:max_bytes(150000):strip_icc()/most-popular-stocks-and-etfs-for-day-trading-1031371_FINAL-48091a4408564ad585a5e7aa58cea129.png "The Best Day Trading Stocks (1)")
The best day trading stocks are ones that provide opportunities in price movementsand have ample volume so you can get in and out of those opportunities quickly. These two factors are known as volatility and volume. Following how much volatility and volume there are helps you pick the best day trading stocks or funds for your trading style and personality. Just remember: Day trading may not be for every investor, so make sure you're prepared.
Key Takeaways
- There are a lot of stocks and funds available for investors to day trade.
- Some day traders like to regularly screen or search for new day trading stock opportunities, while others like to trade the same one all the time, such as the SPDR S&P 500 (SPY).
- Knowing which stock or ETF to trade is only part of the puzzle, though—you still need to know how to day trade those stocks.
- Day trading is not for every investor, so make sure you're prepared.
Volume and Volatility When Day Trading
Some day traders like lots of volume without much volatility. The price of a stock or fund could move 1 cent at a time and a day trader could scalpthat small movement.Other day traders may prefer high volatility and volume, which equates to lots of action in the stocks or exchange-traded funds (ETFs) they trade.
Note
Prices move quickly, often several percentage points in a day or several cents in seconds. It's important to understand that you can gain or lose money in a very short window of time.
Volume and volatilitydo change over time,though. Specific events may make a stock or ETF popular for a while, but when the event is over, the volume and volatility dry up. This cycle may repeat over and over again.
Beta and Volatility
Betais a baseline for determining volatility. It measures how much a stock moves relative to an index like the S&P 500. A beta above 1.00 or below -1.00 means the stock is more volatile than the S&P 500. Betas between -1.00 and 1.00 mean the stock tends to be less volatile than the S&P 500. If a stock's beta is 1.00, it moves in tandem with the index. Keep in mind that ETFs track their own indexes, not just the S&P 500—unless they're specifically designed to track the S&P 500 (such as SPY).
Trend or Range When Day Trading Stocks
The trend and range of investments are other components to consider. There are range traders,trend traders,and those that do both effectively.
Range trading refers to the difference between a stock's low and high prices in a specific trading period. For example, you may partake in range trading if you decide you'll buy a stock at $25 per share and sell when it reaches $30 or higher. You would do this over and over again as long you believe that the stock price would stay in this range.
Trend trading refers to the general direction of a stock's share price. The price could be continuously moving up or down, signifying an uptrend or downtrend. It could also move up and then down, showing a sideways trend. Trends can change, too, so it's not the only way to analyze a stock or ETF.
Note
If you prefer trading ranges, you may want to only trade stocks that have a tendency to trade within a range. If you choose a trending strategy, you may want to only trade stocks that have a trending tendency.
A stock screener can help you isolate stocks that trend or range so that you always have a list of stocks to apply your day trading strategies. Finding stocks that conform to your trading method will take some work, as the dynamics within stocks change over time. It's time well spent though, as a strategy applied in the right context can be much more effective.
Best Stocks and ETFs for Day Trading
Below is a list of the best day trading stocks and ETFs to consider. The most consistently popular ETF among day traders is the SPDR S&P 500 ETF (SPY). This ETF has a high volume that allows you to trade smaller or larger position sizes based on volatility.
Here are other high-volume stocks and ETFs to consider for day trading. Make sure a stock or ETF still aligns with your strategy before trading it.
| Stocks and ETFs With Average Volume and Beta (As of Nov. 17, 2022) | |||
|---|---|---|---|
| Name | Symbol | Average Volume | Beta |
| Financial Select Sector SPDR Fund | XLF | 43,122,732 | 1.18 |
| Invesco QQQ | QQQ | 62,506,092 | 1.07 |
| Amazon.com, Inc. | AMZN | 70,587,582 | 1.23 |
| iShares MSCI Emerging Markets ETF | EEM | 42,501,940 | 0.90 |
| ProShares UltraPro Short QQQ | SQQQ | 143,929,145 | -2.53 |
| SPDR S&P 500 ETF | SPY | 90,637,867 | 1.00 |
| Advanced Micro Devices, Inc. | AMD | 84,386,996 | 1.95 |
| Apple, Inc. | APPL | 89,576,498 | 1.25 |
| Meta Platforms, Inc. | META | 43,503,751 | 1.14 |
| ProShares UltraPro QQQ | TQQQ | 225,344,526 | 3.38 |
In the table above, you'll see that many of the stocks and ETFs have a beta around 1.00. There are two that are well over 1.00 or under -1.00, and those are SQQQ and TQQQ. Both are leveraged ETFs that seek returns that are three times the return of the underlying index.
With a leveraged ETF like this, the index goes down, the ETF can go down three times as much. If the index goes up, a leverage ETF like this could go up three times as much. And with the SQQQ ETF, if an index goes down, it could go up (this is an inverse leveraged ETF). If the index goes up, it could go down three times as much. These types of funds can result in higher and lower returns than stocks or funds that are not leveraged, so invest with caution.
Screening for Day Trading Stocks
You can screen for day trading stocks yourself using a stock or ETF screener. You can use a screener to look at stocks with a certain beta to see which ones are more or less volatile. You can also sort stocks and ETFs to see which ones have the highest volume. Many websites like Yahoo Finance or MarketWatch offer stock screeners that you can start using today.
Frequently Asked Questions (FAQs)
What is the maximum leverage for stocks while day trading?
Day traders can trade with up to four times their maintenance margin excess. That's the legal limit, but some brokerages may impose more conservative limits as they see fit.
How much money do you need to get started day trading?
You must have at least $25,000 in your brokerage account to qualify for pattern day trading.
How many individuals are successful at day trading stocks?
Day trading is extremely risky because just as you could earn high returns in a very short amount of time, you can also lose a significant amount of money in a short amount of time. If you're interested in day trading, take the time to learn as much as you can about the stock market and ensure you have money that you could lose without putting the rest of your finances in danger.
The Balance does not provide tax, investment, or financial services and advice. The information is being presented withoutconsideration of the investment objectives, risk tolerance or financial circ*mstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
Fidelity. "Alpha, Beta, and Smart Beta."
Fidelity. "Range Trading."
Fidelity. "Basic Concepts of Trend."
Yahoo Finance. "SPDR S&P 500 ETF Trust (SPY)."
ProShares. "TQQQ UltraPro QQQ."
ProShares. "SQQQ UltraPro Short QQQ."
U.S. Securities and Exchange Commission. "Statement on Single-Stock Levered and/or Inverse ETFs."
FINRA. "Day Trading."
Investor.gov. "Day Trading."
