2022 has been an intense year for day traders, from GameStop taking center stage on social media to Elon Musk’s involvement in Dogecoin. In the middle of all this, there’s a group of people making big bucks from it. Day traders! Read about the best stocks to day trade in 2022.
What Is Day Trading?
Day trading can be simply stated as buying and selling financial instruments within a single trading day so that all positions are closed out at the end of each day and start afresh the next day.
Day trading contrasts with the long-term trades underlying buy, hold and value investing strategies. It is made easier for you by using day trading software.
It was once an activity that was exclusive to financial firms. However, with the rise of electronic trading platforms, it’s become easier for the average individual investor to participate.
Now you can day trade from the comfort of wherever you are!
Read: How To Choose A Stock That Will Guarantee Returns On Investment
What Are Makes A Good Day Trader?
Here is what makes you a successful day trader;
1. Day Trading Experience
Individuals who attempt to day trade without an understanding of market fundamentals often lose money. Technical analysis and chart reading are both good skills for a day trader to have.
But without a more understanding of the market you’re in and the assets that exist in that market, charts may be deceiving.
2. Strategy
You need an edge over the rest of the market. There are several different strategies you can use including swing trading, arbitrage, and trading news.
These strategies are refined until they produce consistent profits and effectively limit losses.
3. Sufficient Capital
It takes money to make money is a cliché that resonates with day traders.
Using a large amount of capital to make many small trades increase potential returns. You should only risk capital which you can afford to lose.
Not only does this protect you from financial ruin, but it also helps eliminate emotion from your trading
4. Discipline
It is a key trait every day trader needs. Many day traders end up losing a lot of money because they fail to make trades that meet their own criteria.
What Strategies Should I Learn To Day Trade?
The following are several day trading strategies by which you can attempt to make profits;
1. Minimizing risk capital
Many successful day traders risk less than 1% to 2% of their accounts per trade.
2. Trend following
Trend following is a strategy used in all trading time-frames, which assumes that prices of securities that have been rising steadily will continue to rise and vice versa.
You can profit by buying the security that has been rising, or short selling a falling one, expecting the trend to continue.
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3. Range trading
Range trading is a trading style in which stocks are watched to have either been rising off a support price or falling off a resistance price.
Every time the stock hits a high, it falls back to the low, and vice versa.
You, therefore, buy the stock at/near the low price and sell at the high.
4. Scalping
Scalping is particularly popular in the forex market and looks to capitalize on minute price changes. It applies technical analysis and the driving force is quantity.
The basic idea of scalping is to exploit the inefficiency of the market when volatility increases and the trading range expands. Scalpers also use the “fade” technique.
When stock values suddenly rise, they short sell securities that seem overvalued.
5. Rebate trading
Rebate trading is the act of buying and selling short Stock from Electronic Communications Network.
Most ECNs charge commissions to customers who want to have their orders filled immediately at the best prices available but pay commissions to buyers or sellers who “add liquidity”.
Therefore, you trade more shares to contribute more liquidity and earn more money
6. Price action trading
Price action is a method of day trading where you make decisions about trade based on price movements using technical analysis.
While many traders use price action trading, it is still not a one-size-fits-all technique you should practice before trading with real money.
7. Market-neutral trading
Market-neutral trading is a strategy that is designed to mitigate risk in which you take a long position in one security and a short position in another security that is related.
Other strategies you can explore include:
- Algorithmic trading
- Contrarian investing
- Trading the news
What Do I Need To Day Trade?
Well, day traders typically require the following;
A Trading Desk
This is usually reserved for traders working for larger institutions. The dealing desk provides these traders with order executions, which are vital when sharp price movements occur.
Research in News Sources
Day traders mostly capitalize from the vast opportunities created by the news, so it is imperative to be the first to know when something significant happens.
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Analytical Software
Trading software is an expensive necessity for most day traders. Those who rely on technical indicators rely more on software than news. This software may be characterized by the following:
- Genetic and neural applications: These are programs that use neural networks and genetic algorithms to perfect trading systems and make more accurate predictions of future price trends.
- Automatic pattern recognition: The trading program looks out for technical indicators or more complex indicators such as Elliott Wave patterns.
- Back testing: This allows traders to look at how a certain strategy would have performed in the past in order to predict more accurately how it will perform in the future.
- Broker integration: Some of the applications even interface directly with the brokerage which allows for an instantaneous and even automatic execution of trades.
These tools provide you with an edge over the rest of the marketplace. No wonder without them so many inexperienced traders lose out.
How Can I Start Day Trading?
The first thing you will need is a trading plan and strategy. Once these are in place, you will need to;
- Open a Trading Account: Opening a trading account for day trading is easy and it takes only a few minutes to provide your name, email address and any required proof of identification.
