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How to Find the Most Active Stocks to Day Trade + Free Video Tutorials!

Tag: day trading scans

Finding the Most Active Stocks to Day Trade [Video]

 

There are thousands of stocks you can trade on any given day. For that reason, picking the most active stocks each day can help you narrow your universe of ideas.

The potential number of trade opportunities can feel overwhelming to the untrained eye. For example, do you pick popular stocks like Apple or Google to trade? Or, do you just play IPOs and shoot for a quick flip based on the hype? All of these questions have to be fleshed out as a part of your daily trading plan.

Each day, it should be your goal of scanning the market for the best “stock movers today.” Your goal is not only finding stocks that best fit your trading methodology, but which are also the biggest market movers. The task is not as simple as just having a list of high volume stocks that you can trade every day and make boatloads of money.

Learning how to find the best stocks to day trade requires work and quite a bit of research on your part. In this article, we’ll illustrate 7 tips and tricks you can use to find the most active stocks to day trade, the biggest pre market movers, and the highest volume stock each day.

Best Stocks to Day Trade

Start Your Day Early Searching Pre-Market Gainers

Regardless of which approach best fits your day trading style, the one thing required for each selection process is that you must get an early start to the trading day.

Gone are the days where you can arrive at 9:15 am, log on to your broker, and start placing trades. The market is getting faster and faster with the increased trading volume from hedge funds.  At a minimum, you should start your prep work at 8 am market time.

This will provide you enough time to conduct your morning research and configure your monitors with the stocks you are actively tracking for the day. As part of this process, you will want to pay close attention to the pre-market gainers that are populating your scans. These are usually the best day trading stocks.

#1   Find the Best Stocks to Day Trade with Biggest Pre-market Movers

For those of you that have been trading for some period of time, you will know that the pre-market is one of the street’s favorite ways to take advantage of you.[1] A stock could be up 6% in the pre-market only to open up 2% at 9:30 am. The reason for the large price swing is due to the thin volume that can carry a stock in either direction outside of the regular trading session.

We recommend starting your scans around 8:00 am sharp, well before the opening bell.  This gives you a full hour and a half before the market opens to conduct your research. Along those lines, here is a list of what you want to look for when scanning for the best stock movers “today”.

  • Stocks gapping at least 2-5%. The gap needs to be healthy. However, since 2020 and the pandemic, pre-market stock movers are gapping higher and higher
  • Volume needs to be somewhat heavy.  If you see a stock up 20% on 200 shares, then look the other way. Ideally, Relative Volume should be well over 100%
  • Once you see a stock that is up on decent volume, you’ll want to check the news and whether or not there is any dilution risk.
  • Make sure you review the broader value of the futures market for the major indices (Dow, NASDAQ and S&P).  While breakouts can move independently of the market, it’s always a good idea to go in the direction of the broad market.

Setting Up Your Scans for Today’s Biggest Premarket Movers

Your trading platform should provide you with the pre-market movers; however, if the scans are not thorough enough, below is a list of resources:

  1. NASDAQ pre-market values
  2. Stock Market Analysis – list the pre-market movers every morning
  3. Stock Market Watch – provides top gainers and losers but also displays the pre-market value of the major indices.

There are other high powered scanners out there, but to be honest, all you really need is a method to see the top gainers and losers. However, here at TradingSim, we offer a simplified scan filtering engine that will help empower your training experience. There’s no better way to get your feet wet finding the biggest premarket stock movers.

TradingSim Scanner Tutorial

The constant need for more information throughout the day will likely lead to overtrading or too much confidence.

Not to mention, some of these scanners can get pretty costly. You need to prove you are able to make money with the most basic of scans before scaling up to the pricier options.

Examples of these pricier scanning options are Trade Ideas and Finviz. What these sites lack in design they more than make up for in their ability to provide you with more scans than you can ever dream of needing.

Choosing the Best Penny Stocks to Trade?

Now that we have covered the more conservative point of view for pre-market trading, let’s delve into the wilder side of trading – low float stocks.

Low float stocks are not for everyone as the price moves are significant. [2] These low float stocks are likely penny stocks that trade under $5 dollars. Since the covid crash of 2020, these penny stocks have become much more popular and liquid. Some of them may reach into the 100s of millions of shares traded. However, they can be risky.

