Hey guys, I used to trade futures and it is different than trading stocks. I am trying to day trade stocks now so I was wondering if any of you have some particular strategies they can name when day trading stocks. Thanks!
From what I have observed, the difference is in how you select markets to trade. Most (daytrading) futures traders pick 1-3 markets that fit their strategy and stick with them. A lot of them gravitate towards markets with high volatility and high liquidity, like Crude Oil, Nasdaq, Dax, etc. Because the implied leverage is so high, you can still possibly make a little bit of money on "dead" days. With stocks, it's a little different, because your leverage is lower (assuming you aren't at a prop firm that gives you 10/1 or 20/1). Stocks that are volatile one day will simply not go anywhere, in either direction the next. And seemingly boring stocks will be a daytrader's dream on big news. So, your first job is to develop screening techniques that identify the stocks that should have the largest intraday moves. There are a number of realtime scanners out there that help you with this, although no scanner is perfect. Also, sometimes a big event (earnings miss/beat) will be completely absorbed after hours. The stock will gap up/down, then flatline the rest of the day. It's more about finding the stocks that build up momentum early in the day, and jumping on them. That doesn't mean you cant have a stable of favorites - stocks that are generally volatile and liquid (i.e. AAPL, FB, etc), but it's hard to limit yourself to just a few.
With stocks, it's a little different, because your leverage is lower (assuming you aren't at a prop firm that gives you 10/1 or 20/1). Stocks that are volatile one day will simply not go anywhere, in either direction the next. And seemingly boring stocks will be a daytrader's dream on big news. So, your first job is to develop screening techniques that identify the stocks that should have the largest intraday moves. There are a number of realtime scanners out there that help you with this, although no scanner is perfect. Also, sometimes a big event (earnings miss/beat) will be completely absorbed after hours. The stock will gap up/down, then flatline the rest of the day. It's more about finding the stocks that build up momentum early in the day, and jumping on them. Thanks for your reply. So based on what you said, how would someone identify volatile stocks or boring stocks that move on events? Do you look at the average daily volume and stuff like that? Like right now I am trying the short squeeze technique. I noticed that as soon as I identify one, I buy it, the stock goes up a few cent then comes back down.
So, your first job is to develop screening techniques that identify the stocks that should have the largest intraday moves. There are a number of realtime scanners out there that help you with this, although no scanner is perfect. Which screening techniques do you use? I currently use finvizz
I don't think anyone will give out their EXACT screening technique, but generally it involves looking for stocks that have moved a lot on high volume, and also scanning the news during the the day.
Two popular ones that I have heard of (but not used) are Trade Ideas and Madscan. Search for these terms on here and you might find some threads that talk about them.