Yielding Returns from Stocks for day trading
By Daie Joneses
Stocks for day trading imply that there are certain stocks standard and ideal for day trading. Day trading generally refers to buying and selling of futures, options, stocks to make the profit from the difference between the selling and the buying price. It is little different from regular trading in terms of the time period within which the trading takes place. It is usually done by the same day.
With the advanced technology people have access to exchange and market data and with these data day traders make profit from small movements in high liquid stocks and indexes. Apart from that, often traders can make certain trades (the data of which are similar to everyone) at very low cost to make the profit.
Stocks for day trading have different strategies and the primary focus of the day trader is to analyze stocks in two major components: one is liquidity and the other one is volatility. If the stock is liquid, it allows investors to enter and exit the stock at good prices whereas volatility measures the expected daily price range.
The more volatile the stock is, the greater the profit or the loss the day trades faces. Once the kind of stocks investors want to invest at, the next thing is to use three tools for the assistance and guidance. Interday candlestick charts provide the primary and proper analysis of the price actions and changes. Real time news service is also wonderful mechanism for tracking down the new movements in the stocks. Level II and ECN allow users to observe the orders when they occur.
In candlestick charts, first thing investors need to focus on is the pattern and for the trend lines and triangles, technical analysis is effective. And finally the volume tells about the increases or decreases of the volume. The volume spike sows whether the prices get support from traders. Afterwards the prior support at that price (HOD or LOD) is observed and compared. Then looking at the level II situation traders know about the open orders and their sizes. The target price which is dependent upon the trading style is also found out with the mechanism tool.
Apart from these tools, scalping, which involves selling the stock instantly after it becomes profitable is a popular strategy. Then fading, which involves in shorting the stocks if they move upwards, is also a practiced strategy. Daily pivots are about making profit from the stock’s daily volatility. This is a simple technique where stocks are bought at the lower price of the day and then sold at the high price of the same day. However, since stocks for day trading involves risk and challenges, techniques and strategies must be adopted with caution.