I find that new traders tend to waste time trying to day trade stocks that are extremely difficult to trade for consistent profits… So in this post I wanted to show you which type of stocks I think are best for individual traders.
In my last post, I talked about how my wife day trades stocks for income. After a year of hard work, she’s become consistently profitable with our trading strategy. In the video below you’ll see our “sweet spot” for volume and volatility in the stock market:
Two Best Friends of a Trader – Liquidity & Volatility
When you have money flowing in and out of a market, that typically means more trading opportunities. Stocks like Apple (Symbol: AAPL) average about 20,000,000 shares traded per day. That’s a TON of money exchanging hands each day, but the average daily % range isn’t that high. So when you couple low daily % range with a highly competitive trading arena, it makes it harder to pull consistent profits.
On the other hand, if you have a $7 – $10 stock with a few million shares traded daily, you could see great breakout and shorting opportunities.
Free Day Trading Video Course
- A step-by-step guide to day trading online
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Should You Trade Penny Stocks?
There’s a TON of hype and gurus promoting penny stock trading. They usually pump up the benefits of making 100%+ on a trade, but the reality is there are some major barriers and challenges when trading penny stocks. For example, it can be really difficult to find shares to short with over-extended stocks that look like they could crash.
With that said, Penny Stocks can be beneficial because there are hardly any “professional” traders or computer algorithms competing in that market. So, my advice would be to only trade liquid stocks below $5 with clear chart patterns.