- Select the Stock(s): 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.
Should I Consider Day Trading For A Living?
There are two primary divisions of professional day traders: Individual traders and those working for larger institutions.
Most day traders who trade for a living work for large institutions. These traders have an advantage because they have access to a direct line, a trading desk, large amounts of capital and leverage, expensive analytical software, etc.
They typically look for easy profits that can be made from arbitrage opportunities and news events using these resources. Individual traders often manage other people’s money or simply trade with their own.
Few of them have access to a trading desk, but they often have strong ties to a brokerage (due to the large amounts they spend on commissions) and access to other resources.
However, the limited scope of these resources prevents them from competing directly with institutional day traders.
Individual traders typically day trade using technical analysis and swing trades combined with some leverage to generate profits on such small price movements in highly liquid stocks and that is how they are able to make a living.
Wondering whether to day trade for a living, match your strengths to the above, and see where your greatest chances of success fall.
The 15 Best Stocks To Trade In 2022
Thinking of starting but do not know where to begin from? Well, here are the 15 stocks you don’t want to miss in 2022!
#1. Etsy Inc.
Etsy Inc. is an American e-commerce company focused on handmade or vintage items and craft items. These items fall under a wide range of categories including; jewelry, clothing, and home decoration, furniture as well as craft supplies and tools.
Etsy Inc. has seen its stock price shoot up by over 250% in the year 2020 itself. This shows the stock has high price movements with more profitable swing trade opportunities.
Such high price movements in a single upward trend make Etsy Inc. one of the good stocks to invest in. The escalating demand of the e-commerce industry has made Etsy Inc. one of the top day trading stocks.
Read: 15 High Yield Dividend Stocks You Should Buy in 2022
#2. NIO
NIO has a market valuation of around $60 billion and its share is trading at $34. The share price has skyrocketed as compared to last year’s trading price.
NIO reported a revenue increase of 127% from the second quarter of 2020 with the revenues standing at US$1,308.4 million.
The company has gained a huge market share in its local market due to huge support from the government. The Chinese multinational automobile manufacturer specializes in electric vehicles.
With the EV industry reaching its peaking, NIO is speeding up its production to cope up with the demand.
The large market base of China and support from the government make NIO a top trade stock option for day traders today!
#3. ZIOPHARM Oncology Inc.
ZIOPHARM Oncology Inc is a biotechnology company that acquires and develops cancer therapies. It focuses mainly on the development of advanced methods to boost the human body’s own immune system to fight against cancer.
ZIOPHARM Oncology Inc. has been a trending trade stock lately due to the recent developments related to its board members. There has been a remarkable increase in price to volatility action with trends showing high daily volatility.
ZIOPHARM Oncology Inc is an ideal stock for you if you desire to benefit from high speculations and price movements.
#4. Advanced Micro Devices Inc.
With its markets expanding to both business as well as consumer spheres, it offers a wide range of product lines which includes primarily microprocessors, motherboard chipsets, graphics processors, PCs, and embedded system applications.
AMD has benefited from the pandemic following the skyrocketing demand for its products. As many are working from home, the demand for laptops and PCs with fast processors has shown to grow drastically.
As a result, AMD has claimed a position as one of the best day trading stocks.
#5. Zoom Video Communications
Since lockdown, millions of people shifted to the virtual mode of communication for personal and business work. As the best solution, millions downloaded the Zoom app.
This boomed its growth as it touched a market cap of $162 billion, increasing its value more than IBM.
For the fiscal year ending 2022, the company reported total revenue of $2,651.4 million and $2.25 per share. The reason behind the explosive growth in revenue is the exponential growth in customers.
At the end of the fiscal year 2022, the company reported approximately 467,100 customers with more than 10 employees.
In the future, Zoom is well-positioned for stronger growth and without doubt one of the best day trading stocks.
#6. Tesla Inc.
As one of the leading advocates of environmental preservation, Tesla Inc. is highly attractive to day traders.
Recently, Tesla Inc.’s revenue jumped by almost 40% to around $9 billion. The 40% increase was a huge payout to many day traders that had invested. Its stock is currently trading at around $753.
It has risen from a price of $95 at the start of 2020 exhibiting an astounding 700% increase in share price in less than two years. No doubt that Tesla Inc. Is one of those companies that will make you proud day traders.
#7. Roku Inc.
Roku Inc. is an American company offering digital streaming services and hardware. RInc. being a unique OTT (Over the Top) hardware and service provider has seen drastic growth due to a consistent increase in OTT viewership.
OTT platforms like Amazon Prime, Netflix, and others have been in the news for their attractive content and skyrocketing viewership. The recent lockdown has caused a growth in the OTT industry since major new movie releases are now adopting OTT platforms instead of theatres.
