When putting together an investment portfolio, you can use a few different trading strategies.
You can buy and hold for the long term or opt for a short-term strategy to make money quickly.
There are two different ways to approach day trading: volume and volatility.
With a volume strategy, you’ll look for stocks with a very high number of trades daily, which moves the price consistently.
Volatile stocks move relatively large amounts in a very short period of time so that they can generate significant returns very quickly.
Both strategies can be pretty lucrative if you time your purchases right.
You’ll need to screen for high-volume stocks that trade over 1 million daily shares.
You’ll also need to look for a stock’s beta number, which indicates if a stock is more or less volatile than the broader market.
If you find a stock with a beta that’s more than 1 or less than -1, that means it’s more volatile than the S&P500.
These stocks can be excellent options for day traders.
We’ve rounded up some of the best stocks for day trading for investors looking for quick returns.
Best Stocks For Day Trading
Advanced Micro Devices Inc. (NASDAQ: AMD)
Advanced Micro Devices makes computer processors and other electronic parts.
Over the past several years, demand for computers, smartphones, and other electronics has been increasing.
The COVID-19 pandemic exacerbated that demand, as people needed their computers for work, socialization, and entertainment.
AMD stock has the two key hallmarks of a good day trading stock.
First, they are consistently volatile, with an average monthly beta of 1.65 over the last five years.
They also have a massive average volume of approximately 58 million.
This stock has been performing well all year and is enjoying a steady climb through 2021 thus far.
This means right now could be a good time for day traders to ride the growth.
Day traders interested in this stock will want to keep an eye on new electronics releases.
For instance, AMD’s chips are used in highly desirable newer products like the PlayStation 5 and top-of-the-line computers.
Etsy Inc. (NASDAQ: ETSY)
Etsy is an incredibly fast-growing online business that deals primarily in handmade designs.
Founded in 2005, the company has over 60 million products currently listed on their site.
This unique niche makes Etsy stand out among other online retailers.
The push toward online shopping during the 2020 pandemic gave the company a boost in share price and trade volume.
This momentum continues into 2022, with the company earning $2.57 billion in revenue, growing at 10.18%.
The latest quarterly figures show similar growth with $628.9 million at 8% growth.
Nearly 3.44 million shares of Etsy stock are traded each day, though its stock price has fallen significantly this year.
Their average monthly beta sits at 2.02, catching the gaze of day traders.
Disney (NYSE: DIS)
Disney is another excellent stock for day trading.
It has an average volume of well over 13 million and a beta of 1.31, which indicates above-average volatility.
While many companies struggled during the COVID-19 pandemic, Disney did very well.
Although they had to close their theme parks, they were able to make up the financial losses with the success of their streaming service, Disney+.
Disney+ launched in November 2019, and they already have over 100 million subscribers.
Disney also owns Hulu and ESPN’s streaming services, so they benefited greatly from the popularity of at-home entertainment.
Even now, these streaming services are more popular than ever.
Disney stock has leveled off some this year but still sees a lot of day-to-day volatility.
Twilio (NYSE: TWLO)
Twilio is a technology company founded in 2008 and based in the San Francisco area.
They specialize in enterprise-level cloud services, allowing phone and text communication through the web.
As this technology becomes more and more prevalent, Twilio will continue to gain interest from investors.
They are seeing all-time high earnings. Their last quarter saw $1.04 billion in revenues (10% growth). They are looking to continue this forward momentum.
Their average trading volume sits at 2.01 million shares per day and is only expected to grow.
Their monthly beta score of 1.36 shows good volatility for day trading.
Emerging tech such as Twilio’s communication services should always be on a day trader’s radar.
Best Stocks To Day Trade
Tesla (NYSE: TSLA)
Tesla is an electric vehicle stock that has become very popular for day trading.
It has an average monthly beta of 2.25 and a substantial average volume of over 116.51million shares per day.
This stock is particularly popular among traders who use the volume strategy, although it is relatively volatile as well.
Tesla founder and CEO Elon Musk is in the news frequently for his controversial Tweets, which have contributed to the volatility of this stock over the past few years.