Please note, if you go down this path, do not use more than 5% or 10% of your bankroll on each trade. This is more of a game where you play the pop, but you are not making a long-term investment. Odds are that these stocks are priced cheaply for a reason and will eventually drop quickly.

For an example, check out our article on the 1-3pm Bloodbath Setup. It’s a great way to play penny stock movers to the short side.

Find a Clean Pattern with the Highest Volume Stocks Pre-Market

As we mentioned earlier, you want to avoid charts that have low volume in the morning. How do you know you are dealing with a chart with low volume? Just check out the image below.

Thin Volume
Thin Volume

Basically, if you feel like you are looking at stars in the midnight sky, the volume is too thin. When we say stars, we’re not talking about candlesticks – we mean literal dashes on the charts.

The pattern you trade is solely up to you. Some of you may like ascending triangles, while others may look for red to green setups (meaning the stock starts lower but later exceeds the morning highs).

Scanning for the Biggest High Float Market Movers Each Day

If you’re not interested in low float penny stocks, you’ll want to find the highest volume stocks with high float. Why high float?

These are the stocks that can safeguard your investment with a more certain move in the morning.

On average, you’ll find between 2 and 5 stocks that have both the volume and the necessary float requirements to be a real market mover.

The key for you is only trading one or two of these setups per day.

Running your scans, you should see a list of stocks like the one below:

Pre-market Movers
Pre Market Movers

As you can see, there are a few stocks on both the long and short side that are likely good candidates for an opening range breakout or breakdown trade.

Now that we have covered pre-market movers at length, let’s shift our focus back to other ways of identifying great day trading opportunities using the most active stocks of the day.

#2 Finding the Highest Volume Stocks Today

Assuming you have hundreds of thousands of dollars at your disposal you will need a stock with enough volume to allow you to quickly enter and exit the trade with ease. Everyone’s criteria may differ, but our personal minimum is about 40,000 shares per 5-minute bar.

This, of course, depends on the price of the stock and the float. Perhaps you don’t have a large account. If not, be sure to check out our small account strategy.

If you have a brokerage account, your respective firm should have a most active stocks list. This is a good place to start, but will only contain the top 20 or so stocks. You’ll need a scan that is a little broader and provides you with trading opportunities that are not being tracked by every investor. You may want to also find stocks that are rising on high volume relative to their average volume.

For example, if a stock normally trades 2 million shares a day but has 5 million shares traded before 10am, this is something of note. You may be saying to yourself, well these will show up in the most popular stocks in my trading platform. Unfortunately, this is not always the case. Again, your brokerage platform may only return a maximum number of stocks (i.e. top 10, 20).

If your trading platform does not provide you with a robust screener for the highest volume stocks, below are some great resources:

  1. Unusual Volume provided by Yahoo Finance. [3]
  2. Bar Chart provides a list of over 200 symbols [4]
  3. The Street provides not only the high volume stocks but also has a scan for stocks trading under $5 for all you penny stock lovers out there [5]

#3 Develop your Own Watchlist for Daily Market Movers

You will need to develop your own list from stocks you follow on a daily basis.  Again, due to a large number of stocks on the exchanges, it’s best to focus on specific sectors.  Below is a list of popular ones:

  • Banking
  • Precious Metals
  • Semiconductor
  • Automotive
  • Pharmaceuticals
  • Retail
  • Internet

Once you have one or two sectors you would like to follow, begin to track the movement of the top issues. Give yourself a few months of consistently watching the stocks and the sectors in terms of their price movements.

As a follower of the Richard Wyckoff method, you’ll learn that each sector and stock will have an ‘operator’ that is in control of the market action. This operator is the collective investors or market makers with the most money in the stock; therefore, they have a controlling interest. 

Using Gold as an Example

Let’s take an example from the ’08 market.

Every day like clockwork stocks Royal Gold (RGLD) and Golden Star Resources (GSS) would have sharp reversals at 10 AM.  A system of buying or selling short on breakouts of the morning’s trading range would fail consistently with these precious metal stocks.

While experience would’ve taught you to avoid this particular sector for 6 months, you could use the watch and learn approach to understand how a particular market moves in order to gain an edge over other traders.

