12 Best Stocks For Day Trading

In this piece, we will take a look at the 12 Best Stocks For Day Trading. If you want to skip our introduction to trading indicators and the economic climate, then check out 5 Best Stocks For Day Trading.

The modern day stock market is significantly different from the one of the early 1900s. These days, all transactions on the market are digitally linked, which makes traders exchange millions of shares daily. These trading patterns create new strategies for investing in markets, as part of an approach that is dubbed technical trading. Technical trading looks at the patterns behind transactions that determine a stock’s daily price. Share prices are a mix of bid and ask prices, and their levels over a longer time period are analyzed in terms of averages and other indicators that are part of the technical approach.

Moving averages of share prices and the volume of the shares that are trading at a given time period are the two fundamental indicators that are used in technical trading. They are joined by momentum, volume, and volatility indicators, and the fundamental principle behind this approach is that there are wider patterns that are kicked off by market events that can open up the opportunity for profit.

As a simple example, consider the example of a hypothetical company whose stock price drops from $10 to $5 in a week after having previously gained $6 over the year. Depending on the movement of the share price, the number of days that the shares gained and lost, and the price moving averages allow a technical trader to determine whether the new $5 share price is a result of market sentiment overreacting or a shift in the firm’s fundamentals.

Another key technical indicator is volatility. Volatility is measured through several mathematical formulas, and the principle behind it measures the variation in a security’s daily prices over a longer time period. Volatility is also often dubbed as the market’s ‘fear gauge’ as sudden dips and rises in a security’s prices indicate emotions at play instead of a fundamental based conviction driving a buying or selling position.

The current market and economic climate has also created news about fear. The stock market is currently struggling to sustain its massive gains of the first half of 2023, and while these gains are still substantial for major indexes (and big tech stocks in particular) the past few months have seen investors flee as worries about high interest rates, their effects on the economy, and a shaky global environment dominate the narrative.

One of the most common indicators of stock market volatility is the Chicago Board Options Exchange’s CBOE Volatility Index, often called the VIX. October is off to a strong start for the stock market due to a major selloff that took place due to bonds shedding their value as economic indicators such as economic growth and the labor market signaled to investors that interest rates would stay higher than expected. Volatility in the market, specifically in the S&P500 is measured through the VIX and futures of the VIX. Futures that are expected to expire later are typically priced lower since the future is ‘generally’ more volatile than today. However, during the middle of the first week of trading in October, the VIX went on and soared to 19.20 while its three month futures peaked at a lower level, showing that investors were more uncertain of the current environment than the future.

The volatility index curve typically inverts during times of extreme pressure. In 2023, which has been marked for record gains for the NASDAQ 100 and stellar performance by most indexes, the curve inverted in March during a time of extreme uncertainty as multiple big banks failed in quick succession. However, after March, stocks soared and some fears were proven to be unwarranted.

With volatility having soared to levels it was last at during the tail end of the second quarter, we made a list of the best stocks for day trading. The top three are Gracell Biotechnologies Inc. (NASDAQ:GRCL), Gritstone bio, Inc. (NASDAQ:GRTS), and Ebix, Inc. (NASDAQ:EBIX).

The9 Limited (NASDAQ:NCTY) Image by Steve Buissinne from Pixabay

Our Methodology

To compile our list of the best stocks for day trading, we first made a list of the stocks with the greatest weekly price volatility and weekly share price gains. Then, the number of hedge funds that had bought their shares during this year’s June quarter was determined through Insider Monkey’s survey of 910 hedge funds, and the stocks with the highest number of hedge fund investors were chosen as the best stocks for day trading.