How to Find Stocks to Day Trade: 8 Top Tips

The trading questions I get the most have to do with how to find stocks to day trade. So today, I’ll give all of you a rundown on my daily trading routine.

If you sit in on my live premarket sessions on Instagram, you can benefit from the searches I do every day. I share which stocks I think have potential for trades and much more. All are welcome, and it’s absolutely no cost for you to join.

But if you want to actually become a successful trader, you need to understand the market on your own. This means learning how to find your own ideas on stocks to day trade. You’ll have to wake up before the market opens and screen for stocks.

If you want to find the best stocks to day trade, you’ll need to know more than their ticker symbols. You need to know what their trading volume tells you about their potential to break out. And you need to understand their volatility … and the risk of trading stocks with high upside.

This article is a primer on these concepts. I hope it opens the door for more studying. Heck, I hope you can teach me things someday! Join us with the SteadyTrade Team, and you’ll get access to so many webinars on these concepts.

If you want to learn how to day trade, you need to appreciate what makes stocks move. It’s not as simple as picking the right stock. But it starts with that. 

How to Find Stocks to Day Trade: What Is Day Trading?

Day trading is like that old board game Othello. It takes a minute to learn but a lifetime to master. Or at least a few years of studying and screen time!

Basically, it’s just trading a stock within one trading session. If you buy a stock and sell it that same day, you’ve just day traded.

But if you wanna get good at it, you’ll need to develop a strategy and stick to it. This is the hard part. Relying on emotions like fear and greed instead of preparation is a big reason most day traders fail.

What Is Considered a Day Trade?

Let’s say you joined me in my premarket session on December 3. That’s when I discussed Ever-Glory International Group Inc. (NASDAQ: EVK).

This stock was running on no news in premarket. The shorts were piling up, and it was set for a big pullback after trading began.

I told anyone watching to wait till at least 9:45 a.m. Eastern for that pullback. And then, assuming it still had volume and float rotation, to look for it to regain that premarket high.

Well, it smashed the previous high of day and climbed all the way up to $8.30 by 11:30 a.m. If you got in at its lowest point at 10:15 a.m., you could have bought it at $4.75 a share.

This is a good example of the kind of action I like to catch. It’s a day trading setup that I call the dip and rip. This is one of the most reliable setups I’ve seen in recent trading.

How to Find Stocks to Day Trade: 8 Big Criteria

OK, you know you can join me premarket and get the lowdown on what’s happening in the market. If you’re still here, I’m guessing you want to learn how to find those opportunities for yourself. That’s awesome.

If you watched my video on EVK, you saw me counting the signs of a breakout on my fingers. You can screen for these signs with a quality trading platform like StocksToTrade. Take a look — a 14-day trial is just $7. Or get it with the Breaking News Chat add-on for $17.

Screening is the best way to shake out trades from 16,000 actively traded stocks. But first, you’ve gotta understand why these criteria are important.

Volume

High trading volume is the first sign of a good potential trade.

Volume represents the number of buyers for a stock. At the end of the day, trading is a supply-and-demand type of situation. If everyone wants a stock, the price will go up.

Volatility

Volatility is the other prime ingredient of a good day trading stock. I’d go so far as to say that volatility is the secret sauce of the day trade game.

The TV talking heads hate volatility. That’s one of the reasons they tell anyone who will listen to stay away from the sketchy penny stock sector.

Heck, I agree with them! A lot of these stocks are sketchy. Like anything in trading, never risk what you can’t afford to lose.

But if you want to grow a small account fast, volatile stocks can be a good way to go — as long as you understand the rules, risks, and strategies.

To get deeper into volatility, check out the “Volatility Survival Guide.” This is a day trade-centric course available for no cost. My buddy Tim Sykes put it together and asked for my input. Consider this your ticket to understanding the current market volatility and volatile markets to come.

Liquidity

To ward off volatility’s dark side, your stock needs good liquidity. That means you can exit a trade when you want to and take profits according to your trading plan.

