Best Stocks to Day Trade

Day trading might seem like a fast-paced and exciting way to make money, but the truth is more mundane. Day trading is a grind, requiring participants to spend long hours in front of screens watching the market or studying data. Selecting the right stocks is Paramount to success, so day traders look for certain characteristics that could indicate an opportunity. In this article, we’ll review potential stocks for day trading purposes and what metrics to use to identify the best ones. Remember, day trading is a tough business; you’ll need a rules-based system and a little intuition to succeed.

Quick Look at Best Stocks for Day Trading:

Nvidia Corp. (NVDA)

Day traders looking for a powerhouse tech stock can set their sights on NVIDIA Corp., the chipmaker currently dominating the U.S. stock market. NVDA shares have been on a tear since the market bottomed in late 2022 and have recently been jockeying with Microsoft Inc. and Apple Inc. for the title of the world's biggest stock by market cap. 

NVIDIA’s dominance in graphics processing units has fueled this massive rally, and its products are a crucial component for everything from gaming consoles to AI servers. And if you follow financial media, you know NVIDIA’s earning reports have been the stock market Super Bowl for the last 18 months. From a trading perspective, NVDA boasts high daily volume and plenty of option activity, signifying substantial share demand. With its impressive growth trajectory and highflying stock price, NVDA is a compelling choice for day traders.

ProShares UltraPro Short (SQQQ)

Day traders need volatility to thrive, and for bearish traders looking to capitalize on a potential market downturn, ProShares UltraPro Short ETF offers a tempting option. This exchange-traded fund uses a combination of derivatives to deliver the inverse of the Nasdaq 100’s daily performance, which rises when the tech-heavy index falls. However, the real draw for day traders is the outsized leverage the fund utilizes to amplify its returns by a factor of three. If the Nasdaq 100 drops by 1% in a day, then ideally, SQQQ would rise 3% that day. 

While this aggressive strategy can be lucrative in a bearish market, day traders should remember it requires high-risk tolerance and constant monitoring. SQQQ (and its brother TQQQ, the 3x long Nasdaq 100 ETF) are complex financial instruments with high expenses that frequently suffer tracking errors. Be sure you understand how these instruments function before day trading them.

Tesla Inc. (TSLA)

After being left for dead earlier this year, TSLA shares have roared to life and recently turned positive on the year thanks to a massive 27% gain in the last month. Despite Cybertruck's delayed production and ongoing recalls, substantial delivery numbers in Q2 have fueled a big rally. The stock hit a 9-month high, defying expectations amid a broader electric vehicle sales growth slowdown. 

Tesla's recent performance highlights its potential for short-term gains, especially with the upcoming July earnings call and the Robotaxi hype. While the Cybertruck is still problematic, positive news and future catalysts may continue to push up TSLA shares. Day trading strategies have long favored TSLA’s volatile stock, and it appears another opportunity has arrived as average share volume has been nearly double the three-month average this week.

Marathon Digital Holdings (MARA)

MARA is an enticing day trading option since the cryptocurrency market heavily influences its price. As a Bitcoin miner, MARA's price swings wildly alongside the digital currency. This volatility makes it attractive to day traders who can capitalize on short-term price movements. Unlike buying Bitcoin directly, MARA offers exposure to cryptocurrency through a publicly traded company. 

However, this also means additional risks: day traders must be aware of the headwinds of the mining industry, such as operational costs and regulations. Additionally, MARA shares have a beta of 5.57, meaning they are more than 5x more volatile than the S&P 500. MARA is a stock for trading, not investing.

GameStop Corp. (GME)

GameStop is the quintessential day trading vehicle. In 2021, the stock gained worldwide notoriety as the first of the ‘meme stocks.’ Fueled by a perfect storm of social media hype, a passionate online community, and some large hedge funds joining the fray, GME shares underwent a massive short squeeze and parabolic price increase. GME's soaring price exposed the vulnerability of several hedge funds with substantial short positions, who quickly had to cover their shorts to prevent catastrophic losses. 

While the initial frenzy has subsided, GME's volatility persists. Day traders are drawn to its potential for sharp price swings, driven by anything from company news to a well-timed cat meme from a Reddit trader. The stock price has a 52-week range of $9.95 to $64.83, highlighting the potential for huge sustained swings. However, these same forces can trigger rapid declines as company fundamentals look poor. Volatility abounds, but GME’s online community often hypes the shares beyond reasonability.

Invesco QQQ Trust (QQQ)

Regular ETFs can be day trading vehicles, too! QQQ tracks the NASDAQ-100, a basket of the 100 largest nonfinancial companies on the Nasdaq composite. Since the QQQ reflects the performance of major tech giants, big up days in the tech sector can lead to significant gains for the ETF. QQQ is a gigantic fund with over $286 billion in assets and 35 million shares traded daily, offering excellent liquidity and low bid/ask spreads. A 0.20% expense rate for a tech ETF isn’t a bad deal.

Traders who believe the tech sector is primed to surge can hop on QQQ to amplify their potential returns across a broad base of stocks. However, the QQQ inherits tech volatility, meaning sharp downturns can inflict heavy losses. Day traders should be comfortable with this and have a clear strategy before putting money into the QQQ.

iShares MSCI Brazil ETF (EWZ)

Day trading doesn’t just mean riding waves on domestic stocks; sometimes, emerging markets can provide volatility that few sectors in the U.S. can. EWZ tracks Brazilian stocks, offering a chance to own large swaths of the Brazilian stock market. EWZ holds some of Brazil’s largest public companies, such as Vale SA and Petroleo Brasileiro SA, and boasts more than $4 billion in net assets. 