Roku Inc. has been experiencing high traded volume each day for the past many months as traders are gathering to benefit from its high price movements.
#8. Amrep Corp
Amrep Corp is a renowned New Jersey-based company primarily involved in real estate and media services managing its operations through its subsidiaries namely; AMREP Southwest Inc. and Kable Media Services Inc.
Amrep Corp. has been a trending stock lately due to the unexpectedly positive results of the 2022 first-quarter fiscal report ended in April 2022 with a net income of $739,200 or $0.95 per share which has led to a strong increase in price to volatility action with up trends.
This has made Amrep Corp an ideal stock for day traders who desire to benefit from high speculations and price movements.
#9. Aegon N.V.
Aegon N.V. is a trusted life insurance and asset management company based in the Netherlands, Dutch. It is one of the best day trading stocks under $5 per diluted share.
With Aegon N.V. now adopting efficient cost-cutting by selling a non-core volatile business and reducing its risk exposure, has made it a trending stock lately.
This has increased its price to volatility action as higher volatility is observed opening sessions.
Targeting a cost cut of 13% by 2023, Aegon N.V. is a great opportunity for day traders who desire to benefit from high speculations and price movements with the best day trading stock under $5.
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#10. Twilio Inc.
Twilio is a cloud communications platform. It allows software developers to programmatically make and receive phone calls, send and receive text messages, and perform other communication functions using its web service APIs.
Twilio has evolved as the top cloud computing company reported a total increase in its revenue by 55% with more than 221000 active customers by 2020. Since lockdown, Twilio stock is on a rising streak.
The active customer accounts affected the exponential growth in its stock price and volatile nature making Twilio an excellent Day trading stock company.
#11. NIKE Inc.
Nike’s share has been on a rising streak with the share has increased by more than 100% after the COVID hit.
The billion-dollar multinational corporation earnings and sales stayed strong despite the global recession and major disruptions. Company focuses on the design, development, and worldwide distribution of footwear, apparel, and services.
The sporting brand recently reported a net income of $5.7 billion and revenue of $44.5 billion, reporting an increase of 19%.
NIKE’s is highly volatile with unbeatable release drops of their products which leads to increased margins making it one of the best trading stocks for you.
#12. Curaleaf Holdings
Cannabis is becoming a big business as it looks set to become legalized around the world. Although its share price is somewhat uninspiring in terms of volatility, it could suddenly shoot up if the right regulatory framework for 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.
Although its share price appears to have flat-lined over the past decade, the price has actually been quite volatile on a shorter time scale during the first months of 2022.
As such, this stock may be suitable for day trading.
#13. Netflix
Due to increased demand for streaming services during the lockdown, the stock of Netflix has soared.
By the end of the fiscal year 2020, the streaming service company added 36.6 million subscribers and has now crossed 200 million subscribers in total.
Recently, Netflix reported an increase in its revenue to $14.5 billion by 17%. The stock of Netflix has been on a rising streak way before the pandemic. But the pandemic gave a huge boost to the stock price.
At the start of 2020, the stock of Netflix was trading around $329.
Today it is trading at $606, exhibiting an 84% increase in less than two years.
#14. AMC Entertainment
One of the world’s largest global entertainment companies, AMC Entertainment is currently at a market valuation of $24 billion with the AMC share is trading at $47.
Not only is AMC award-winning content but also its ability to generate and provoke memes from social media. No wonder it has taken the title of 2022’s best meme stock before.
The company published a quarterly report that reflected its revenue of $445 million while last year’s second-quarter revenue totaled $18.9 million and a net loss of $349.
It is one of the best day trading stocks because of its volatility and trending nature. In not more than a year, the stock has shown a staggering improvement of over 2000%.
#15. Apple
You must have expected this even as a beginner. The trillion-dollar company’s stock is popular at this time of the year as it unveiled the next Apple family at the Apple event.
The stock has come off its highs but has managed to hold its 50-day SMA and is one to hold for the long run.
Read: How To Make Money In The Stock Market in 2022: Full Guide.
Frequently Asked Questions
The legal limit is four times the maintenance margin excess.
At least $25,000 in your brokerage account to qualify for pattern day trading.
In the forex markets, yes.
Bill Lipschutz
Average annual pay is $80,081
Conclusions
The misconception of overnight success in day trading is common. This is mainly because people underestimate the power of learning.
Day trading needs time to become an expert and with time, you’ll be one of the many reaping huge rewards in a single night!
References
- Investopedia: https://www.investopedia.com/
- Wikipedia: https://en.m.wikipedia.org/
- Amazon: https://www.amazon.com/
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