It’s not just Musk’s behavior driving this growth – it’s also Tesla’s electric cars, which are some of the most popular on the market.
Despite the controversial acquisition of X (formerly Twitter) this year by Elon, Tesla shares continue to rise, seeing 9.30% growth over the last year.
Day traders have the potential to follow those gains.
Investors who want to day trade Tesla should keep a close eye on its price movements, as well as any news from the company and Musk himself.
This stock is hugely popular among retail investors and often moves based on the general sentiment of the market.
Roku (NASDAQ: ROKU)
Roku provides digital streaming devices and hardware for TVs.
With Roku, viewers can access streaming platforms like Netflix, Disney+, Hulu, Amazon Prime, HBO Max, and much more.
It’s clear that streaming isn’t going away anytime soon.
Roku’s volatility and volume have both gone up this year, catching the attention of day traders.
The stock currently has an average beta of 1.72 and an average daily volume of 6.31 million shares per day.
Roku’s stock has increased by over 21% this year
This increase, along with volatility, makes it especially appealing to day traders.
Best Stocks For Day Trading Under $5
Aegon N.V. ADR (NYSE: AEG)
Aegon N.V. ADR is a life insurance and asset management company headquartered in the Netherlands.
The company has been around since 1983, with nearly 40 years of experience.
Their primary focus is to provide U.S. investors with an easy way to access foreign companies for trading.
Aegon N.V. ADR is working hard to reduce costs by selling off some of its non-core businesses.
Moves like this attract the attention of investors who are looking for companies moving in the right direction.
As a result, the company has seen an 15.5% share price increase in the last year alone.
Their beta score sits at a volatile 1.28, and they see 1.14 million shares traded per day.
At less than $5 per share, Aegon N.V. ADR deserves the look of any day trader.
Best Penny Stocks For Day Trading
Faraday Future Intelligent Electric Inc (NASDAQ: FFIE)
FFIE is a mobility ecosystem company. It creates intelligent, connected, electric vehicles. The company was founded in 2014 with the goal of disrupting the automotive industry.
The company operates across multiple cutting edge industries including AI, clean energy, IoT, and usership models.
Its headquarters are in Los Angeles, California. FFIE’s largest shareholders include: Vanguard Group Inc, BlackRock Inc., Geode Capital Management, LLC, Charles Schwab Investment Management Inc and State Street Corp.
The firm has announced a masterplan for profitability very recently, which has seen its shares trade positively in the last 3 days.
Overall the stock trades with a Beta of 2.68 and its average volume is 7.16 millions shares per day, which makes it a very attractive option for day trading.
Should You Day Trade Stocks?
If you’ve already mastered the basics of investing, day trading can be an excellent way to make money quickly.
Day trading is something that anyone can learn how to do with practice and research.
Before you start day trading, it’s imperative to make sure you have a good understanding of how the stock market works.
Any day trading strategy comes with inherent risk, so it’s not the best tactic for beginners.
To day trade successfully, you’ll need to have time to watch the markets throughout the day.
One of the best ways to find new day trading stocks is through a stock screener.
This tool allows you to search for stocks by volume, volatility, current price, and more.
Since the market changes so much each day, screeners effectively find newly volatile stocks or those with a meaningful increase in volume.
Day traders should also keep an eye on the news every day, as earnings reports and other announcements can move shares very quickly.
Staying ahead of the curve on the news can help you find trading opportunities quickly while they’re still at a relatively low price.
Finally, day traders need to be aware of the additional costs that come with this trading strategy.
Capital gains are taxed more heavily on stocks that you’ve held for a year or less, as opposed to stocks that you hold for the long term.
Day trading can also come with high commission fees on some platforms.
Best Stocks for Day Trading: Factors to Consider
Keep these tips in mind any time you do day trading:
Volume
Volume is perhaps the most important factor when flipping stocks and plays a huge role in a trader’s success.
Securities with lower volume don’t typically have the swings needed to win big from buying and selling. Since they don’t trade much, you may also get stuck holding onto shares even when you want to sell.
Higher trading volume can also indicate a company’s building toward something big.
Low Floats
The one big exception to my comments above are low floats. Stocks with low floats have minimal shares available, keeping liquidity low.