The one challenge with building a list is limiting the number of stocks you watch within 1 or 2 sectors down to the biggest market movers. You are manually tracking these stocks and building a sense of touch for how they trade. At most, you should only track 10 stocks per sector, so this gives you a maximum of 20 stocks you can follow at any one point.

This should give you a feel for not only the stocks in the sector, but if they are real stock movers, and whether or not they fit your strategy.

#4 Keep Up with Historical Market Movers

Instead of looking to someone else for advice on what the best stocks to day trade are, how about looking at your own trade performance. There is at least one stock you trade on a regular basis for one reason or another.

Funny thing is you will not be able to explain why you keep gravitating to that particular security. Call it your soul mate or just your stock of choice. Your comfort level with the stock will make you feel like you “own” its movements.

You can move in and out of the stock with ease and generally make a profitable trade on each attempt.

For me, I couldn’t get enough of Baidu Incorporated (BIDU).  For all of you fans of the show Scandal, she was my Olivia.  I would track BIDU every day even if she wasn’t moving much.  For some reason, I was able to predict her movements and never found myself fighting the trade.

So, look back over your trade history. Is there one stock market mover that keeps popping up on your list of trades?

#5 Social Media Stock Movers and Pumpers

This is a more recent technique for scanning the market. It can be a bit tricky, however. The reason for this is that searching social media sites or reading news events might positively or negatively impact your view on a stock.  

We recommend basing your trade decisions solely on the price and volume action of the stock. That being said, there may be some underlying sentiment on social media that is worth knowing.

Play StockTwits

StockTwits streams the hopes and random thoughts of investors for many securities.  They even have a market sentiment factor which displays at the top of each wall for the respective stock.  

In terms of which stocks most active stocks to day trade, if you visit the homepage you will see a list of stocks across the top which are trending.

These are stocks that members are actively discussing as Stocktwits plays. You will quickly notice that these are the stocks in the news. Nonetheless, there are times when members are discussing a move in a stock during the middle of the day before a news publication is able to produce an article.

Play Stocktwits for most active stocks
Play Stocktwits for most active stocks

The best method for using StockTwits without a doubt goes back to the list of pre-market movers. You can, of course, look at the news event which is pushing the stock higher or read the latest press release from the company, but StockTwits allows you to get a real pulse of the market.

You can actually use StockTwits as a method to validate exactly how much interest there is in the stock.

If you see a stock up 10% but with only two tweets, it’s likely not in play.

However, if you can find the stock that is up on heavy volume and the board for the respective security on StockTwits is very active, you likely have a stock in play.

Remember, it’s not about the level of bullishness or bearishness on the board – all you care about is if people are talking about the stock you have an eye on.

Similar to StockTwits but with a twist, is the popular sentiment lists being viewed on swaggystocks.com. Swaggystocks essentially crawls many of the popular social media outlets like Twitter, WallStreetBets, Reddit, and more. They compile the most mentioned stocks into cute little charts that tell you what’s trending.

swaggystocks.com social media sentiment indicator for most active stocks
swaggystocks.com social media sentiment lists

The cool thing about swaggystocks.com is that they offer many different social sentiment lists that are updated frequently throughout the day. What this can do for the retail trader is give insight into what stocks are most active. You might find a potential market mover or high volume stock from this list.

Of course, as with any stock in play, you want to have a setup and a trade plan. Don’t be a bag holder just because AMC is being mentioned a lot on Twitter. Stick to your edge.

TradingSim Historical Market Movers Scanner

TradingSim’s market movers scan provides a list of the top 50 losers and gainers for every session in the market going back 3 years. For most brokers, they don’t keep track of this data. To that end, you’ll have a tough time identifying which stocks were trending on a given day in the past.

TradingSim Market Movers Pane
TradingSim Market Movers Pane

Market movers inside TradingSim will allow you to pick a random day 6 months in the past and actually see what the most active stocks were for that day. Just as you would research and track the hot stocks for each morning, market movers automatically provides this function for you on historical days. This way, you can just focus on practicing day trading.

#6 Monitor the Earnings Calendar for Potential Active Stocks

One event that is sure to bring about increased volatility is the reporting of earnings. This occurs quarterly throughout the year.

Be sure to keep track of who is on deck for the week. That way, you can start to monitor how the stock is trading going into the earnings announcement.

To be clear, we are NOT advocating you place a trade before the earnings are reported, because this is another form of gambling. You will, however, want to know who are the upcoming market movers and most active stocks for that day, so you can add them to your watch list.  

