The Truth About Day Trading Stocks: A Cautionary Tale About Hard Challenges and What It Takes To Succeed

CHAPTER 14

Stock Picking: Simplifying the Process

 

 

 

Caution! Do not read this chapter thinking this is all you need. This chapter is about how to choose stocks, not about how to trade stocks. Just the same, amateurs may think stock selection is the “golden goose” of good strategies. Beginners might read my Contents and flip right to this page.

That would be a huge mistake.

Trust me, you need to read the whole book. Stock picking is just a small aspect of the process of day-trading mastery. I’d want you to know, for instance, before you got to this chapter, that your choice of a promising stock doesn’t mean you can safely trade in larger than 100-share blocks.

The good news is that the selection of stocks is one of your easiest hurdles. With clearly defined indicators and preconditions, finding good stocks to day trade is a breeze. Dependable analysis brings good results, and to help that process along, I’ve compiled a list of vital criteria:

• The average daily volume (calculated over the past three months) must be at least one million shares traded daily.

• The stock price must be between $10 and $100.

• The average intraday price swings must be sufficient to trade (as evidenced by chart analysis).

• There must be no stocks affected by government regulations and/or approvals.

• There must be no current news headlines that directly affect the stock.

• There must be no chance, in the near future, that the company will file bankruptcy.

If you apply all those rules, you’ll find worthy ...