As a trader, you're only as good as the stocks you choose to invest in. When it comes to trading, stocks in playis a well-known phrase to use. A lot of inexperienced traders don't know what a good stock to day trade is or how to identify one, and they spend a lot of time thinking the market is hard to day trade in.
No matter how good you are at trading, if your stocks don't move or have adequate volume, you won't be able to consistently earn money. I would not spend my time investing stocks that don't move. As a day trader, you must be efficient with your time and purchasing power in order to make money.
When looking for stocks, we don't just want them to go up or down; we want to know that they're headed in a specific direction. It's likely that a stock with a $5 intraday move would never provide us with good risk/reward chances. A small number of equities experience excessive intraday volatility without indicating a clear trend.
A stock in play is one that provides outstanding risk/reward setup chances, such as 5c downside and 25c upside, or 20c downside and $1 upside — a 1:5 risk/reward ratio. An indicator of impending price movement may be seen in the form of aStock in Play. When a stock is actively traded, it will make predictable, frequent, and catchable movements. Numerous and high-quality risk/reward chances may be found in solid intraday stocks.
Every day, a fresh set of equities is put on the trading block. You may maximize your purchasing power by trading stocks in play. It's easier to implement your trading strategies and stick to your risk/reward objectives when you're working with these instruments. Making use of the correct Stocks in Play might help you defeat computerized trading systems.
Where can I find out more about the stocks that are now being contested? We'll go into where to look for them in more depth later on in the book, but here are some possibilities:
A source of current information
The price of a stock has increased or decreased by more than 2% prior to the market opening
Pre-market trading activity for a stock that is uncommon
We may trade off of a stock's crucial intraday levels when it does so
On certain equities, retail trading is not a viable option. Only equities with large relative volume are affected by this method. While Apple Inc. (AAPL) trades billions of shares per day, smaller equities on average may only exchange 500,000. So, you're saying you should just trade AAPL from now on? No. One stock's high volume may not be comparable to another's high volume. It's not enough to seek for a high sum of the individual volumes. Stocks having a high volume of trading on average may be found. Find out what's unusual for that particular stock. The 30 million AAPL shares exchanged in a single day may not be unusually large. Unless there is a really extraordinary level of activity in AAPL, avoid trading the stock. Institutional traders and high frequency trading machines dominate the market if trading volume is below average. Avoid it like the plague.
Four people in formal attire are running in an upward zigzag arrow with a red flag at the finish line on a sky background
Traders often contact us with complaints about their inability to identify profitable equities to trade. When it comes to choosing stocks to trade in real time, many of them have a basic understanding of how trading works and the required knowledge and equipment for day trading. As a rookie trader, we were no doubt aware of this. Investing is a gamble, and you can only be as successful as the stocks you choose to invest in. Equities in Play, as we like to call them, are the stocks that day traders are interested in.
Many different methods exist for selecting and profiting from stocks that are in play, and there is certainly more than one accurate one. In certain cases, traders use stock and index baskets to make money. Exchange-traded funds (ETFs) are the exclusive focus of day traders like my buddy Brian. To locate stocks, several people have devised their own own filters. Index Futures are used by others to trade the whole market. Professional traders at the trading desks of large institutions often merely trade in a particular industry, such as gold, oil, or technology. Even if we are retail traders with limited funds, we must be efficient in our selection of Stocks in Play.
Stocks in Play are those with strong relative volume whose behavior is not influenced by the wider market. Only a small number of companies are traded in isolation from their industry and the broader market on any given day. Only those equities are traded by day traders. These securities are commonly referred to as "Alpha." Alpha refers to a predator at the top of the food chain who is unassailable by other organisms. In day trading, the Alpha stocks are those that are not reliant on the market as a whole or on their industry. There is no way for the market or high frequency trading to keep them in check. We refer to them as "in play" stocks.