This will reduce the amount of research required prior to the market open.  Below is a list of sites that publish earnings calendars:

#7 Focus on One or Two Stocks from Your Most Active Stocks List

Focusing on one or two securities is all about keeping it simple.  In all of the above examples, you would need to scan, watch, and react quickly on a daily basis to a large number of issues.

If this is something that you feel is too much and you want to become a master of something simple, then look to trade the same one or two issues every day. Or, at a miminum, choose only a few of the highest volume gainers or most active stocks each day. 

Selecting a Stock to Trade from Your Most Active Stocks List

When selecting a stock to trade, you have two approaches: (1) select the most popular stock or (2) pick your favorite stock based on your past trading performance.  #2 will largely depend on your own trading preferences, so we’ll cover a few top stocks for day trading:

  • AAPL (Apple) – high volume and great price action.  The popularity of the company has transferred over to the stock’s popularity in the trading community
  • S&P 500 Spiders (SPY) – While this is not a stock but an ETF that follows the S&P index, the volume is huge and provides the means for you to trade the index without trading futures
  • QQQ – formerly known as the QQQQ has been a fan favorite of active traders for over a decade
  • TSLA (Tesla Motors, Inc.) – if you like volatility, the stock moves as fast as its cars
  • NFLX (Netflix) – the CEO is willing to make bold decisions, this has translated into significant price swings in the stock
  • FB (Facebook) – there are few stocks that have polarized traders as much as Facebook

It’s safe to say we are a little biased towards the NASDAQ when it comes to day trading.  The NASDAQ’s ability in the late 90’s to facilitate order flow has forever stamped them as the preferred index for active traders. You’ll typically never fall short of a daily market mover or high volume stock on the NASDAQ.

Below are the benefits of trading one or two stocks:

  • Learn the trading pattern and personality of the stock
  • Identify the technical indicators best suited for the security
  • Less stress
  • Less work to do before and after the market close

In Summary

There are multiple ways to select the best stocks for you to day trade.  Remember, trading is a journey, so don’t try to figure it all out in one day.  Just make sure your scan provides you the means to trade high volume stocks with a sound system that consistently makes you money.

If you do decide to create custom scans, you will want to focus on the following key areas:

  • high volume stocks
  • gappers
  • pre-market movers
  • red to green and green to red moves
  • consecutive number of red or green candles
  • biggest stock gainers and losers

Results for these 6 scans will provide you more than enough as a new trader.

We hope you found this article to be helpful in your quest to find the most active stocks to day trade.  If you would like to see how we can help you further, come over to Tradingsim.com and give our market movers a shot. We’re sure you’ll find our top stock mover tips useful.  

Here’s to good fills!


Photo Sources

Stock Ticker – francisco.j.gonzalez

External References

  1. Cramer, Jim. (2019). Don’t Mess Around with Pre-Market Trading During Earnings Season. CNBC
  2. Low Float Stocks. lowfloat.com
  3. Most Active Stocks. yahoo.com
  4. All US Exchanges Volume Leaders. barchart.com
  5. Most Actives. thestreet.com

Day trading scans are an integral part to any day trading strategy. How else will you know what to trade? Yet, in a universe of thousands of stocks, finding the best candidates each morning can be a daunting task. In this post, we’ll share our top 4 criteria for finding the best tickers to trade each day.

In addition, we’ve created this quick tutorial for how to use the TradingSim scanning tools. Be sure to check it out as a primer for the content below.


Why Scan for Stocks?

On any given day, you’ve got the option to trade somewhere between 6000-8000 publicly listed companies. Not to mention all the OTC stocks, derivatives, and more.

No one can trade that many securities at once, for obvious reasons. Nor would you want to. You want to find the best tickers that will bring you the biggest reward.

Day trading scans offer a way to funnel that list into proper categories of equities that match your trading style or system. This way, you can focus on patterns you recognize, and discard the rest.

To that end, let’s look at few reasons why you might want to scan for stocks:

  1. Volatility/Momentum
  2. Volume/Liquidity
  3. Short or Long Bias
  4. Strategy

This is just a short list, but it encompasses a lot of what day traders are looking for each day as they scan the markets. Let’s take each one and look at why it is important, plus offer some scanning tips.