You want to look for stocks that are projected to move at least a million shares a day. I know it sounds like a really high number, but that’s the minimum you need to make sure that you’re not locked into a trade.

You can set your screener to pick up stocks trading at least 50,000 shares in premarket. If they continue to build momentum, they could make for a solid trade down the line.

Price

This one won’t make or break a trade. But it’s massively important to you, the trader.

How big is your account? What kind of plays are you looking for? What’s your risk tolerance?

These are all important questions to ask when you’re screening for stocks. A lot of people don’t want the risk that can come with a true penny stock. Maybe they’ll screen for stocks valued between $5 and $10. They’re forgoing the opportunity for massive gains for a bit more certainty.

Low Float

Another thing I look for is a low float stock.

Float refers to the number of shares that are publicly available and actively traded. This is the supply side of the equation.

We usually call a stock with less than 10 million float a low float stock. When there’s a lot of volume coming into a stock, this limited supply will force the price to go up. And that’s what you want as a day trader.

Higher float stocks can move too, but they need much more volume. Stocks like Apple (NASDAQ: APPL) probably won’t ever make the huge percentage gains that low float stocks can.

Percent Change

All these ingredients should add up to a big percent gain for the stock you’re looking to trade. A stock that’s up big in premarket can potentially give you a wave to ride.

But the wave can surge up …  then slam down just as you’re dreaming of your new, cherry-red motorcycle. You can’t fall in love with the numbers. But they are a good sign of future movement you could trade if the setup is right and fits your strategy.

Catalysts

A lot of the time, you’re looking for a reason that the stock you’re targeting is moving. Otherwise, your trades will be more of a crapshoot.

You can trade a stock like EVK, but you better not hold it overnight. In less than 24 hours, that stock went up nearly 300% …  and now it’s almost down to its pre-spike lows.

There was no real reason for it to go up. And when the spike ended, traders who didn’t take their profits were left holding the bag.

On the other hand, stocks can run for days on quality news catalysts. These can be earnings announcements, press releases, or news that affects a whole sector. A catalyst can lead to several green days in a row.

Of course, you want to catch the news early. If you wait too long, a big piece of news will already be priced into the stock’s value. If that happens, you might land on the wrong side of that classic piece of market advice — buy the rumor, sell the news.

StocksToTrade has an awesome add-on designed for exactly this. 

The Breaking News Chat is nothing like other chat rooms. You won’t get peer-pressured into plays that don’t fit your trading plan. You’ll just get Grade A, curated news catalysts from two highly seasoned market pros. Try it along with the StocksToTrade platform — a 14-day trial of both is just $17.

No one can guarantee that even the best news is gonna move a stock. That kind of thinking is for amateurs. But quality news is one big checkmark on the list of what makes a good trade.

Hot Sector

News can also cause a whole sector to move. Or sometimes a hot sector is just something that people are paying attention to.

Tesla’s (NASDAQ: TSLA) scorching hot 2020 led to sympathy plays throughout the electric vehicle sector. Ballot referendums on pot legalization caused stocks in that sector to run for a week.

The pandemic has been the source of A TON of heat, from pharma to the entire at-home sector. When news of a vaccine hit? The whole stock market went on a run.

How Do I Choose a Day Trading Platform?

When you day trade, you’re trying to take advantage of small price swings over the course of the day. A lot of the time, you’re trading sketchy stocks without real value. Other times, you’re taking advantage of a run-up in an established stock.

Every time, you’re trading on the market’s psychology. If you’ve been trading longer than a minute, you know that this excitement usually doesn’t last.

You want to get in and get out quick. This makes timing super important. And the tools of the trading platform you’re using can make the difference.

The best day trading platform for me is definitely StocksToTrade. It’s designed by active traders to provide all of the advantages lacking in other platforms. Check it out with a 14-day trial for just $7. Or add the Breaking News Chat and get both for just $17.

StocksToTrade gives you access to day trading musts like Level 2 quotes. This lets you see the supply and demand behind price movement.

