There isn't a perfect day trading stock, as trading styles vary by trader. That said, most day traders prefer tight spreads and lots of volume. A lot of price movement is also something many day traders seek; it is easier to jump in and out for a profit in a stock that is moving a lot, compared to one that isn't.
- Ideal stocks for day trading include those with high volume and tight trading spreads.
- Lots of price movement and liquidity are trademarks for day trading stocks.
- A good day trading stock can typically be traded for several months or more before conditions change, however.
The following stock combines liquidity with excellent intraday price movement, making them ideal for most day traders. Conditions do change though, so while these stocks currently offer what day traders are looking for, weeks or months from now they may not.
Example of Day Trading Stock
Stocks with high trading volume is the first thing to look for. ZIOPHARM Oncology, Inc. (ZIOP) has a 100-day average volume of 2.4 million shares per day. The stock has a high average day range (from high to low).
Look for stocks that are shortable, but note that a high short interest can make the stock hard to borrow some days. The below ZIOPHARM chart shows the 6-month daily price history, daily volume, and the performance of the stock (percentage) over the 6-month period.
Many ideal day trading stocks are priced below $20. A lower share price allows day traders to trade stocks with volatility and volume at an affordable price for smaller trading accounts.
For those seeking greater volume, the SPDR S&P 500 (SPY) is popular among traders of all types. For those seeking significant volume and volatility, the iPath S&P 500 VIX ST Futures ETN (VXX) or VelocityShares 2x VIX ST ETN (TVIX) are currently offering both in abundance.
As well, other ETFs worth considering include Financial Select Sector SPDR (XLF) and Invesco QQQ (QQQ). Specific industry ETFs that are ideal for day traders include the VanEck Vectors Gold Miners ETF (GDX) and iPath S&P 500 VIX Short-Term Futures ETN (VXX).
In the simplest form, look for high volume stocks with a high beta, such as Advanced Micro Devices (AMD). Other stocks meeting that criteria include Twilio (TWLO) and Tesla (TSLA).
The Bottom Line
These types of stocks are of potential interest to day traders because they provide liquidity and significant daily percentage price movements each day (usually). No specific direction or trade is recommended. Anyone who day trades should have a sound strategy they trade and be prepared for the volatility these stocks offer.
Conditions do change though. A stock with high volume currently could see it reduced (or increased) in the weeks ahead. volatility could also increase or decrease. A good day trading stock can typically be traded for several months or more before conditions change enough to consider trading something else. Some day traders trade the exact same stock, ETF, or several stocks and ETFs for their entire career.