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.