There’s also a ton of other features that will help you be a more versatile day trader:

• Precise charting abilities clearly show how a stock matches your preferred setup.
•  A robust news scanner lets you know the news and rumors moving the market.
• Built-in stock screeners help you hunt for the best stocks for your trading plan.
•  Integration with a ton of brokers makes it effectively a worldwide trading platform. Want to day trade U.S. stocks from Canada? No problem!

All this figures into the next step: How you’ll actually find stocks to day trade.

How Do You Know Which Stocks to Day Trade?

So I just threw a bunch of things out there at you. But I know what you’re asking. Tim, how do I find the right stocks to day trade out of the 100 that kinda look good?

You know that badass StocksToTrade screener I just mentioned? Yeah, it’s that easy. Plug and play, baby!

This is how it works. Here’s an example of criteria you might set:

•  Price between $1 and $10. This is penny stock land. It’s also the best place to focus on if you’re building a small account.
•  Percent change of at least 10%. If you’re under pattern day trader (PDT) rules, your trades are limited. So I want you to only focus on the best movers. Maybe even dial this up to 20%.
• Volume of at least one million on the day or close to that mark. You want a stock that’s liquid. This means that there’s demand that will keep driving the price up. It also means that you can more likely get out when you want to.

How to Start Day Trading

You’ve got your stock screener all set up, and it’s showing some stocks on the move. Awesome! But don’t start pushing all your chips to the middle yet.

You’ll want to build a watchlist. Your watchlist should contain stocks that have the potential for trades down the road. From there you can monitor their progress. Keep checking their charts against your preferred setups.

At the beginning, everything can look like a good trade. But I want you to hold off until you find that perfect setup for you.

Think of yourself like a sniper. If it’s a cloudy day, maybe you watch for your opportunity without pulling the trigger. When you’re under PDT, you only have three intraday trades you can make on margin per week. Save those bullets.

Frequently Asked Questions on How to Find Stocks to Day Trade

How Many Stock Trades Can I Make Per Day?

If you’re under PDT, you have only three trades you can make on margin per week. This limit doesn’t apply to overnight trades or to cash accounts. There’s also the totally legal ‘trick’ of opening multiple accounts. But if you go over the limit, your account will eventually be restricted.

How Do You Screen Stocks for Day Trading?

Get the right software and then really drill down on what fits your trading plan.

Can I Day Trade with $1,000?

You can even day trade with less than that. Just understand your risk. Always limit your losses and protect your account.

Why Do Most Day Traders Fail?

When you’re learning how to start trading, the biggest danger comes from a lack of discipline. Make a trading plan and stick to it. Your losses will be acceptable if you design for their possibility.

Can You Day Trade Without $25K?

You can’t get too hung up on the size of your account. The most important thing in early days is to hone your setups and your trading plans. Keep immaculate records of your trades. If you do these things and stick to it, success should come in time.

Can I Make $100 a Day Through Day Trading?

The potential is there, but trading is not easy. Don’t get hung up on what you could make and never assume that you can consistently make a certain amount of money every day. The market can shift fast. Always know the risks and be prepared for anything. 

Conclusion — Get on Your Way to Finding Stocks to Day Trade

Hopefully this article helped break down how day traders find the right stocks to trade for their strategy.

Just keep in mind that this isn’t some magic formula or even the biggest part of day trading. Stocks go up and down every day. And every year, traders start with high hopes and flame right out.

The biggest part of learning how to trade is the trading part. And you’ll only get there by studying and putting in the hours.

A supportive community can help. We built the SteadyTrade Team to support traders in working through all the challenges that can come with learning to navigate the markets. We get together at least twice a day to hash things out. We share how we found the stocks we’ll day trade and much more. Join us today!

Whatever you can commit to, just make sure that you COMMIT. It’s a big and scary word, but on the other side of it is the life you’re imagining.

How did this help you on your quest in finding stocks to trade? Let me know in the comments!