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Volatility Is The Key To Day Trading

Successful day trading requires the ability to spot trends and patterns quickly, and act on them. It’s tough to know which stocks to watch, but once you have learned the skill, you will be ahead of the game.

You should maintain a “watch list”. These are a cross section of stocks that you keep an eye on. Many stocks have recognizable patterns, and with a little experience at watching the same group of stocks, many traders can make educated guesses about whether the stock is about to move up or down. Most day traders, at least the successful ones, make trades from their watch list.

There are several criteria for choosing stocks for your watch list!

Probably the most important is liquidity. I always look for stocks that trade at least 250K shares daily. If the stock isn’t trading well, you may have trouble selling when you need to get out. If you can’t sell the stock, you’re obviously not going to make any money. I would rather trade stocks that are moving over 1M shares a day, but certainly never less that 250K. If the stock is too thinly traded, the market makers can manipulate the price too easily.

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