The Best Day Trading Stocks

how to pick the best day trading stock: follow volume and volatility, consider trend and range to track uptrend and downtrend, only trade stocks with tendency to range if you prefer trading ranges, only trade stocks with trending tendency if you use trending strategy, and utilize stock screener to find stocks that conform to your trading method

The Balance / Hilary Allison

The best day trading stock is one that provides opportunity in its price movements and has ample volume so you can get in and out of those opportunities quickly. These two factors are known as volatility and volume. Following how much volatility and volume there are helps you pick the best day trading stocks or ETFs for your trading style and personality.

Volume and Volatility

Some day traders like lots of volume without much volatility. The price moves one cent at a time and they scalp the small movements. Others prefer high-volatility and volume, which equates to lots of action in the stocks or ETFs they trade.

The price moves quickly—often several percentage points in a day or several cents in seconds.

Volume and volatility do change over time, though. Specific events may make a stock or ETF popular for a while, but when the event is over, the volume and volatility dry up. This cycle may repeat over and over again. An example of this is the S&P 500 VIX ST Futures ETN (VXX).

When the S&P 500 is moving higher, VXX is relatively calm, but when the S&P 500 falls, VXX jumps to life and there's a big jump in volatility and volume. Below is a list of the most popular day trading stocks and ETFs. They all have lots of volume, but they vary in volatility.

Beta is a baseline for determining volatility. It measures how much a stock moves relative to the S&P 500. A beta above 1 or below -1 means the stock is more volatile than the S&P 500. Betas in between -1 and 1 mean the stock tends to be less volatile than the S&P 500. Keep in mind that ETFs track their own indexes, not the S&P 500, unless they're specifically designed to track the S&P 500 (such as SPY).

Trend or Range

The trend and range of investments are other components to consider. There are range traders, trend traders, and those that do both effectively. Range refers to the difference between a stock's low and high prices in a specific trading period, while trend refers to the general direction of a stock's price. The prices could be continuously moving up or down, signifying an uptrend or downtrend.

If you prefer trading ranges, only trade stocks which have a tendency to range. If you utilize a trending strategy, only trade stocks that have a trending tendency.

A stock screener can help you isolate stocks that trend or range so that you always have a list of stocks to apply your day trading strategies to. Finding stocks that conform to your trading method will take some work, as the dynamics within stocks change over time. It's time well spent though, as a strategy applied in the right context is much more effective.

Most Popular Stocks and ETFs for Day Trading

The most consistently popular ETF among day traders is the SPDR S&P 500 ETF (SPY). It isn't uncommon for trades of this ETF to hit 100 million shares per day, and the huge volume allows you to trade smaller or larger position sizes adapted to the volatility. Here are other high volume stocks and ETFs to consider for day trading. Betas are provided where applicable. All numbers are subject to change. Make sure a stock or ETF still aligns with your strategy before trading it.

Most Popular Stocks and ETFs with Average Volume and Beta (November 2019)

Name Symbol Volume (3-Month Average) Beta
Financial Select Sector SPDR Fund XLF 54,178,358 1.14
Invesco QQQ QQQ 29,485,110 1.17
iPath S&P 500 VIX Short-Term Futures ETN VXX 38,059,657 N/A
iShares China Large-Cap ETF FXI 25,180,136 1.18
iShares MSCI Brazil ETF EWZ 24,348,118 0.78
iShares MSCI EAFE ETF EFA 26,397,895 0.86
iShares MSCI Emerging Markets ETF EEM 61,668,512 0.95
ProShares UltraPro Short QQQ SQQQ 16,690,127 NA
SPDR S&P 500 ETF SPY 72,297,303 1.01
VanEck Vectors Gold Miners ETF GDX 65,079,923 -0.15
Advanced Micro Devices Inc AMD 57,350,494 3.08


Screening for Stocks Yourself

Screen for day trading stocks using or another stock/ETF screening site. On Finviz, click on the Screener tab. To look for stocks, go to "Industry>Stocks Only" under the Descriptive tab. To search for ETFs only, go to "Industry>Exchange Traded Fund." To look for both together, leave the field set to "Any." Under the Technical tab, alter the beta setting to seek stocks that are more or less volatile.

On top of the Screener tab, there's a drop-down menu called "Order." Select "Average Volume (3 Month)" from the list, and put it in descending ("Desc") order. The stocks and ETFs near the top of the list have the most volume, and this is where most traders will want to focus their search.

Bottom Line

There are lots of options available to day traders. Some like to regularly screen or search for new day trading stock opportunities. Others like to trade the same one all the time, such as the SPDR S&P 500 (SPY). Knowing which stock or ETF to trade is only part of the puzzle, though, you still need to know how to day trade those stocks.

Frequently Asked Questions (FAQs)

What is the maximum leverage for stocks while day trading?

Day traders can trade with up to four times their maintenance margin excess. That's the legal limit, but some brokerages may impose more conservative limits as they see fit.

How much money do you need to get started day trading?

You must have at least $25,000 in your brokerage account to qualify for pattern day trading.

How many individuals are successful at day trading stocks?

The odds of making it big as a day trader are low. Day traders typically lose significant amounts of money in their initial months of trading, and many never recover from those initial losses to become profitable. However, day trading can certainly become profitable for those who have the time, temperament, and capital required.

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