Professional pattern day traders are different than most other investors. Every single professional day trader has a true passion for the intricacies of short term price movements and a set of personal rules that are followed on a minute by minute basis. It’s not a profession or even hobby for the risk adverse. One needs to embrace risk and make it work in positive ways to survive the day trading jungle.
Finding the best stocks to trade is a test for all traders. Swing traders, pattern day traders and even long term investors are faced with this challenge. However, pattern day traders need to address the question numerous times per day.
Personal stock research is a very time and energy consuming endeavor. However, if you want to put the time into it, it can be very rewarding.
1. Start by studying the pre-market and European stock markets
Look for stocks making unusual moves before the 9:30 AM EST stock market open. Often CNBC or Bloomberg TV will feature these early movers. These stocks can make ideal fast movers after the market opens. Try to discover what’s causing the sharp move and be prepared to fade it ( go the other way) if it appears to be failing as the open gets closer in time. Don’t forget to watch the volume of these early movers. Be certain that the stock you decide to trade has adequate relative volume.
In addition, many traders like to watch Europe. The reason being is many U.S. based stocks have a European counterpart or have operations in the euro zone. What happens there will have a direct effect on U.S. markets.
2. Don’t dismiss social media
Believe or not, there are hedge funds that use social media data mining as a trading strategy.
Follow sites like stocktwits, seeking alpha, and even twitter for tips on the hot stocks for the day. Professional traders use squawk boxes to talk to each other and we have social media to communicate ideas. Don’t trade blindly on twitter type tips. Always dig deeper to see if there is any fact behind the claims.
3. Watch corporate announcements
While this may seem obvious, day traders have a special affinity toward these announcements as they move the stock price.
Be certain to have stocks making earnings or other announcements that day on your day trading watch list. Earnings can move a stock sharply during the trading session.
SOURCE: http://tradingtips.com/daily/day-trading/trading-tips-professional-day-traders/