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One Simple Day Trading Secret |
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Submitted by Jeannie Nunez
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To be successful in day trading, one must be able to spot up and down patterns quickly in stocks they’re watching – But one question remains. “What stocks should I be watching?” Once you’ve mastered this one technique, you’ll be a mile ahead of other day traders not using this technique.
Top day traders have what they call a “Watch List.” This watch list is the list they’re constantly watching, looking for patterns that indicate it would be a good time to buy. The majority of a successful day trader’s trades come from watching stocks on their watch list.
What are the criteria for choosing a good stock for your watch list?
One important criterion is liquidity. A stock that trades at least 1.5 million shares a day is a good rule of thumb. Even if the stock matches all the other criteria, it does no good if you can’t quickly buy or sell your stock.This is not too difficult to look for as most good day trading stocks trade in many millions a day. Upto 30 million in one day for the huge liquid stocks. Keep out of thinly traded stocks. The Market Makers can manipulate their price movement too easily.
Next look at the volatility of stocks. A good stock for your watch list should be a highly volatile stock, as day trading profits are made when stock values change. Measure and compare companies you’re considering by day, week, and month.
High dividend stocks should be eliminated as well. Day trading is not a long-term investing strategy, and the more dividends a company pays, the less money they’re re-investing into the company’s growth.
Once you’ve got a list of candidates, select between five and thirty to put on your watch list. Start small in the beginning, and work your way up to more stocks as you gain confidence and experience using your watch list.
This tip alone could earn you thousands of dollars.
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