What Are the Best Stocks To Day Trade and How To Choose

Watch the full video here: How to Pick the BEST Stocks for Trading (with ZERO experience)

If it’s your first time day trading, it can be hard to tell which stocks are worth your while. Are Apple, Microsoft, and Amazon actually good investments, or are they just big names?

Day trading isn’t just about easy, obvious trades — it’s about precision, strategy, and a keen understanding of the stock market. Whether you’re a beginner or looking to refine your skills, this guide will help you identify the best stocks to day trade and develop a system to make informed decisions.

What Makes a Stock Suitable for Day Trading?

Not all stocks are equal when it comes to day trading. To identify the ones worth your time, you must understand volatility, liquidity, and trading volume:

Volatility

Day traders are hunters of volatility and managers of risk. Volatility fuels day traders, creating the price movements necessary to make profits. A stock like Tesla (TSLA) might jump 5% in a single day, creating opportunities for quick trades.

Liquidity

On the other hand, liquidity ensures you can buy and sell stocks easily without affecting the stock price. We profit from intraday fluctuations in price — we need to find stocks that are moving in order to make money.

Trading Volume

Stocks with millions of shares traded daily are ideal for day traders. High-volume trading means there’s enough activity to execute trades at a desirable pace and price.

Share Price and Movement

Stocks priced between one dollar and $20 often provide the best opportunities. They balance affordability with significant price movement, making them especially appealing to beginner traders.

What Are Some Tools for Finding the Best Day Trading Stocks?

If you have the right tools in your day trading arsenal, half the battle is already won. From stock scanners to news platforms, the tools you use can make or break your daily trading game.

Stock Scanners

I use stock scanners to help me filter out all of the noise. They’re essential for filtering thousands of stocks to find the ones with the most significant price movements. They help you focus on the ones that meet your criteria, such as being up at least 10% in pre-market trading.

Pre-market stock scanner highlighting top gappers, including percentage changes, volume, and float size, essential tools for day traders.

Watchlists 

A watchlist is like a curated library of potential trades. By narrowing your focus to stocks with strong catalysts, you can save time and make better decisions.

Social Media and News Platforms

Keep an eye on the ground with platforms like Bloomberg or even Twitter to help you spot breaking news and trends. A positive earnings report or major FDA approval can act as the catalyst for substantial movement.

What Are Common Types of Day Trading Stocks?

Now, it’s time to study common stock categories to select an appropriate approach for you. Here are your options:

Large-Cap Stocks 

Stocks such as Nvidia (NVDA) and Tesla (TSLA) usually offer stable returns. Though their price movements may not be dramatic, they enjoy high liquidity — an aspect that traders and investors love.

Small-Cap Stocks

A small cap is typically defined as stocks below $10, with the potential for high risk/high rewards. These stocks are ideal for traders in search of high percentage gains but require careful risk management because of their volatility.

ETFs and Derivatives

Exchange-traded funds (ETFs) like Nasdaq ETFs provide broad exposure to a given sector, allowing you to trade market movements rather than specific firms.

Becoming involved with a trading community can be a helpful way to gain a better understanding of current trends. Knowing the underlying reason behind a fluctuation can enhance your investments in the stock exchange.

How to Choose Stocks to Day Trade

A systematic approach is key to finding the best stocks for your trading style. Here’s how:

Catalyst and News Events

Stocks with strong catalysts — like earnings reports or new product launches — often see significant volatility. These events are golden opportunities for day traders.

Patterns and Price Action

Look for clear chart patterns like breakouts or reversals. Analyzing price movements can help you identify entry points with precision.

Technical Analysis and Indicators

Using tools like VWAP (volume weighted averages price), moving averages, and the relative strength index (RSI) can make your trades more informed. For instance, it might be time to sell when the RSI signals a stock is overbought.

Avoiding High-Risk Stocks

Penny stocks and pump-and-dump schemes might tempt you, but they lack the liquidity and stability necessary for profitable trades.

Remember, a short squeeze is a technical phenomenon — it can be triggered by a catalyst but can also occur without any fundamentals. You’ll need to take a holistic approach to day trading to make sure no variables go unexamined.

What Are Common Mistakes That Day Traders Should Avoid?

Avoiding common trading pitfalls can save you from unnecessary losses and instill discipline in your approach. These are the errors you’ll want to keep an eye out for:

Overtrading

Jumping into too many trades without solid setups can lead to poor decisions and unnecessary losses. Quality over quantity is the rule — use stop-loss orders to prevent mistakes.

Ignoring Volume

Trading low-volume stocks can leave you stuck with shares you can’t sell quickly. Always prioritize stocks with high trading volumes to ensure liquidity.

Chasing Momentum Too Late 

It’s tempting to jump into a trade after a stock has already made big moves, but entering late increases your chances of a loss. Wait for pullbacks before you pounce.

Patience is incredibly important if you’re going to have long-term success as a trader. On slower days, focus on refining your day trading strategies or analyzing past performance rather than forcing trades that don’t meet your criteria.

What Are More Advanced Tips for Day Traders?

Once you’ve mastered the basics and dodged the mistakes, you can apply these advanced strategies to help you maximize your profits and minimize risk:

Combining Indicators

Pairing indicators like MACD and Bollinger Bands can help you better understand a stock’s behavior. For example, the MACD’s signal line is a powerful tool for spotting trend reversals.

Real-Time Monitoring

Stay ahead of the game with real-time data from a reliable trading platform. Quick reactions can be the difference between a profit and a loss.

Short Selling Opportunities

Short sellers look for profits from declining prices, but this is not a strategy for most traders. Short selling involves additional risk and can result in unlimited loss and margin calls, requiring an advanced-level understanding of market trends and price movements. Brokers and platforms may also have additional rules and restrictions when short selling.

What Are the Best Day Trading Platforms and Tools?

Choosing the right trading platform is often the final piece of the puzzle. Here are my top two:

• Lightspeed Trading: Excellent for traders needing the fastest execution for large positions, however, they do charge commissions on each trade.

Lightspeed Trading platform interface showcasing real-time market data, watchlists, and trading tools tailored for professional day traders

• Charles Schwab (formerly Ameritrade): Offers advanced charting and stock scanning tools.

From 7 a.m. to 9:30 a.m. each day, I look for the day’s top gainers in pre-market trading, which often reveals the top movers. Later on, “Power Hour” from 9:30 a.m. to 10:30 a.m. — and 3 p.m. to 4 p.m. — offers last-minute opportunities for portfolio adjustments and breakouts.

Putting It All Together

Deciding on the best stock to day trade is an art and a science. With the right tools, you can target stocks with high volatility, liquidity, and trading volume and achieve consistent success.

If you’re a beginner, start slow and never let yourself get sloppy — be persistent and constantly perfect your methods. Of course, the more you trade, the more experienced you’ll become.

Finally, don’t stop learning with this article. Get my Small Account Strategy Worksheet to learn the specific techniques I applied to build an account from below $600 to over $10 million.

My results are not typical. Remember, day trading is risky and most traders lose money. You should never trade with money you can’t afford to lose. Prove profitability in a simulator before trading with real money.