For day traders, this can work in your advantage. Low floats are more prone to the kind of big swings we love to see, simply because it takes fewer traders to stir up the pot.
Beta Value
Where would we be without volatility? A beta value represents how much a stock moves when compared to the overall market.
The S&P 500 holds a beta value of 1, with everything else floating around it. Any stock with a value higher than 1.0 is more volatile.
High beta values obviously mean tons of volatility, but being too aggressive could expose you to extra risk you don’t want to deal with.
News
Breaking news about a company can churn up volatility faster than you can say scandal. Anything from an executive stepping down to the announcement of a new product release can cause share spikes.
Staying abreast of the latest news will help you gauge which stocks will move to heights or lows you can capitalize on.
Social Media
Similarly, social media platforms can prove just as effective in causing changes in share price. Gossip about a company’s new shoe or negative sentiment about a sprinkler system can push share prices up or down.
It may not be as easy to capture what customers are saying on your own, but certain platforms do the work for you.
Growing Trends
I’ve been caught up in the artificial intelligence buzz of late, and rightly so. The trend has been on the up and up for a year now, and many companies are scrambling to get on board.
Following these trends and the organizations that embrace them can lead to pockets of volatility and excellent opportunities to trade.
Benefits of Day Trading
There are several incredible benefits to day trading. Let’s study them now:
Quick Profit Potential
With a little luck, you can turn some profit on any trade you make in a very short period of time. The money you make can be quite considerable for the amount of time you put into it.
If your trades work out, you can build quite a lot of wealth faster than other investment strategies.
Easy to Start
You don’t need much more than a brokerage account, a computer, and internet access to begin day trading. There’s no formal certification or training required to buy and sell stocks on the market so long as you have a basic understand of stocks and how they work.
This makes day trading an avenue for almost anyone to explore.
Success in any Market
Bull markets and bear markets don’t phase an active trader. In either case, it’s only stock volatility that matters. Even bad markets can lead to stock movements, and there are always short-selling strategies to lean on.
Being able to work in any market condition is a huge contrast to long-term investors banking on gradual share price increases over time.
No Overnight Risk
Most day traders close out all their positions before the market closes for the day. When you clock out, you’re aware of exactly how much you’ve earned without having to worry about any overnight price fluctuations that could sink a seemingly good investment.
A Thrilling Ride
Day trading is rarely a boring venture. If you’re built for the adrenaline of throwing stocks around, it’s likely the path for you.
It requires a constant focus on share price changes and lightning-fast reflexes to buy and sell and the most opportune times.
Risks of Day Trading
It goes without saying that day trading also has its share of risks:
High Probability of Loss
I won’t sugar coat it, the majority of people trying out day trading don’t actually turn a profit. Being high risk and high reward, it’s quite easy to lose money way faster than a long-term investor ever would.
Success in day trading does take a large amount of skill along with diligence and as much luck as you can muster.
Stressful
The market can shift at a moment’s notice, and almost always without warning. Watching your balance jump and dip can put an emotional toll on anyone.
It’s effectively a form of gambling that can become quite addictive. You’re also having to compete with others who may have more experience than you.
Can Require Lots of Cash
You have to spend money to make money, and that’s clearly the case in day trading. The more money you invest in a stock, the more profits you can walk away with if it moves the way you anticipate.
Since you’re potentially owning multiple stocks at once, you may need several thousand dollars to have viable trade opportunities.
Time Consuming
Day trading is a very active profession. You need to be in front of the computer the entire time you hold stocks to gauge the right time to sell. There’s also the matter of tracking your trades so you don’t miss opportunities.
Even before the market opens, day trading requires copious amounts of research and planning to prepare for the day.
Volatility
Volatility is great for day trading, but it can also be a curse. Stocks not moving as intended can wreak havoc on your investments, and the amount of information required to anticipate volatility before it happens can be daunting.
Best Stocks to Day Trade: Final Thoughts
Day trading isn’t for everyone, but it can be an effective way to generate strong returns for investors who are willing to take a risk.
The best day trading stocks are ones that see significant price movements as the day goes on.
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