6 Essential Elements to Pick The Best Stocks Pt.2

6 Essential Elements to Pick The Best Stocks Pt.2

Before delving into the top tips for choosing the best stocks, here’s one tip that is more important than them all: start early. Due to increased volume from hedge funds and modern technology, the market is faster than ever. Start your day well before the market opens to ensure that you have time to complete your morning research. This also gives you plenty of time to configure your monitors to reflect the best stocks that you’ll be tracking throughout the day, which will help you be the most effective day trader possible.

Six Tips for Choosing the Top Stock Picks – Read Part 1 of this article 

1)Consider Focusing on One or Two Stocks – There’s no law that says you must trade dozens of stocks per day. In fact, keeping it simple may be the way to go. Choosing and focusing on one or two stocks allows you to scan, watch and react quickly, and there are many other advantages as well. You’ll be able to identify technical indicators for your chosen securities and learn their typical patterns. By zeroing in on a few stock picks , you’ll have a lot less work to do before the market opens and after it closes. Most enticingly of all, focusing on a few stocks tends to be a lot less stressful.

So, how do you choose just one or two stocks? Either choose your stock picks based on popularity or research trading patterns of a few different stocks to find ones that look promising. It may be hit or miss at first, but you should be able to select one or two that consistently deliver for you.

2)Keep an Eye on the Earnings Calendar – Earnings reports can have a major impact on the market, and they often increase its volatility. It’s crucial to stay one step ahead of the game by being aware of which earnings announcements are on tap for the upcoming week. You can then monitor the situation leading up to the announcement and strategically place your trade before it’s actually made. This is also a great way to identify stocks for your watch list, and it has the added bonus of reducing the amount of research you must do before the market opens for the day. You can find earnings calendars via Morningstar, Yahoo Finance, Earnings Whisper and various other resources.

3)Create Your Own Watch List – Sure, it’s fast and easy to use published watch lists to inform your day trading activities. However, it’s far better to create a watch list of your own. If you’re unsure about how to create one for yourself, start by focusing on specific sectors. Popular examples include retail, Internet, banking, precious metals and pharmaceuticals. Once you’ve selected a few sectors, watch the stocks and how they move in each. This is basically the “watch and learn” approach, and it takes time, dedication and patience. However, the hard and somewhat boring work is sure to pay off when you have your very own watch list with stocks that are perfect for day trading.

The Bottom Line

Now that you have some great tips for choosing the best stocks to day trade and best stocks , put them to use! Some may appeal more to you than others, but try them all anyway. After all, you never know which strategies will work the best for you and for your particular style of trading. Another thing to keep in mind is that you can’t work through all of this in a single day. Arriving at the best day trading strategy and stocks takes time, so be patient. You’ll know you’ve succeeded when your scan consistently results in trades that produce reliable earnings on a daily basis.

Read 6 Essential Elements to Pick The Best Stocks Pt.1

Photo by: Alberto Carrasco Casado 

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