Short-term traders seek volatility because a volatile price environment provides bigger moves and more profit potential. The moves also typically happen quickly, which means quicker trades. One way to find volatile stocks is to do nightly research and see which stocks had big movement recently that may continue, or may breakout and become volatile. A simpler way to find the most volatile stocks is to focus on stocks that are consistently volatile. The following four NYSE and Nasdaq stocks have average intra-day movement of more than 6% per day over the last 100 days. By looking at a longer average, such as 100 days, it is likely the price will continue to be volatile for days and weeks to come. All the stocks also have daily average volume greater than 4M shares.
FireEye (Nasdaq:FEYE) is one of the most volatile stocks for day and swing traders. Over the last 30 days its intra-day movement is 8.71% and trades more than 5.5M shares. Since the stock topped at $97.35 on march 5, the trend has been strongly down. Those seeking volatility are predominantly focused on short positions. Very high volume between on May 7 and 8 may indicates a selling climax and a bottom is near, yet betting on that with this major decline underway is very risky. The dominant short-term play remains to get short at intra-day resistance levels, or short on breaks to new lows (as long as strong downward momentum continues on the daily chart), and participate in the daily percentage swings.
SolarCity (Nasdaq:SCTY) has average intra-day movement of 6.94% over the last 30 days, and average daily volume exceeding 5M shares. The long-term trend is up, but a decline starting in March has pushed the price down into support for that uptrend between $45 and $50. Therefore the stock is at an inflection point, which could create an even more volatile environment as the price whipsaws back and forth. A drop below $45 indicates the longer-term uptrend is likely over, while a move back above $62 signals another up wave is underway.
SouFun Holdings (NYSE:SFUN) has average intra-day movement of 6.41% over the last 30 days, and average daily volume exceeding 5M shares. The trend is currently down across long and short-term timeframes. Therefore, opportunities currently lie on the short side. While intra-day opportunities will vary, from a swing trading perspective moves back toward prior resistance present short-trade opportunities. Resistance areas include $12 to $12.50 and $14. Stops are placed $0.75 above these areas, with targets below the recent lows. A rise above $14.75 indicate a short-term bottom is likely in place.
GT Advanced Technologies Inc. (Nasdaq:GTAT) has average intra-day movement of 6.09% over the last 30 days, and average daily volume exceeding 8M shares. Strong selling in May has pushed the price below support at $15, and could continue to fall into the $10 region. Short-term opportunities lie with the downtrend, as rallies currently present opportunities to get short for swing traders. Rallies into $16.50 to $17 are likely to be met with selling pressures; stops are placed above $18. Day traders can look for breaks to new lows each day as long as the strong downward pressure continues on the daily chart.
The Bottom Line
The most volatile stocks intra-day present opportunities for day and swing traders looking for trades with the potential for big profits in a short amount of time. Volatility is a double edged sword though. Losses also mount quickly in these stocks when caught on the wrong side. With more than 6% movement each day, position size should be strictly managed and each trade should account for only a small portion of available trading capital. Use stops, but in a volatile environment even a stop loss order may not execute at the expected price (slippage), resulting in a bigger loss than anticipated. These stocks present great opportunity, but are only for those traders willing to also take on potentially large risk.