What do daytraders look for when stockpicking?

Question

have been trying to pick out AIM listed risers based on volume and ratio of buys to sells with a little sucess but I feel I could fine tune this somehow,does anyone on here use a similar method and what particular pointers do you look for when choosing a stock to punt?

Answer 1

I day trade exclusively on news, good or bad. I wait to see what the markets reaction to that news is and follow that trend. So say an earnings report is released after the market close, and the company in question has an earnings surprise of more than 20% the following day the stock may open to the upside. As long as it opens on the upside with higher than normal volume and continues that trend i will buy in. I will short a stock that does the opposite. I've had some great success with this model but there are alot of things that can go against you so do your due diligence. Im sure there are a thousand people that think im stupid for trading this way but it works for me.

My latest trade was a short, AVNR skyrocketed 300% wednesday on good news of its drug trials. today the stock trended downward, when the stock broke through its previous lows i placed the short sell. and covered at the end of the day making a nice $400.

Happy trading

Answer 2

true and experienced daytraders try to mock the specialist that run the stock exchange. what they do is exploit the bid ask spreads of stock. It is a very complicated process that most people do not understand or for that matter dont even know exists. But they basically try to buy high qauntities of stock with wide bid ask spreads and that are not volatile, because movement means risk.

the stock market is a two way auction system for example we
will say a stock has a bid ask spread of 9.90-10.10 this means that someone has put in a bid to buy the stock at 9.90 and someone is asking or offering to sell at 10.10 that is why there is a spread. people put in their bid and asks through limit orders. anyone who uses a market order will just get the best price available so if you put in a market order to buy this stock you would pay 10.10 if you sold you would sell at 9.90 now the person with the best bid or ask is the first in line to sell or buy when a market order is placed. now that you know this the daytrader will put in a bid to buy this stock at 9.91 and he will be first in line when a market order is placed once the stock is in his hands he will place an order to sell at 10.09 now he is first in line to sell with the best ask when a market order is placed. so he just made .18 per stock without the stock even moving a penny. now if he bought a thousand shares of this stock he just made 180 in a mere seconds and with small risk do this a few times a day and you are making some dough.

this is just an example most bid ask spreads are tighter than this and this technique also takes advanced charting that is not delayed. plus it has become more competitive recently so to get in this type of trading educate yourself fully

Answer 3

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Answer 4

AIM is not for day trading as volume is too low so people don't get carried away.
Try buying blue chips with clear trends and volume (forget buy/sells)

Answer 5

I like the plan "smartest" has described. It seems perfectly logical to me. He follows the momentum. The only thing I do not understand is how do you find out what the normal volume is?

Answer 6

Volatility, gut feel and an eye on the News Feeds ...