1. Volatility and Momentum

Day traders want to make the most of their money in the shortest amount of time. As opposed to swing trading, day traders expect to earn a decent percentage of their portfolio by buying and selling during the day. By the end of the day, they are back in cash.

Whereas a swing trade may take days or weeks or months to realize a big return, day traders scan for and capitalize on big moves each day.

Therein lies the importance of volatility and momentum.

Volatility and momentum are important for two reasons:

  • Without volatility, large intraday swings are not likely
  • Momentum gives the trader a big picture setup

Meme Stock Example

Meme stocks have been all the rage in 2020 and 2021. Stocks like AMC, GME, and others, have catapulted from their meager single digit values, to double and even triple digit per share valuations.

Take a look at the range that some of these daily candles have on AMC and GME:

AMC and GME volatility
AMC and GME volatility

On one day in January of 2021, GME gapped to $500+ and then fell almost $400 in a that same day. Likewise, AMC doubled its value in a single day in June 2021.

Now that is extreme volatility!

And as you can see, it can run both ways, up or down.

While these might be “outlier” moves in a normal market, they are perfect examples of the results you should seek for day trading scans — if volatility and momentum fit your strategy.

Filtering for Volatility and Momentum

In keeping with the meme stock examples above, let’s use our TradingSim scanner and see how we could have narrowed our results to include these big days.

An easy way to scan for volatility and momentum is to filter for %gain or %loss on high volume. What this tells us is that the stock is either gapping up or down with a lot of interest from speculators.

A simple premarket scan on January 28, 2021, filtering for %loss and highest volume, gives us the following results:

Top Volume + % Loss day trading scans
Top Volume + % Loss day trading scans

In the results populated, we see GME in both columns. GME had the 14th highest amount of shares traded in the premarket that day, for the entire market. It was also the 5th biggest % decline at -24.06% by the time of market open.

That is a big fluctuation!

And now that you have your scan results, it is up to you to look at the chart and decide when and how you want to trade the ticker.

Scanners and filters don’t tell you how to trade, they simply show you the best opportunities for the day.

By the time 9:30am came around, GME had doubled in value, then retraced that entire move:

GME momentum up and down

This is a perfect representation of how volatility and momentum complement each other. The extraordinary intraday swings create a myriad of opportunities for the nimble day trader.

2. Volume and Liquidity

Volume and liquidity determine how easily you can get into and out of a position. In general, the higher the liquidity and volume, the easier it is to place larger orders at will.

In our GME example, over 5 million shares had been traded in the premarket for that day. That’s over $2,000,000,000 in shares traded in the premarket alone!

By the end of the day, it had traded over 23 million shares.

Why Volume and Liquidity Matter

Scanning for day trades with high volume and liquidity is important for a handful of reasons. Without proper liquidity, you may find yourself in one of the following predicaments:

  1. You won’t get filled when trying to sell limit orders.
  2. Market orders may experience massive slippage.
  3. You might ended up being a bag holder.
  4. You’ll be tempted to average down to support your position.

None of these options are ideal.

In similar fashion to volatility and momentum, volume and liquidity give you the steady stream of buying and selling you need to enter and exit positions.

To give an analogy, if volatility and momentum are the class 5 rapids you’re floating down, volume and liquidity are the water that keeps you from running aground.

Turn the volume off, the momentum stops.

Low Liquidity Example

To visualize this imagine trying to trade INS on this day in June 2021. Crickets are chirping and no one is home.

INS low volume example
INS low volume example

At only 26,600 shares traded on the day, what’s the point in even placing an order? You’ll be down $0.20 – $0.30 immediately, and good luck getting filled on anything with size.

Hopefully you can see the difference between low liquidity like the example above, and high liquidity like the GME example.

Filtering for High Volume and Liquidity

There are a number of ways to scan for volume and liquidity. We’ve shown two ways in the volatility example above.

However, if you want to increase your filter criteria, we suggest searching for stocks with higher market caps.

Scanning for larger cap liquidity
Scanning for larger cap liquidity

In the day trading scan above, we pick stocks with a minimum of $1 billion market cap or higher with a minimum of 100k shares traded over the past three months and 100k shares traded in the premarket. We’ve also limited the results to only stocks traded in the S&P 500.

We then sort those by highest volume, name the filter, then click save.

