One must be able to spot up and down patterns quickly in stocks they?re watching if he wants to be successful in day trading but one question still remains. ?What stocks should I be watching?? When you are able to master this one technique, then you will be a mile ahead of other day traders who are not using this technique.
For top day traders, they have what they call a ?watch list.? This watch list is the list they?re constantly watching, looking for patterns that indicate it would be a good time to buy. The majority of a successful day trader?s trades come from watching stocks on their watch list.
Do you know what the criteria for choosing a good stock for your watch list?
One important criterion is liquidity. A stock that trades at least 1.5 million shares a day is a good rule of thumb. Even if the stock matches all the other criteria, it does no good if you can?t quickly buy or sell your stock. Looking for this is not really too difficult due to the fact that most good day trading stocks trade in many millions a day. Up to 30 million in one day for the huge liquid stocks. Be sure to avoid the thinly traded stocks. As for the Market Makers, they are able to manipulate their price movement too easily.
Looking at the volatility of stocks is the next thing you would need to do. When it comes to a good stock for your watch list, make sure that it is a highly volatile stock as day trading profits are made when stock values change. Measure and compare companies you?re considering by day, week, and month.
Be sure that high dividend stocks are eliminated as well. In day trading, the more dividends a company pays, the less money they?re re-investing into the company?s growth since it is not considered as a long-term investing strategy.
Once you?ve got a list of candidates, select between five and thirty to put on your watch list. What you can do is start small in the beginning and you can work your way up to more stocks as you gain confidence and experience using your watch list.
This tip alone could earn you thousands of dollars.
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