Day trading is a very dynamic and risky business. As a stock day trader, you must have a keen eye to watch the stock movements throughout the day, and a great deal of understanding to analyze each market situation, so as to make profits and avoid loses. As a day trader one must be very confident, decisive, have sound knowledge about the market, know his own limitations and invest accordingly, have no fear nor get tempted with greed, have a great deal of patience to watch the movement of stocks in the market and then invest, take responsibility of his decisions and acknowledge his mistakes and learn from them, and be prepared to survive heavy financial loses. All of these traits can increase a person's chance of becoming a successful day trader.


Day trading is all about investing in financial instruments such as stocks, currencies, futures, etc. To know which are the best stocks or specific financial instruments to trade, one must look for a few basic criteria. Although the following criteria are provided for stocks, they apply to other financial instruments as well, such as forex (currencies). Here they are:

1. Volatility: The stock should be highly volatile, that is, the stock prices should move (upwards or downwards) quite frequently during a trading day.

2. Liquidity: It basically refers to the number of buyers and sellers in a stock. Good liquidity is an essential criterion for a good stock to day trade. It ensures that there are a large number of buyers and sellers in a particular stock so that you can quickly and easily move in and exit a position. It will help prevent holding a position for too long, which can be risky, and also reduce the difference between the bid and ask prices of the stock. Good liquidity implies a higher number of transactions, a greater number of shareholders, more outstanding shares in a stock, and a greater number of market participants such as makers.

3. Volume: It should be significantly high in a suitable day trading stock. This ensures that a trader can buy or sell large quantities of stock without adversely affecting its market price.


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