price increase. The video briefly touches on this concept as one of the reasons stocks might spike in price, aside from news catalysts, making it a potential factor for day traders to consider.

💡Liquidity

Liquidity refers to the ease with which an asset can be bought or sold without affecting its price. In the context of the video, liquidity is important for day traders because it allows them to enter and exit positions quickly. High-volume stocks tend to have better liquidity, which is why they are favored for day trading as it ensures that traders can sell their shares without difficulty.

Highlights

A stock can increase by 300% in a few hours, unlike blue-chip stocks which take years.

Finding stocks with massive potential before they surge is key to day trading success.

Volume, the total quantity of shares traded, is crucial for identifying hot stocks.

High volume indicates more eyes on a stock, leading to bigger price spikes.

Day traders prefer stocks with high volume for better price movement opportunities.

Liquidity is important for easy entry and exit in trading; high volume facilitates this.

Scarcity, dictated by supply and demand, influences stock price movements.

Float, the total shares available for public investors, represents supply in stock trading.

A low float is preferable for day trading as it creates scarcity and larger price movements.

Stocks with a 20 million share float or lower are ideal for day trading.

Combining high volume, low float, and being a top gainer makes a stock a day trader's dream.

News is a significant catalyst for stock price movements in day trading.

Good news about a company can lead to substantial price spikes.

News articles are released during specific times, with key moments around 7am to 9am EST.

Not all news articles impact stock prices; discerning the quality of news is important.

Using a stock screener or news scanner can help identify stocks with potential before others.

A news scanner provides a live feed of articles and allows for filtering based on specific criteria.

Identifying good news articles improves the chances of successful day trading.

A list of keywords can help beginners identify the quality of news articles.

Stocks may spike for reasons other than news, such as breaking resistance levels.

Trading stocks with a low float, high volume, and a great news catalyst provides consistent gains.

A tested trading strategy with 100 trades resulted in a 130% profit in just 2 months.

Transcripts

What make s a stock a great potential candidate to day trade? This stock went up 300% in just

a couple hours. While most blue-chip stocks you would have to wait multiple years for

that to take place. The problem is, usually when you see these 300% plays your late to

the party. So how do we find these stocks that make these massive moves like this, before

they even happen? So we can take advantage of it, reap the benefits, and get incredible

gains. Well, to understand how to find big gainers,

we first have to understand volume. Volume is the total quantity of shares traded by

traders for a specific stock. So, the more buyers and sellers, the higher the volume.

Volume can be a great indication if a stock is hot or not. Think of it as almost the amount

of eyes watching a stock. The more people watching it, the bigger the spikes.

As a day trader you ll quickly realize, price movement is your friend. That s why day traders

like volume so much because when there is a lot of volume, the price will move a lot

more. Giving us more opportunities for trading plays.

While if you trade a stock with little to no volume, it s not going to be moving as

much, resulting in fewer amounts of opportunities. Not only that, traders like volume for liquidity

reasons. As if you re a buyer and you want to sell your position at a specific point,

you can only sell that position if there is another buyer. It doesn t just poof out of

mid air. There needs to be someone else on the other

side of the transaction. When there are low amounts of volume. It might be hard for you

to find another buyer, resulting in it being harder for you to exit your position.

So we now know the impact volume has on a stock, but what creates the actual movement

of a stock? Well, there s actually a few factors. One

is scarcity. I m sure you ve all heard of the good ol supply and demand. If there is

a low supply of something, and lots of demand for it, that will increase the price. Right?

So we identified that volume is the demand in a type of way, but how do we identify the

supply? The answer? The float. The float is the total amount of shares available for public

investors to buy and sell. As I m sure you all know, all stocks in the stock market have

different amounts of shares to be bought and sold. Some companies like Amazon have 450

million shares out there in circulation, while other companies, like some penny stocks, only

have 700,000 shares out there. Every stock is going to be different. You

can get this number by going on yahoo finance, searching the ticker symbol, click the statistics

tab, then scroll down a bit to the float section. That s the amount of shares available right

now. Now if we go back to the supply and demand

example. If we want the price to rise. We want high amounts of volume, which is the

demand, and low amounts of supply. Which is the float.

So in most cases for day trading, the lower the float the better. As the less shares out

there, creates more scarcity, meaning bigger price movements.

When I m day trading I like to find stocks that have a 20 million share float or lower.

Like I said before, the lower, the better. If it has anything more than 20 million, I

wont day trade it, unless it s a really slow day and there aren t a lot of options out

there. If you ever, find a stock that has a massive

amount of volume, a low float, and it s a top gainer. You will quickly see why this

is a day traders dream. Because the amount of volatility from this is like nothing you

have ever seen before. You will literally have single candles that make 10% moves.

So when day trading, those should really be your filters. Lots of volume, and a low float.

That s how moves like this, exist. Now filters are important and all, but what

s even more important is a catalyst. News. News is such a huge part of day trading. As

a company with insanely great news, has a greater chance of blowing up.

