Just curious what people's volume requirement is for a stock to be considered adequate for daytrading? It seems to be that more and more listed stocks have just become garbage and are tough to daytrade... Thoughts? -Guru
I look for average volume > 1m over the past 5 trading days and an ATR > $0.80. I'm not exactly a scalper but I don't hold long term so I need to know I can get out if I need to without major slippage. That is all. BigMike
what is 'daytrading' to you? if it means closing positions by end of day, then you would be surprised how illiquid you can get if you mean in and out 3 or 4 times, then that's another story...
It depends on your daytrading stile . Sometimes NQ stocks over 20$ with with 100K---300K average volume are very good datrading stocks . The reason is that the spread is big (and that is sometimes good for the trader )----but the important case is such stocks tend to move very quick and very far . It is clearly better to try to win on $ + with 500 Shares of such a stock , than to try to win a couple of cents with far bigger positions with the old matured favorites which do not move enough .
You also need to watch the average intraday range (Average True Range is a close approximation). And be aware of when that changes. I talked to a guy that had traded DL in the past, then tried to trade it recently and complained that nothing happened. If he had checked the news on this stock, he would know they are being bought out for a cash price, so the stock moves less than 7 cents/day. Not a good trading stock! Cash
When I daytraded stocks I looked for an average daily range of over $1.5 and liked at least 1m a day average volume over last 60 days.
I used to think you needed vol to trade. But I have seen many traders trade stocks that are so illiquid it's scary. Try 8000/shrs a day. Do I do trade these? Hell no! But I know guys that do. The secret is jumping when the vol is there. It's all relative. Most of the stocks I track have anywhere from 150,000 avg vol on up.