In order to find the best stocks to trade each day, you should do a pre-market scan. You’re basically going to do a simple scan and then you’re going to run that each morning. Before the market opens, ideally, you’ll come up with a list of five potential stocks to trade every single day. The idea is to find exactly where all the traders are, where all the volume is, and what’s probably going to be the best stock to trade that day.
You’ll want to focus on the pre-market action and scan for stocks that are gapping up. Basically, this means that these stocks are shooting upwards pre-market. You then find out why they’re shooting up. You’re scanning for the stocks that are trading on very high volume and are gapping up.
By doing so, you’re finding where all the traders are. You want to know which stock is most likely going to be the best stock because it has the highest probability of making big moves to either the upside or the downside.
You can use scanners or a top gainers list to identify all the top percent gainers each day in the market. You’re looking for the stocks that are up the most percent, or down if you’re doing down gappers. Once you’ve found a few stocks, you check the news to figure out why those stocks are moving.
You’re going to want to trade the stocks with the highest volume and the best news. You might find that there are a few press releases that morning on the stock scene. If a stock is gapping up, but it doesn’t have any news to justify its action of moving up, it’s probably not going to be your strongest candidate, but this could make it a good stock too short.
Many great traders like to become part of day trading chat rooms in order to chat with others in the community and gauge the market based on the community.
If stocks are moving up very viciously in the pre-market hours, but they don’t have any news to justify any of those moves to the upside direction, chances are that they won’t hold up and you should open a short position, which is betting the stock will go down. This is because if a stock is up 100% but doesn’t have any news to justify any of the upward movement, the market tends to correct itself in a proper manner.
That means if the stock is up 100% and there’s no news, no earnings, or anything to justify that 100% move, it’s probably a good idea to open a short position when the market opens on that stock.
When we come in pre-market, we want to find stocks where there’s a lot of volumes. We don’t want to be trading stocks with no volume. If the news is good and the stock is going up, there is a high probability it will continue running, so it might be a good idea to take a long position.
If you come in and you find the stocks gapping up and pushing really high pre-market, but you find there’s no news, chances are that when the market opens, they will dump out and crash because they’re not meant to be that high.
There are many different considerations when day trading and financial education are crucial for a successful future. The best way to do this is by taking good day trading courses. This is by far the best option when starting in the market.
One option worth looking into TheDayTraderChatRoom.com is a great site that can help with stock market education.