Maybe they found a cure to a specific type of cancer, maybe they just made a partnership

with another big company, or maybe they just crushed their earnings for that quarter. All

of these news catalysts would result in a huge spike in price for that specific stock.

Companies will release news articles every single trading day in the morning. Sometimes

as early as 4 in the morning, to as late as 9am. This is eastern standard time by the

way. For the most part, the most important news articles will come out at around 7am

to 9am. They will also usually come out at round numbers.

So, there will be a batch of news articles that come out at 7am. Then another batch of

articles at 7:30. Then some more at 8. You get the idea.

Now, not all news articles are good. Sometimes companies will release an article and say

something like BESTBUY, just announced it will repaint all of the parking space lines

in its parking lot. A bit exaggerated, but you get the point.

Not all news articles are going to result in huge spikes.

Our goal is to find the news articles as early as possible, decipher if it s a good news

article, then enter, and hopefully make a trade like this one. Where we get in before

everyone else even realizes. Now, I know what you re thinking. How do we

find these news articles? Ah yes, how wise of you to be thinking that.

Well there s a few ways actually. Some brokers will have a news section on their platform

and show all the recent news articles that came out. But I don t really like this strategy

because most of the time 95% of it, is just fluff, and not very import articles. Resulting

in no price movement. Another option is to use a stock screener.

So say if its 8:57 am and it s about to be 9. Sometimes ill open my stock screener and

watch the top gainers of the morning. As it automatically refreshes, I ll wait till it

turns 9 o clock, Scroll down a bit and maybe I see a new ticker symbol pop up that wasn

t there before, and it just spiked up 10%. You can simply go on yahoo finance, which

is completely free. Search the ticker symbol. Then hopefully there s a news article that

came out in the past 10 minutes and you can hop on the train before it leaves the station.

Then this 10% gain, might turn into a 50% gain. Who knows?

You can also do the same thing with relative volume. Relative volume tells us how many

shares have been traded in relation to how many shares are usually traded. So if a stock

has a relative volume of 60. That means its volume right now is 60x higher than normal.

Which in most cases, means it has a good news catalyst.

Now these strategies are nice, and it definitely has worked for me before. The thing is, it

s not very consistent. For one, you re just hoping a new stock pops up on your screener,

and sometimes that doesn t even happen. Then 2, your hoping you find it soon enough, to

where you can search the ticker symbol and find the news article before it even blows

up. The problem with that is, if you are finding

stocks that are already up 10%, most of the time, your already late. And the news article

has already done its work, and that s the peak of the price movement.

So we need to find stocks with high amounts of volume, low float, find their news articles

as soon as they come out, and not just any articles but good news articles, to hopefully

enter before everyone else does. One way I ve found great success with this

is using a news scanner. Just like a stock scanner, a new scanners is constantly refreshing,

finding the best news. So instead of find the price movement first,

then searching up the news article. We get the news article first, and enter before the

price has even moved. Now, there are lots of different news screeners

out there. Some are free, but not as good, some are great, but cost money. Theres a lot

of options. This is up to you to find the right one based

off your needs, but if you want some help I ll put the one I use in the description.

What I like about this one is all the features it provides. So instead of searching for ticker

symbols, it will have a live feed of all the articles that are released. So you can get

on during key moments like we were talking about before, like 8 am or 9 am. And see if

there are any good news articles that pop up.

What s even cooler is you can add filters to this scanner. So say if you only want stocks

priced between $1 and $20, stocks that have volume of 100k or more, and has a float of

under 20 million. This scanner will only show you news articles of stocks with those specific

requirements. Which is so damn powerful. And we really just scraped the surface with

the filters, there are soo many more. So you can watch the scanner at key times,

have your filters enabled, if you see one pop up, check it out, read the article and

decipher how good the news is. The better the news, the better the spike.

The next thing you might be wondering is how do you tell if a news article is good? Well

the more you trade, the better you get at identifying articles and how good they are.

But for all the beginners out there s this list I ve made. Rating popular keywords from

best to worst. If you see these key words in the title of

the article. It s most likely a good news article. The better the keyword, the better

the article. So you can add this video to a playlist or save the video or whatever,

and just come back to this screenshot if you want to rely on that.

But doing this whole strategy with finding great news articles and getting in plays like

this before they happen has worked wonders for me. So I thought I d share it with you

guys. I should also note. All these top gainers

might not be from news. Sometimes stocks will spike up huge amounts

because they broke a key resistance level or sometimes for literally no reason at all.

So you really could just use the low float / volume strategy and just trade top gainers

off technical analysis. That s completely fine too. And sometimes I even do that.

But I found trading stocks with a low float, high volume, AND a great news catalysts, gives

a lot more consistent gains. And you truly feel a lot better and safer when day trading

a stock that has a good news catalyst. It s almost like trading a stock that has a magnet

above it pulling it up, so you can be more confident when trading.

So you know how to find the stocks, but you also need to know how to trade them correctly.

Well luckily for you I did the testing for you. I tested a trading strategy with 100

trades and it profited 130% in just 2 month, so yeah its pretty good. Go check that out,

thanks for watching, and I ll see you guys next time.