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Summary
- As the economy starts to revive, traders are increasingly seeking opportunities to find the best stock to invest in
- Day traders should look at several factors prior to trading such as volume, liquidity, volatility and range of a particular stock
- They should also consider several factors prior to choosing a broker to trade with, such as speed of execution, commission fees and other related costs and more
As the UK economy emerges out of a year long period of low economic activity due to covid-19 lockdowns and restrictions, long term investors and day traders alike are well poised to benefit from making smart investment choices to leverage from the upturn in the markets.
Stocks have been a popular financial instrument used by day traders for making returns on the same day. Some other financial instruments which are preferred by traders include trading in indices, cryptocurrencies, forex, futures and options, commodities markets and more.
However, in this article, we will take a closer look at stocks that would be best for trading and highlight some UK stocks which can be traded for the day.
Stock picking criteria
The goal of a day trader is to find the right stocks and take a position on them, which will help the trader get a return on the same day. Thus, before diving straight into the stock market, there a few different factors day traders should keep in mind.
Traders should look for stocks that are heavily traded in terms of volume and also highly liquid. Such stocks should also ideally be susceptible to significant price movements, thus enabling the trader to close his position and make a tidy net profit in a short time period.
Thus stocks which satisfy the criteria of volume, liquidity, volatility and range are ideal for traders seeking to find the best returns in a day. UK large cap and mid cap stocks have high trading volumes and liquidity.
Thus traders should search for earnings announcements or any important or relevant stock specific news which could impact its price movements.
In addition to the above, traders must also select the right broker to trade in the market. Some points to consider prior to selecting a brokerage platform include the speed of execution, commission, fees and other related costs, regulatory compliance, competitive spread, leverage and margins offered by the broker and finally strong customer support.
Some UK stocks large cap and mid cap stocks which have given high levels of returns in the last month include:
- VODAFONE GROUP PLC (LON: VOD)
UK-based telecom giant Vodafone is among one of the highest volume leaders in the FTSE 100 index in the main market. The stock’s average trading volume stood at 68.77 million shares in June 2021 so far. The average trading volume is the average number of shares traded in a day over a specified period and helps gauge the liquidity of a stock.
The company’s 52 week price trading range is between GBX 87.11 and GBX 142.74 from June 2020 to June 2021, indicating it has a fair degree of price movement on a yearly basis. According to financial data company IHS Markit, Vodafone is rated as low in the Markit short selling activity index, implying traders do not short sell this stock to a higher degree.
Also Read: Focus on Vodafone And BT Group as CMA Approves Merger of Virgin Media and O2
- LLOYDS Banking Group PLC (LON: LLOY)
UK-based banking major Lloyds Banks is another highly traded FTSE 100 listed stock. The stock’s average trading volume stands at 161.94 million shares in June 2021 so far.
The company’s last 52-week price trading range is between GBX 23.59 and GBX 59.94. Similar to Vodafone, Lloyds also has a low rating in the IHS Markit short selling activity index.
- Glencore PLC (LON: GLEN)
Glencore PLC is a metals and mining company trading on the LSE. The stock’s average trading volume stands at 27.57 million shares in June 2021 so far.
The company’s last 52 week price trading range is between GBX 150.59 and GBX 339.40. Glencore also has a low rating in the IHS Markit short selling activity index.
- Hammerson PLC (LON: HMSO)
Hammerson PLC is a metals and mining company and a mid-cap stock trading in the LSE. It is a part of the FTSE 250 index. The stock’s average trading volume stands at 18.47 million shares in June 2021 so far. And the company’s 52-week price trading range was oscillating between GBX 150.59 and GBX 339.40. Hammerson also has a low rating in the IHS Markit short selling activity index.
These are just some of the stocks which meet a day trader’s stock selection criteria, but there are several more. Ultimately a trader must do sufficient research and analysis prior to trading. Beginners should stick to one or two stocks before eventually expanding their trading portfolio.