Recently, investing in Brazil has meant attempting to profit from a downturn as Brazilian stocks have struggled amid economic and political turmoil. However, Brazil's market can be volatile, with the potential for sharp swings in either direction. This risk demands close attention, and day traders must stay aware of new and current events in the volatile country. (One benefit: EWZ pays a 7.8% dividend yield to compensate for the risk of these companies.)

Paramount Global (PARA)

Shares of PARA have been lighting up the market lately thanks to the recent merger agreement with Skydance Media, a production company backed by Oracle co-founder Larry Ellison. Under Ellison's leadership, investors see the potential for improved profitability and a boost to Paramount's digital platforms. 

This positive news and unusually high trading volume have created a dynamic market environment for day traders. Share volume has topped 20 million recently, and PARA's ongoing merger negotiations could present opportunities for short-term gains. However, day traders should know that the stock still faces analyst skepticism, and the merger's finalization could cause fluctuations.

AST Spacemobile (ASTS)

Here’s a far-out idea: AST SpaceMobile aims to create the first space-based cellular broadband network. While it's a theory with plenty of potential, the network's success hinges on overcoming technical hurdles and securing partnerships with mobile network operators. Despite this uncertainty, ASTS shares have seen wild swings in recent months. Positive news can trigger significant price jumps, making it attractive to day traders with a high tolerance for risk, but even minor setbacks can cause the stock to plummet. ASTS has a market cap of just over $3 billion and trades about 10.8 million shares daily on average.

Iris Energy (IREN)

Iris Energy is another high-risk, high-reward stock play for day traders with the right mindset. IREN is volatile in the green energy sector, focusing on sustainable Bitcoin mining with renewables. Combining cryptocurrency with renewable energy might seem like a pie-in-the-sky idea, but it’s a hot issue that can cause sharp price swings. Day traders can capitalize on these movements if they can stomach the risk. However, IREN is a young company with a sub-$3 billion market cap and a still-developing track record, having only incorporated in 2018 and launching an IPO in late 2021.

What Makes a Good Day Trading Stock and ETF?

How do you locate good stocks and ETFs for day trading? It depends on your style, technical prowess, and profit goal, but there are a few common characteristics to watch out for. Here are five critical factors for finding day trading stocks.

• Liquidity — Having liquid shares is vital for day traders for several reasons. First, it enables easy entry and exit points since there’s no shortage of buyers or sellers in the market. Additionally, liquidity prevents price cascades when unloading prominent positions. There are few worse feelings than attempting to exit a day trade and getting only a partial order filled.

• Volatility — You might not want volatility if you’re using a 60/40 investment strategy, but for day traders, it's a necessary evil for making money. Volatile stocks make significant moves in small time frames, allowing day traders to enter and exit positions in a matter of hours (or even minutes) and still earn worthwhile returns.

• Tight Bid/Ask Spreads — The spread is the difference between buy and sell prices on public exchanges. When you buy a stock, you pay a little more than the person selling it receives; the difference goes to the market maker for facilitating the transaction. While most spreads are merely pennies, high spreads can eat into profits and often signal illiquid securities.

• Upcoming Catalyst — Whether it’s an earnings report, product launch, or technical trading signal, good day traders often benefit from a catalyst that creates outsized demand. Good-day traders identify these catalysts before the rest of the market and profit when retail traders pour in.

• Market Capitalization — Market cap also plays a role in a day trading strategy. Large-cap stocks have the most liquidity, but it's hard to create volatility when their cap is measured in hundreds of billions (unless you’re NVDA). Day traders might prefer small or large-cap stocks depending on their strategy, but both have pros and cons.

Being armed with information is essential, but day trading isn’t a skill you can master overnight. These characteristics will get you started; however, they’re only one component of a comprehensive trading strategy. Day trading carries significant risk, so don’t dive into volatile stocks unless you’re confident you can handle them.

Choosing the Right Brokerage for Day Trading Stocks & ETFs

Picking the right day trading broker is an important step as well. Consider the following when selecting a broker for your trading strategy:

• Intuitive Trading Platform — Day trading often requires quick action, so you’ll want to pick a broker whose trading platform makes you feel comfortable and confident.

• Robust Charting Tools — To find the best entry and exit points, you'll need to understand technical analysis, which means studying charts and finding signals. Not every online broker provides extensive charting tools, so make sure your choice has the necessary features.

• Diverse Order Types — Any day trader must Utilize an array of order types. Depending on the complexity of your strategy, make sure you can place limit orders, stop-loss orders, trailing stops, and multi-leg orders.

• Costs and Available Assets — Does your broker offer commission-free stocks and ETFs? What about options? Are all the stocks you’re looking for available to trade? Find out the answers to these questions before opening an account.

Here’s a quick comparison of some of our favorite day trading brokers:

Frequently Asked Questions

Best Stocks & ETFs to Day Trade Methodology

Benzinga analyzed a range of stocks & ETFs to determine the best for day trading, considering trade volume, price movement, newsworthiness, and market volatility. It compiled a list of stocks, including Tesla, NVIDIA, and Invesco QQQ. Traders should compare these stocks to their portfolio, monitor performance, review news, diversify their portfolio, and stay updated on current events. Day trading carries risks, and traders should conduct thorough research and manage risk effectively.