How to Screen For Stocks With High Beta For Day Trading?

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When screening for stocks with high beta for day trading, it is important to first understand what beta is. Beta measures the volatility of a stock in relation to the overall market. A stock with a beta higher than 1 is considered to be more volatile than the market, and therefore may be a good candidate for day trading.


To screen for stocks with high beta, you can use various stock screening tools available online. Look for stocks with a beta greater than 1, preferably closer to 2 or higher. Additionally, you may consider looking for stocks with high trading volume and liquidity, as these are important factors for day trading.


You can also use technical analysis to identify stocks with high beta. Look for stocks that have been exhibiting significant price movement and volatility in recent weeks or months. High beta stocks often experience larger price swings, which can provide opportunities for day traders to profit from fluctuations in price.


Overall, when screening for stocks with high beta for day trading, it is important to consider both the beta value of the stock as well as other factors such as trading volume, liquidity, and recent price movement. By thorough screening and analysis, you can identify stocks with high beta that may be suitable for day trading.

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How to analyze the historical beta values of stocks for day trading?

  1. Understand what beta is: Beta measures a stock's sensitivity to market movements. A beta greater than 1 indicates the stock is more volatile than the overall market, while a beta less than 1 indicates the stock is less volatile.
  2. Look at the historical beta values: Historical beta values can be found on financial news websites or through stock analysis tools. Look at how the beta has changed over time and identify any trends or patterns.
  3. Compare beta values: Compare the beta values of different stocks in the same industry or sector to see how they stack up against each other. This can help you identify which stocks are more or less volatile relative to their peers.
  4. Consider current market conditions: Beta values can change based on current market conditions, so take into account any recent events or news that may be impacting a stock's beta value.
  5. Use beta to inform your trading strategy: Historical beta values can be used to help assess risk and determine the potential volatility of a stock. This can help you make more informed decisions when day trading and manage your risk accordingly.
  6. Monitor beta values regularly: Beta values can change over time, so it's important to monitor them regularly to stay informed about the risk profile of the stocks you are trading.


What is the relationship between beta and risk in day trading?

In day trading, beta is a measure of the volatility of a stock compared to the overall market. A stock with a beta higher than 1 is considered more volatile than the market, while a stock with a beta lower than 1 is considered less volatile.


In day trading, higher beta stocks are generally considered riskier because they can experience larger price fluctuations, potentially leading to larger profits or losses. Traders who are risk-averse may prefer to trade lower beta stocks that are less volatile and more stable.


However, it's important to note that beta is just one factor to consider when assessing risk in day trading. Other factors such as liquidity, trading volume, and market conditions should also be taken into account when making trading decisions. Ultimately, the relationship between beta and risk in day trading is complex and individual traders may have different risk tolerances and strategies.


How to track the beta values of selected stocks for day trading?

Tracking the beta values of selected stocks for day trading can help you understand how volatile a stock is compared to the overall market. Here are some ways to track beta values for day trading:

  1. Use an online stock research platform: Many online stock research platforms provide beta values for individual stocks. You can input the symbols of the stocks you are interested in and view their beta values.
  2. Check financial news websites: Financial news websites often provide information on beta values for popular stocks. You can visit websites like Bloomberg, CNBC, or Yahoo Finance to find beta values for the stocks you are tracking.
  3. Use a stock trading app: Stock trading apps like Robinhood, TD Ameritrade, or E-Trade often provide beta values for individual stocks. You can use these apps to track beta values in real-time while you are day trading.
  4. Calculate beta values manually: If you prefer to calculate beta values yourself, you can use the following formula:


[ \beta = \frac {cov(Rs, Rm)} {var(Rm)} ]


Where:

  • Beta (( \beta )) = Beta value of the stock
  • cov(Rs, Rm) = Covariance between the stock's returns and the market returns
  • var(Rm) = Variance of the market returns


By tracking beta values for selected stocks, you can better understand their risk and return characteristics, which can help you make more informed trading decisions.


How to interpret beta values when screening for stocks for day trading?

Beta values are used to measure a stock's volatility compared to the overall market. A stock with a beta of 1 indicates that it moves in line with the market, while a beta greater than 1 indicates higher volatility and a beta less than 1 indicates lower volatility.


When screening for stocks for day trading, beta values can be interpreted in the following ways:

  1. High beta stocks (greater than 1): These stocks tend to have larger price fluctuations and are more volatile than the overall market. They can offer greater potential for profits, but also come with higher risk. Day traders may consider high beta stocks for more aggressive trading strategies, but should be prepared for increased volatility.
  2. Low beta stocks (less than 1): These stocks are less volatile than the overall market and may provide more stability for day trading. While they may offer lower potential for profits compared to high beta stocks, they also come with lower risk. Day traders looking for a more conservative approach may consider low beta stocks for their trading strategies.
  3. Beta close to 1: Stocks with a beta close to 1 move in line with the overall market and are considered to have average volatility. Day traders may find these stocks to be a good balance between risk and reward, as they offer moderate volatility and potential for profits without excessive risk.


Overall, beta values can provide valuable insight into a stock's volatility and suitability for day trading. However, it is important to consider other factors such as liquidity, trading volume, and market conditions when selecting stocks for day trading. Additionally, it is usually a good idea to diversify your portfolio to manage risk effectively.

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