Day trading is quickly becoming one of the most popular investment strategies in the stock market today. In fact, many pundits have claimed that the “buy and hold” strategy that so many everyday investors have relied on for so long is dead. Who can argue with them given the market activity of the last several months. Volatility has been the name of the game. There have been large swings to both the upside and the downside – a perfect scenario for traders.
While current market conditions may favor trading versus investing, there is still one major obstacle that must be overcome to achieve success. Because of the characteristics of trading (i.e. short investment time frames, more concentration of assets in smaller numbers of stock), stock selection is the single most important factor to day trading success.
What does a good day trading stock look like? Several key features to look for when searching for stocks to trade include, but are not limited to:
- High or Increasing Volume – Hi trading volume indicates interest in the stock, both positive (stock moving higher) and negative (stock moving lower). What ever way a stock moves, trading provides an opportunity for profits.
- Liquidity – You want a stock that is easy to get in to and out of. Also, liquidity usually means that the bid and ask price spread are reasonable.
- Breaking News – Earnings reports, positive or negative court rulings, and other news about a company often provides a trading opportunity.
Day trading is not easy. Be prepared to work if you want to become successful. Know going in that your first investment will be an investment of your time as you search for the best day trading stocks and overcome the key obstacle to achieving day trading success.
Source by Jeff Gilbert www.positivestocks.com