Day trading is the act of buying and selling a stock (or another financial instrument) within the same day. Seasonality can be a great assist to day traders as it can help identify which stocks have historically been active as well as what time and day of the week. In this article we’ll dive into different ideas around day trading, utilizing intraday seasonality and combining it with other powerful day trading strategies.
What is Day Trading?
Entering a trade and exiting a trade on the same day is considered a day trade. The best definition of day trading can be found here: Day trading – Wikipedia. Many countries and brokers limit the number of day trades a trader can make until their account is funded above a certain threshold. This pattern-day-trade rule or PDT can be read about here: Am I a Pattern Day Trader? Know the Day-Trading Margin Requirements | FINRA.org
Many beginning traders should tread lightly when placing day trades as markets can be unpredictable in short time horizons. Many that begin day trading will begin using trading charts, technical indicators, breaking news and chart patterns.
Seasonal trading can be a great intro to day trading as the intraday, one-day trades provided by the watchlist and Seasonaltrading.com application provide historical wins and losses along with the exact entry and exit times that have fared well historically. This can provide simple to follow trade ideas for day trading beginners as well as confirmation or helpful insights to seasoned day traders.
Day Trading Strategies with Seasonality
Day trading the best stocks for tomorrow can be a great way to earn a living as well as a fast way to destroy a fortune. Intraday trading is looking for stocks that will move within the same day to capture a decent return. Overtime, the algorithms of the market leave patterns and often like to trade when liquidity and volume are highest – typically around the stock market open and the stock market’s closing time. These patterns manifest themselves in seasonal patterns allowing traders to identify the time windows where certain stocks may have historically outperformed their peers. This information can be incredibly valuable when constructing a watchlist of intraday stocks to trade tomorrow.
Seasonaltrading.com is a large proponent of prudent, data-driven trading and investing. Our intraday seasonality tool will identify which stocks do the best during all times of the day, each day. Some stocks may preform best in the morning whereas other stocks may outperform in the afternoon. Additionally, Mondays may be better for tech stocks than Fridays. These patterns exist due to different designated market makers and hedge funds accumulating trading positions. Each human interaction is subject to the human’s behaviors thus creating patterns but distinct ones across all stocks.
Best Day Trading Strategy?
Thousands of trading strategies exist for day trading including VWAP, TWAP, momentum, opening range breakouts, fading support and resistance, breakout trading, breaking news, and more. Which is the best day trading strategy? It is hard to say and often the market and trader will determine that over any given period. One determining factor to crown the best intraday strategy would be data. If a strategy cannot be proven or backed up by data, then any serious investor or trader would have a hard time risking significant capital in pursuit of the strategy’s reward. Seasonality is easily quantified and historically verified. We encourage all traders to take the free trial to our application and newsletter to see how powerful seasonality can be for swing and day trading alike. Sign up free here: Pricing – Seasonal Trading
Best Day Trading Stocks
Momentum and growth stocks are much better suited for intraday trading than value stocks and blue chips. The momentum and growth stocks exhibit the most volatility and price gaps which ultimately lead to better trading ranges. On the other hand, it is unlikely that McDonalds or Coca-Cola – will provide enough intraday volatility to warrant day trading. The business will not change drastically from quarter to quarter thus providing very few trading opportunities outside the general ebbs and flows of the broader market. There are always exceptions to every rule, however. Seasonality can help identify historical periods where any stock, blue chip or growth, outperformed other stocks and its previous self. These insights and clues to market data can help a trader find the right timing to get in and out without having their capital tied up in a slow moving, legacy business.
Shares to buy today for day trading with seasonals
Day traders often search for biggest gappers or stocks coming off earnings announcements to find day trading opportunities. Traders utilizing intraday seasonality expand the tradeable universe quite a bit. The benefit of viewing intraday seasonality is that many traders are stuck focusing on a handful of symbols for the day while intraday seasonality can find opportunities where the bots and algorithms tend to follow similar patterns between certain time windows of the day. There may be no news, earnings announcement, or gap in a stock, but it may be a great candidate for day trading because the seasonal effects show a strong uptrend from 1:00 PM to 3:00 PM on Tuesdays.
Scanning thousands of stocks to find the best ones to buy for day trading is often a difficult task and requires third-party software, scanning and effort. Seasonaltrading.com has an Artificial Intelligence bot that scans all of our data and sends a newsletter with the top 5 intraday stocks for the coming trading day to your inbox. You can find more than 5 in our application. Get access to both with a free trial here: Pricing – Seasonal Trading
Can Seasonality help Day Trading Beginners?
New day traders can be overwhelmed with fast moving stocks, large price gaps, breaking news and more. Beginning day traders need a concrete plan, risk management and a solid strategy. The plan and risk management are often simple. The strategy becomes a challenge when analyzing thousands of trading indicators, data points and social chatter.
Seasonal trading can help new day traders by helping traders narrow their focus list. Not sure which stocks are best? Intraday seasonality can give clues to which stocks perform the best (and worst) during different hours of the day, days of week and more. This type of knowledge can help a trader stay off the tracks when a train is coming or catch the last train home.
Can Seasonality help with Day Trading Stocks?
Stocks follow seasonal trends and patterns just like any other asset class. Traders, like all humans, are creatures of habit. The market opens at the same time and there is a rush of volume, then the lunch time trading begins and volume wanes, and then as the market prepares to close for the day volume erupts again. This natural pattern is one example of seasonality. Many stocks exhibit range expansion and compression throughout the day but at slightly different times. Knowing how stocks behave during different times of the day can lend insights into when designated market makers and other stock owners like to make their moves. Using seasonality can help day traders not only find out what stocks are interesting today but also what times are best suited for trading a particular stock based on historical data and recent patterns. Timing is everything. Try yourself for free here: Pricing – Seasonal Trading