This way, you’re eliminating smaller cap stocks of lower valuation. Plus, the volume criteria eliminates a lot of the thinly traded stocks in the market.

3. Short or Long Bias

The great thing about filtering your day trading scans is that you can limit your results to a directional bias. Not all traders want to go long, and not all traders want to go short.

Depending on your preference, the market may be presenting more opportunities in one direction or the other. Thankfully, we can filter for either direction.

Long Scan Ideas

The simple method for scanning for long ideas is to look for premarket gappers. Here are a couple of methods you can use to scan for either % gain or $ gain.

$Gain and %Gain day trading scans
$Gain and %Gain day trading scans

This populates a great starting list to narrow down your trade ideas for the day. As we’ve said before, not all the stocks will be great trading candidates.

It will be up to you to run through the charts and identify your setups, volume, and other criteria you like.

The reverse side to this scan is simply the $ Loss and % Loss scans. Run these if you’re looking for an opportunity to short a continuation move, or go long on an oversold bounce.

More Long/Short Scan Ideas

Perhaps you want to get a bit more granular on the daily chart before you zoom into the intraday price action. That’s a great plan.

Maybe you like to play breakout plays, or you only want to trade stocks that are breaking down?

Here is an example of scanning for 52-week highs with similar criteria from the last scan:

Select the 52 week high button, filter by top volume, name your scan, and then save! The results will populate with potential breakout plays, as seen in this example of EGY below.

52 week high day trading scan result
52 week high day trading scan result

On the left, we have our list of stocks. Selecting the first one, we see a potential breakout candidate on the daily chart.

Now, it is just a matter of matching the stock’s intraday action with our own day trading strategies.

To do the opposite of this scan, simply choose the 52-week low option.

4. Scanning for Strategies

Speaking of strategies, we’ve come to our fourth and final tip for narrowing down day trading scan results. In all honesty, though, the other scan tips we’ve already mentioned are centered around strategies:

And that’s just to name a few.

The great thing about scanning for day trades, is that just a handful of simple filters can generate a myriad of ideas. It all depends on what you want to trade.

Perhaps you want to run scans based on a vwap strategy? How about MACD? Moving Averages?

There are so many ways to scan for stocks, the list could go on forever.

Nonetheless, let’s pick one more powerful strategy before we wrap things up.

Short Squeeze Strategy

Have you ever heard of a short squeeze? In light of the meme stock craze lately, short squeezes are becoming a household phrase.

Generally speaking, a short squeeze occurs when too many traders are betting that the stock will go down. They borrow the shares to sell from their broker, and hope to buy back those shares at a lower price, expecting to make money in the opposite direction of bulls.

However, sometimes the bulls smell an opportunity. The more demand they create, the more they “squeeze” the traders betting against the upward momentum.

As short traders are forced to “buy back” the shares they were selling short, the stock price is driven higher and higher.

The GME discussion above was a great example of a catastrophic short squeeze. Many institutions blew up their funds in that trade.

Bloomberg short squeeze headline
Bloomberg short squeeze headline

But if you want to be long and take advantage of these events, you need to be able to find stocks with a high short interest.

Here’s how we do that:

Filtering for Short Squeezes

Inside the TradingSim simulator, we create a new filter.

Short % of Float Scanner
Short % of Float Scanner

We select a high “short % of float” amount, like greater than 20% in this case. Then we order our results by top volume so as to filter out thinly traded stocks.

The alternative order would be to simply choose “%Gain”. Either one should give good results.

Give the scan a name and save it.

The results should give you plenty of stocks that are being shorted heavily by institutions, but which are also trading with high volume.

Short Squeeze List Results
Short Squeeze List Results

For the list we’ve created, notice that the top candidate on our list is MRIN. In the daily chart provided here, we’ve forwarded the time stamp to the end of the day so that you can see just how powerful the move was.

The short interest and demand pressure squeezed shorts for almost a 100% gain that day!

Conclusion

Day Trading Scans can offer traders a multitude of different ways to narrow their focus for the day.

That being said, we understand that not every trader is going to have the same strategy, bias, or techniques. However, we’ve hopefully created some very simple, generalized, yet effective ideas for you.

Feel free to put these filters to the test in our simulator as you practice your day trading strategies, and leave us some feedback on how they’re working for you!