Day trading is the buying and selling of stocks within the same trading day. This is an ideal strategy for someone looking to capitalise on intraday market fluctuations to make some profit.
Stock selection is a huge component in the day trading game. Stock prices swing up, and sometimes they go down. So, if you want to get a piece of the day trading action, you need to learn how the game is played. Trading the right stocks at the right time may mean big wins for a trader.
In this article, we identify some of the best shares to day-trade in 2021.
Where Can I Trade Day Trading Shares?
Day traders will want to choose an online broker that offers fast execution (so you get the price you want), tight spreads (so you don’t lose much money as soon as you open a position), and good charting tools (because day trading is all about price charts).
To save you some work, we’ve found some of the best brokers for you.
What Are Day Trading Shares?
Day trading simply means stock trading which takes place on the same day. Stocks (or equities) are securities representing part ownership of a corporation, and stock units are what you might hear people calling shares.
Stock buying and selling are predominantly done on stock exchanges. Nowadays, technology allows individual investors from around the world to participate in the exchange through electronic marketplaces. Anyone can now easily trade stocks through a reputable online broker.
Stock day trading is all about taking a position on a stock whose price you expect to move significantly within a single day. You hold the position for minutes, hours, or until the end of the trading day, but no longer.
As a day trader, you want to go for stocks with the tightest possible spreads, high trade volumes, and good liquidity.
How to Trade and Invest in Day Trading Shares
Open a Trading Account
Select the Stock(s)
First, find the stocks that are ideal for day trading from within the list presented by the broker. For day trading, you will then use technical analysis (chart patterns) to decide on the right time to press the “buy” or “sell” button.
Place Your Trade
You can either enter a position at the current market price, or you can use a limit order to automatically open a trade when the stock’s price falls or rises to your desired entry price. A day trader will typically apply a profit-taking limit order and a loss-limiting stop order to the open trade.
Top 10 Day Trading Shares to Trade
In January 2021 the prices of several stocks became volatile when amateur traders took to social media to boost the prices of those beaten-down stocks in an attempt to squeeze out the professional short-sellers. We present these “meme stocks” and a few others as examples of stocks that could have been (and were) day-traded at the time, and which may continue to be suitable for day trading due to the high volatility of their price movements.
- GameStop (NYSE:GME)
- AMC Entertainment (NYSE:AMC)
- Blackberry (NYSE:BB)
- Curaleaf Holdings (OTCMKTS:CURLF)
- Nokia (NYSE:NOK)
- Zomedica (NYSEAMERICAN:ZOM)
- Netflix (NASDAQ:NFLX)
- PubMatic (NASDAQ:PUBM)
- Amazon (NASDAQ:AMZN)
- Take-Two Interactive (NASDAQ:TTWO)
1. GameStop (NYSE:GME)
The price of original meme stock GameStop’s shares increased by a factor of almost 25x within two weeks in January 2021, and then fell back equally fast, before rising again (halfway) and falling again. Some traders — including day traders — would have made a lot of money in the short term from big daily rises and falls. And some would have lost a lot, so be careful.
2. AMC Entertainment Holdings (NYSE:AMC)
AMC’s share price followed a similar trajectory to that of GameStop, but not as extreme: only 10x initially. The shares have continued to be volatile — but generally rising — into May 2021, so this could continue to be a good stock for day trading.
3. Blackberry (NYSE: BB)
Canadian mobile phone company Blackberry was big about a decade ago, before Apple’s Phone and handsets based on Google’s Android took the lion’s share of the mobile market. Having bounced along the bottom for the past eight years, Blackberry’s share price shot up by a factor of four in January 2021 before falling back to its baseline by May. Some traders could have made a lot of money, or lost a lot, depending on which side of the trade they were on. Now, this stock may have had its day in terms of day trading.
4. Curaleaf Holdings (CSE:CURA)
Cannabis is becoming big business as it looks set to become legalised around the world, and Canadian company Curaleaf could be a big beneficiary. Although its share price is somewhat uninspiring in terms of volatility, it could suddenly shoot up if the right regulatory framework from marijuana is put in place. Since it’s not easy to time when this might be, Curaleaf may be better as one to hold for the long term in case it shoots up, rather than buying and selling it within a single day. Since it is listed on the Canadian Securities Exchange, not all brokers allow this stock to be traded.
5. Nokia (NYSE:NOK)
Like Blackberry, Nokia is a former mobile phone powerhouse looking to return to its glory days. Although its share price appears to have flatlined over the past decade, the price has actually been quite volatile on a shorter time scale during the first months of 2021. As such, this stock may be suitable for day trading.
Expert Tip on Investing in Day Trading Shares“ True to their name, day traders should never hold positions overnight. This is because the prices of volatile stocks can spike up or down outside of trading hours, resulting in a “price gap” in the next morning’s price chart. You could suffer a large unexpected loss or your protective stop order could be triggered at a very unfavourable price. ”- Tony Loton
Why Invest in Day Trading Shares?
Day trading can be exciting (which is not always a good thing) because profits are banked regularly. The money you make each day is like the wage you would earn by working a regular job each day, and each day you have a blank trading slate to start again. You don’t have to wait for weeks, months, or even years to realise your profits.
The downside is that you have to do a lot of work (like in a proper job) and your profit is limited to what you can make in a day. It may be less work — though less immediately rewarding — to buy a stock and hold it for a much bigger profit over a much longer timescale.
Frequently Asked Questions
Yes. Most countries consider such income as taxable. Check your local laws before trading.
Yes. Some brokers may provide additional services such as bot trading for traders. You can also use stop-loss and take-profit orders to automate the buying and selling.
Yes. Most reputed brokers will insist on “know your customer” (KYC) procedures that require you to provide identification when opening an account.
Always choose a regulated platform and make use of additional security measures such as two-factor authentication (2FA) to secure the trading account.
A lot of news is available on social media. Many expert traders offer advice on such media outlets, but be sure to do your own research rather than relying on others.
Stock trading is usually limited to market hours on weekdays, but these market hours overlap, so you could be trading American stocks or Asian stocks (for example) when the London markets are closed.