How to Pick the Best Day Trading Stocks

Day trading is the art of getting in and out of a stock quickly so it is important to pick stocks that are active with an opportunity to make money today.

The first thing to understand is the ticker symbols of the best day trading stocks change all the time. An opportunity to buy a stock today will likely be gone tomorrow and you can easily miss out on the best stocks for day trading. A few day traders trade in the same top day trading stocks every day. They use a trading strategy to find new opportunities to make money. They jump from stock to stock when stock trading to find the greatest chance of a big price move, which creates profit potential. However, you need to be careful about the type of stocks you choose. It is better to stick to traditional stocks such as ETFs and other high volume stocks instead of instruments such as penny stocks for day trade stocks.



Reminder: What is Day Trading?

Day traders are not looking to invest in stocks to hold for several years as the companies grow their profits. Day trading uses the volatility (a measure of the price movements in a stock over time) created by other day traders as well as long term investors when they are buying and selling the stock.

You can purchase a stock at a low price and wait a few hours for it to go up and sell for a profit. Alternatively, you can sell a stock short and take profits if the stock price falls.

How to pick the best stocks for day trading

There are thousands of stocks to trade, so many that it would be impossible for a single person to scan for opportunities. That’s why day traders use a stock scanner. This is probably the most important tool for finding the best day trading stocks. The stock scanner can filter using the criteria that shows activity.

The three best ways to judge short term trading activity is by filtering the stocks you might consider buying for the following:

  • Price
  • Volume
  • Volatility


NOTE: Some day traders also look for news catalysts but more often than not the stock price moves quicker than the news. By the time you have a chance to react to the news, the opportunity is gone and insiders and algorithmic traders are taking profits. Another way to use news is to use it as a confirmation that the change in price, volume and/or volatility will be sustained.


Day traders typically look for 3 characteristics in a price to show high activity and a chance to ride a price move to make money.


Is the stock in an uptrend or downtrend or in a trading range? If the price is trending higher, the highest-probability day trades will be in the direction of the trend, not countertrend. Likewise, stocks in a downtrend will often provide the best short-selling opportunities. If the price is in a sideways price range, then traders will be looking for ‘breakout’ from this range, which we cover next.


What is a breakout? A breakout is when the price moves beyond a significant price level. Because day traders are normally buying stocks, a breakout normally means the price moving above a significant price level. The significance is that the price has not moved into this new territory for some time and it shows that buyers have become more enthusiastic than sellers.


opening range breakout trade


Which price levels are best for breakouts? Two of the most popular methods used by stock traders are using support and resistance levels from previous price highs and lows or a new period high or low. For example, one day trading strategy is to buy a stock when it moves to a new 20-day high.

A pattern day trader will typically use a breakout as the trigger to enter a trade after a familar price pattern has formed.


What is a price gap? A price gap is when you look at the price chart and the space is empty because the price has ‘gapped’ from one price level to another and missed the prices between. The gap demonstrates high activity and traders will look to buy the stock that has gapped higher.


opening gap


A popular day trading strategy for beginners is the market opening gap strategy. A scanning tool can filter for stocks that gapped at the market open, and often can filter for how big the gap was – for example it could search for gaps that represent a more than 5% move in the stock price.


What is Volatility? Volatility is a statistical measure of how much a price changes over a certain period of time. As day traders, we want high volatility! The higher the volatility, the greater the chance of buying a stock cheap and selling it when it gets expensive in a short period of time (ie less than day).

How to measure volatility? Investors use beta to judge a stock’s volatility. Beta compares how much a stock moves compared to a benchmark index like the S&P 500. If a stock moves up 2% when the index moves up 1%, it has a high beta. Where as a low beta stock might move 0.5% when the index moves 1%.

Another measure of volatility that is especially popular with forex day traders is called the Average Daily Range (ADR) or a variation called the Average True Range (ATR). It is the average points difference between the high and low of a stock (or forex pair) over a certain period of time, normally 14 days.


Volume is simply how many shares have changed hands over a certain period of time. Volume spikes are a characteristic of a stock that has become the focus of traders. Either the high volume represents accumulation of the stock (more buying) or distribution (more selling).


volume stock trading

Source: PSEstocktrading.com


When using a stock screener, day traders can filter for volume as measured by the number of shares traded or by the value of all the shares traded. It is also possible to filter for volume that is higher than the average daily trading volume for that stock.

Stock Screeners

Here are 5 of the most popular stock screener websites:


We have highlighted the most important filters to use on the stock screener– breakouts, gaps, volume, beta, ADR. But other filters can be used to filter what type of stock you are trading. For example penny stock traders will filter for the share price to be under $1 or perhaps for Market Capitalisation to be under $10M.

Invest in the best day trading stock picks

Here are some steps you should take, away from the actual stock picking process to make sure you are best setup to find the best day trading stocks to make money in the market.

  • Try paper trading on a demo account
  • Find a reliable brokerage account from online brokers such as FlowBank
  • Decide how much you can risk for stock trading
  • Commit some regular time
  • Choose a favourite stock screener
  • Use limit or stop orders
  • Practise timing entries & exits
  • Set realistic expectations
  • Use a strategy
  • Monitor your trading performance


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