How to Day Trade for a Living

Trade high-volume stocks

Instructions

Identify relative high-volume stocks.
Start by understanding which stocks are showing more activity than usual. High relative volume means a stock is trading more shares than it normally does, indicating increased interest from traders. For example, if a stock normally trades 500,000 shares a day but has already traded 1 million shares by noon, it’s showing higher activity. This could indicate a potential trading opportunity.
Set up a stock scanner for pre-market activity.
Use a stock scanner to find potential trades based on specific criteria such as stocks that have gapped up or down by at least $1, have a high Average True Range (ATR), and substantial pre-market volume. These metrics help identify stocks that might move significantly during the trading day.
Create a watch list from scanner results.
Choose 3-4 stocks from your scanner results to keep an eye on. These should be stocks that show significant pre-market price movements or unusual trading volumes. Research why these stocks are moving—look for news, earnings reports, or other events that could impact the stock.
Plan your trades based on your watch list.
Before the market opens, plan your entry and exit points for each stock on your watch list. Determine at what price you will enter the trade, and decide in advance where you will take profits or cut losses. This pre-planning helps in making swift decisions during market hours.
Monitor the stocks after the market opens.
Once the market is open, watch how the stocks on your list perform. Keep an eye on whether they follow the pre-market trends or if new patterns emerge. This monitoring will help you decide the right moment to execute your trades.
Use real-time scanners for additional opportunities.
Throughout the trading day, use intraday scanners to find other stocks that meet your criteria but weren't on your initial watch list. This can help you identify additional trading opportunities as market conditions change.
Execute trades when criteria are met.
Make trades based on the strategies and entry points you planned. If a stock hits the price level you were waiting for and other conditions you set are met (like volume or market sentiment), execute the trade.
**Adjust your positions as needed. ** During the day, be prepared to adjust your stops and exits based on how your trades are performing. If a stock moves favorably, consider adjusting your stop-loss to lock in profits. If the trade goes against you, be ready to exit to minimize losses.
Review and reflect on your trades. At the end of each trading day, review your trades to see what was successful and what wasn’t. Analyze if you followed your plan, how well your chosen stocks performed, and what you could improve for next time. Use these reviews to refine your trading strategy.