Day Trading Stock Picks, 4 basic tips to start in 2022

What are Stock Picks and how to start day trading them

Day trading is a type of investment strategy. When a financial expert practices day trading, he or she is buying or selling a financial instrument several times in one day (this is why someone call it as Intraday Trading).

Traders use the technique to take advantage of the stock pricing changes that occur during the day. With today’s modern technology, you can day trade from any location.

Keep in mind that the financial strategy is one of the riskier ones. Therefore, be sure to research your stock options before attempting the day trading method.

Liquid and Volatile Stocks

Once you begin reviewing the best stocks to buy, assess the benefits of liquid and volatile stocks. In the financial community, liquid stocks are investments that are easy to buy. The term also refers to the frequent price changes of a particular stock.

When you purchase liquid stocks, the cost is generally cheaper than other stocks. Furthermore, a liquid stock may be easier to sell.

Experienced day traders tend to favor volatile stocks. A stock becomes volatile when the distributing company’s available cash is inconsistent.

As a day trader, you can take advantage of the cash discrepancy and earn a profit. In fact, when the market is uncertain, it could turn into a good day of trading for you.

Use the Trade Volume Index

When the financial community refers to a stock’s volume, it is measuring the number of times that the financial instrument has been bought and sold over a certain timeframe.

If the stock has a large volume, then more traders have been interested in it. In addition, a volume increase usually means that the stock price is about to change.

You can use the Trade Volume Index to decide whether you should purchase a stock.

How you can Day Trading Small Cap Stocks

Financial Services and Social Media Stocks

According to expert day traders, financial services corporations have some of the best stocks to buy. Companies like Bank of America and Chase offer ideal stocks for day traders.

Also, stocks issued by financial institutions are frequently liquid, which also makes them popular.

Stocks offered by social media companies are also a good option for day traders. Social media companies include Facebook, Twitter and LinkedIn.

Financial experts are unsure of the ability of social media companies to adapt their high number of users into a constant source of revenue, but traders continue to buy and sell social media stock, so consider investing in them.

The Importance of Research

By completing thorough research on the stocks that you intend to buy, you can avoid costly mistakes. Be sure to assess the different index options that are available such as the NSE Nifty and the BSE Sensex.

Each day, evaluate your chosen stocks to determine whether they will experience an up or down shift. Also, analyze each stock’s support and resistance levels to establish over or under buying of the stock.

Consider investigating basic details about a company when you decide to buy its stock.

How to identify stock picks of the day

So, as a trader, how do you identify top stock picks to trade in a certain day? There are several approaches to handle this.

Identify the most active stocks

First, you can use several tools to identify the most active stocks in premarket trading. Ideally, this will help you narrow down the stocks that are set to have significant volatility during the day.

Some brokers provide this information. If yours does not, you should use a tool provided by, as shown below.

premarket in investing


Second, as you start your trading day, you can check out the companies that are making headlines. In most trading days, there will be such companies.

For example, there are firms that have announced a merger deal. There are others that have announced management changes or restructuring opportunities. Also, there are those firms that have just announced or are about to release their earnings.

These are some of the stocks that you should focus on in a given day.

Set up your Watchlist

Third, you can also use a watchlist to identify such trading opportunities. While you can create a watchlist by yourself, you can use watchlists that are provided by other companies.

At DTTW, we provide a daily watchlist that you can use in your trading journey.

Level 2 and Time & Sale

Fourth, you can identify stock picks based on the level 2 and time and sale tools that are provided by most brokers. Ideally, level 2 is an order book that lists how orders are being placed in the stock market.

Time and sales, on the other hand, displays the volume of such orders. You can use this information to find trading opportunities.

Analysts's picks

Another important approach of identifying stock picks is to focus on analysts’ picks. In most days, many analysts from banks like Morgan Stanley, JP Morgan, and Goldman Sachs. These picks tend to have significant market action during the trading day.

How to Day Trade Stock Picks

There are several strategies you can use to trade these stock picks.

Be a Scalper

First, you can decide to be a scalper, where you buy or short and then exit within a short period at a profit. This is what many day traders do especially now that most brokers are offering trades at no commissions.

Identify Market Opportunities

Second, you can use both the level 2 and time and sales to identify market opportunities. In most cases, buy signals emerge when more people are buying a stock. Sell signals emerge when there is strong volume in the downside.

Normal Trading

Third, you can use your normal trading strategies, including algorithmic, to initiate and close trades.

Top Mistakes You Should Avoid as a Trader

Final Considerations

The pros and cons of day trading include its potential for risk and opportunity to make a profit. You should prepare yourself for losses. Furthermore, the investment technique can be stressful due to its changeable elements.

External useful resources for Day Trading Stock Picks

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