How To

How to Best Stocks to Day Trade

Online Trading
Online Trading
Contributor
By Allen Young
eHow Contributing Writer
(1 Ratings)

Finding the best stocks for day trading is a tricky business. A lot of money can be made in a short period of time, but a lot of money could be lost, as well.

Difficulty: Moderately Challenging
Instructions
  1. Step 1

    Watch the stock market for at least a month before investing your money. You need to get a feel for the market fluctuations if you hope to have any success.

  2. Step 2

    Figure out how much you need to make to break even, and concentrate on reaching that amount for the first few weeks.

  3. Step 3

    Look for stocks that fluctuate by at least $2-$3 per share within a day’s time. Look at the history of the stock. If there are a few dollars swing on a regular basis, you can quickly make a profit each day. These are the stocks you will be trading. You won’t normally want to hold stocks overnight as a lot can happen in a few hours.

  4. Step 4

    Buy low. Pay attention to the news for events--or even the news itself--that may affect the stock. Oftentimes, the market overreacts to the news and will correct itself later. Watch for a stock that you have good reason to believe is about to rebound, and invest early in the day. Look at the after-market news and trading during the evening to see if there is buying activity. That is a sign the stock will open higher early when the U.S. markets open.

  5. Step 5

    Sell high. Decide at what point you wish to sell your stock, and arrange to be notified when the share price reaches your target.

Tips & Warnings
  • Don‘t beat yourself up if you set a selling price and thereafter the price goes even higher. The ‘if only’ game works both ways: ‘if only I’d waited’ could have easily have been ‘if only I had sold earlier’.
  • Don’t get in over your head. This is easy to do, particularly with ‘leveraged’ buying - when you are trading with borrowed money.
Photo Credit

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