When you want to invest in stock markets, short-term stocks present an excellent opportunity to gain profits. It can be thrilling and enticing to pick the best short-term stocks to buy right now. These stocks are easy to buy and sell due to increasing accessibility to the markets. The liquidity is also viable when trading for short-term stocks. But, it always makes sense to choose the best options that suit your investment portfolio. Here are some tips to help you out:
Start with the Due Diligence Research
The trading in the markets during a bull run looks like a joy ride, but any downfall can be harmful to your investment. Hence, you should go through a detailed process to select the right stocks and avoid this risk. Consider the market cycles and analyse the best stocks using reliable filters.
You should also look at the micro and macroeconomic factors that affect the performance of the stock in the short term. It may include the regulatory aspects, financial performance in the recent quarter, and business outlook.
Consider the Volume
In short-term stock trading, volume refers to the total number of shares traded in the market during a specified time. Every transaction conducted during this period contributes to the trade volume. For example, if 30 transactions were made in a day, 30 will be the volume for that day.
As a day trader, you can consider volume to be an indicator. Use this factor to read the movement in the market. If you find a sudden spike in stock, the strength will depend on the volume traded during that specific time.
Use the volume for your advantage in the short-term stock trading. When you have a substantial capital to invest, buy stocks with significant volume. Instead of relying on a limited list of top stocks, broaden your perspective and find stocks having a spike in their volumes.
Assess the Volatility
The risk and unpredictability factor of the market can also influence the value of day trades. If a stock has high volatility, its price can change drastically within a short time.
This can be an ideal trading position for the best short-term stocks to buy right now. However, when the volatility is low, the value of trade remains constant with a smaller margin to make quick profits.
To determine the volatility of any stock, you can use the beta value that predicts the total volatility of the returns against the benchmarked returns.
Do Technical Analysis
When dealing with short-term trade positions, technical analysis can be the Holy Grail for the traders. It helps to perform the primary analysis for some shortlisted companies with a quick overview.
The seasoned traders also believe when fundamentals aren’t exciting or clear, you can simply rely on technical analysis to scan the market and choose stocks with good momentum.
This process tracks the historical trading volumes and prices to find the trends for daily trading. You can utilize the information and patterns to make buying and selling decisions.
Choose the Best Timing
In day trading, timing can make a lot of difference. It is essential to know the best times for trading without risking too much. An ideal approach is to start early in the day.
If you do not get started with the market, you may struggle a bit to make profits. Also, starting early gives you time to do proper research and configure your computers with the best stocks you choose for active tracking throughout the day.
Another important thing is to avoid trading for the entire day. While you may be tempted to earn more by trading all day, your profits will be better if you give 2-3 hours for trading.
Analyze the Delivery Percentage
As a beginner in day trading, you may get confused about the delivery percentage. It is a vital factor to understand the potential of security to earn profits in the short-term. Monitor the stock 3, 5, and 7 days average delivery percentage for a detailed analysis.
Security-wise statistics help to determine the price, delivery volume, and the data for delivery percentage. The implication of this data is simple. A low delivery percentage represents high activities in short-term trades. This means the current price patterns are dubious and, most likely, short-lived as well.
However, if the delivery percentage is high, it points to a long-term activity in the stock. This implies that current price trends will sustain, and it is safe to invest in the stock on a particular day.
To invest in the short-term stocks, understand this. Each factor should work together in stock to fetch you the profits. This includes volume, trend, volatility, and delivery percentage of the stock to work in tandem with each other to deliver the best returns.
Most importantly, consult an advisory firm that can provide the perfect mix of the best strategies and tips to buy profitable stocks for the short-term.