How to find stocks to trade profitably

“You are only as good as the stocks you trade.” This is an expression that is used frequently in the world of trading.

Now, in the midst of bank stock turbulence, it makes all the sense in the world, because investors have to go the extra mile to find the right stocks to trade profitably.

In his book How to Live From Day Trading (Valor Editions), Andrew Aziz, assures that many new traders know how trading works and have obtained a good education and the right tools for day tradingbut when it comes to finding stocks to trade in real time “they don’t have a clue how to do it”.

The investor, in his opinion, has to be able to find those actions that the day traders are operating, which he calls stake actions.

Choice of actions in play

For this well-known trader, there are several ways to choose the shares at stake and trade them profitably. There are also different ways to do it correctly.

Some traders trade baskets of stocks and indices. Others mainly trade ETFs.

Many have developed their own filters to find actions. Others focus on trading the markets in conjunction with futures indices. Professional traders employed by large banks often only trade in sectors such as gold, oil, or technology.

What are the characteristics of these actions?

But independent traders, with limited capital, must be very efficient when selecting the stocks at stake, Aziz says.

But, what are the characteristics of the actions at stake? What defines them? How can they be found?

• It is an action that is the subject of new news
• A stock whose price has risen or fallen by more than 2 percent before the market opens.
• A stock that shows unusual activity before the market opens.
• An action that develops important intraday levels, which we can take advantage of to operate.

Every day, according to the author of How to Live in Day Trading, there is a new set of stocks that meet this requirement. Trading stocks in play allows you to be as efficient as possible with your buying power. “They often offer many better intraday risk/reward opportunities and allow you to execute your trading ideas and rules with more consistency,” concludes Aziz.