squirrel,
as you can see from all the posts here, there are as many strategies / stock screening ideas for daytrading as there are traders out there.
So it depends very much on what you feel comfortable with.
But there are a few general rules in trading, which you should adhere, unless you want start to become a speculator :
1. you need sufficient amount of supply and demand = liquidity / volume.
Many "wannabe" traders , most of them with small trading accounts, go for the low-priced issues, pink-sheet and pennystocks, because they read about spectacular moves of 50%, 100% and more within a day.
These moves are often enough based on heavy manipulation on thinly traded stocks.
As a trader, stay away from those. If you want to gamble - play them.
As a trader, you also want to stay away from IPO's.
( are there any left ? )
2. You'll need a fair amount of movement in the stock = a certain level of intraday volatility which gives you enough chances to participate in moves.
3. Decide, what kind of daytrading you want to do - intraday swings of several points can only be traded on a relatively small number of stocks, most of them can be found in the tech & biotech sectors.
I'd say ( others may correct me ) there are only about 100 stocks, most of them NASDAQ, which make intraday-moves of several points on a regular basis and have enough liquidity to trade them day in day out.Still too much to follow on a daily bases, So I weed them out by some restrictions on daialy trading range and volume. My list contains only about 30 stocks, enough to follow on regular basis IMO.
These are the preferred targets of many daytraders. Playing these stocks with lotsizes of 1000 shares or more involves high risk and requires strict stop-loss discipline. I trade these stocks in lots of 100 - 300 shares, but have no more than 3 or 4 positions open at the same time, but sometimes carry positions overnight as well.
( I guess, it's pretty much the Tony Oz style, which I prefer )
4. If you want to scalp the teenies with large lotsizes, you might look for less volatile but still liquid stocks, so getting in and out should not turn out to be a problem.
If you like to scalp the spread, look for reasonably volatile stocks which trade in volumes less than 1 Mio shares a day. Here you'll find often enough opportunites because of bid / ask of spreads more than 1/2 point.
5.Momentum-trading ( in Play )
here you trade stocks which appear in the headlines of newspapers, magazines like Barrons or IBD or on CNBC. Also the up & downgrades of powerhouses like Goldman Sachs are always good for a few points on any given day.
Other popular sources for momentum stocks are well known investing-websites and the typical hotlists of mover's and shaker's, new 52 week highs and lows, unusual volume etc.
Unless it's a stock which trades already with high volatility and volume, you'll find, that many of these event-driven moves don't last very long; maybe only a few days, before the stocks fall back into the daily agony of low volatility.
Make sure you checked the support & resistance landscape before jumping on any of those momentum trades. I have paid for some expensive lessons when I started daytrading these stocks about 2 years ago. Don't let your daytrade turn
into a longterm investment ;-)
6. Bread & Butter Stocks :
These are stocks which tend to work well with many popular technical indicators, support & resistance and have a strong correlation to follow the S&P futures. Many of them can be found among the DJ 30 Industrials, the Nasdaq 100 and S&P 100 stocks and are the preferred objects traded by many professionals.
However, be aware that moves in these stocks are also affected heavily by program-trading, which kicks in at certain key price-levels and / or fair-value ratio's between futures and the stocks.
7. Trading stocks on certain price / volume patterns - this is the area, which requires,IMHO, the most knowledge about TA and is subject to a high degree of subjectivity.
What you might interpret as a certain promising pattern, might just mean - well nothing at all to other traders.
Since you cannot follow thousands of stocks on a daily basis, even with the best screening tools, you need to describe the desired pattern very accurately with your screening tool's programming language, to enable it to find exactly what you're looking for. Most probably, you'll want to restrict your pattern screening on a watchlist of a few hundred stocks which fit some basic criteria for trading.
With intraday-screening, there's little time to prepare your trade, because you don't know in advance when the desired pattern / signal will pop up.
Once a it does, you have to evaluate the situation very quickly and make your decision, or you'll miss the better part of the move.
Breakout's or reversals at key-pivot points tend to happen fast and on high volume.
Very often, there are only a few moments left to enter the trade after the signal appeared.
This is true especially for so called "high probability patterns" as published on many charting websites.
The only high probability with these patterms is, that so many trades watch for them that they become a kind of self-fulfilling prophecy - at least for a few moments though.
( Buy the party, sell the hangover in that case ).
Good screening eod screening-tools, webbased :
Get an overview at my website under :
http://www.tradeshark.de/files/Stockscreening.htm
or here :
http://www.daytradingstocks.com/stockscreeners.html
Software :
http://www.bigeasyinvestor.com
http://www.tc2000.com
http://www.3mtrading.com
http://www.aiq.com
http://www.qp2.com
http://www.omnitrader.com
Realtime-screeners / software & websites
http://www.marketscreen.com
http://www.ravenquote.com
http://www.traderbot.com
http://www.tradetrek.com
http://www.realtimetraders.com
http://www.hardrightedge.com
http://www.tradingmarkets.com
Finally, here a simple screen, which I use with Bigeasyinvestor to find daytrading candidates for swingtrading :
1. Average daily range >= 4 USD
2. 1 Month average volume >= 800.000
3. 1 Month average volume <= 15.000.000
4. Closing price >= 20 USD
5. beta >= 1
This screen brings up about 25 - 35 Stocks - from a database of about 8500 issues.
I guess, that's a number one can handle on daily bases.
I execute this screen every weekend.
But most of the time, there are not much changes to make to my list.
The ususal suspects are :
AFFX, ALXN, BEAS, CHKP, CI ( yes not always only NASDAQ stocks ), CMVT, DIGL, ELNT, EMLX, GILD, GMST, HGSI, ISSX, ITWO, MERQ, MUSE, NETE, NEWP, PDLI, QCOM, QLGC, SEBL, TXCC,
VRSN, VRTS, VTSS.
Most net stocks have failed to make to my screens since a couple of months.
Signs of bottoming out on lower volatility ? ( Just a remark )
Please be aware, that this screen is not for finding any significant entry or exit patterns - it's just for determining stocks which provide enough liquidity and volatility for being good swing-trading candidates.
Further evaluation and check of the TA landscape is always required !!!
Hope this helped a bit
Good Luck
