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Day trading involves buying and selling securities within the same trading day, capitalizing on short-term price movements. In Canada, day trading has gained traction in recent years, thanks to:

• Discount brokerages with user-friendly platforms make it easier for individuals to participate.
• The Toronto Stock Exchange (TSX) boasts a healthy volume, providing opportunities for quick trades.

However remember, that day trading is risky and can lead to significant losses. Successful day trading requires in-depth market knowledge, technical analysis skills, and a well-defined trading strategy.

Choosing the right stock for day trading is crucial for day trading success. Here is what you should look for:

• High Liquidity: A large number of shares traded daily ensures smooth entry and exit points.
• Volatility: Stocks with consistent price fluctuations offer more opportunities for profit.
• News Sensitivity: Companies susceptible to news-driven price swings can be good targets, but require careful monitoring.

Understanding these characteristics will help you identify potential day trading opportunities in the Canadian market.
 

3 scanning methods to identify the best day trading stocks
 

1. Pre-Market and After-Hours Movers

Pre-market and after-hours movers are a great way to identify potential day trading opportunities. Here's how you can use this method:

1. Leverage Screening Tools: Many online brokers and financial websites offer stock scanners that allow you to filter based on pre-market and after-hours activity. You can set parameters for:

• Percentage Change: Look for stocks with significant price movements (up or down) outside of regular trading hours.
• Volume: Focus on stocks with higher than usual pre-market or after-hours trading volume, indicating increased interest.

2. Analyze the Reason for Movement: Don't just chase price changes blindly. Look for news or events that might explain the pre-market/after-hours movement. This could be anything from company announcements to industry-wide news. Understanding the catalyst can help you predict if the momentum will continue during regular trading hours.

3. Combine with Other Techniques: Pre-market and after-hours movement is just one piece of the puzzle. For a more comprehensive view, consider using this method alongside other scanning techniques, like:

• Technical Analysis: Look for technical indicators on the stock chart that might predict future price movements based on historical trends.
• Fundamental Analysis: Research the company's financial health, industry trends, and upcoming events that could impact the stock price.
   

2. High Volatility

Day traders thrive on price movement, and high volatility stocks offer the potential for quick profits (or losses). Here's a scanning method to identify potential day trades using high beta and recent price swings:

1. Scanning by Beta

• Beta measures a stock's volatility relative to the overall market. A beta of 1 indicates the stock moves in line with the market, while a beta greater than 1 suggests the stock's price swings are larger than the market's average.

Minimum Beta: Set a minimum beta threshold (e.g., 1.2 or higher) to focus on stocks with potentially amplified movements.

2. Include Recent Price Swings

While beta offers a general idea of volatility, it's also valuable to identify stocks experiencing significant price changes recently.

• Percentage Change: Look for stocks with a price change exceeding a certain percentage (e.g., +/- 5%) in the pre-market or during the early trading session.

3. Combining Filters

Use your chosen scanning platform to combine these filters. This will narrow down the list to high beta stocks that have also exhibited recent volatility.

Liquidity: Ensure the stocks have sufficient trading volume (liquidity) to enter and exit positions quickly.

Technical Analysis: Apply technical indicators on the filtered stocks' charts to identify potential entry and exit points for your trades.

News and Events: Stay informed about relevant news or upcoming events that might affect the stock price.
 

3. Gappers

Gappers, stocks that open significantly higher or lower than their previous day's closing price, can signal strong momentum and present potential day trading opportunities. Here are 3 scanning methods to identify gappers for your day trading strategy:

1. Basic Gap Scan

This is the simplest method and identifies all gappers, regardless of direction or size of the gap.

• Look for stocks where the opening price is either higher or lower than the previous day's closing price by a certain percentage (e.g., +/- 1%).

2. Gap Size and Direction Scan

Refine your search by focusing on gaps of a specific size and direction that align with your trading strategy.

• Set minimum and/or maximum gap percentage thresholds (e.g., minimum 2% gap up).
• Choose to focus on gappers up (potentially for buying opportunities) or gappers down (potentially for short selling opportunities).

3. Volume Filter with Gappers

Combine the gap scan with a volume filter to identify gappers with increased trading activity, which can indicate stronger momentum.

• Include a minimum average daily trading volume threshold (e.g., exceeding the stock's 10-day average volume).
• Combine this filter with your criteria for gap size and direction.

Also Look For 

• News and Catalyst: Investigate the news or events that might be causing the gap. Understanding the catalyst can help you decide if the momentum is likely to continue.
• Technical Indicators: Apply technical analysis tools on the gapper's chart to identify potential entry and exit points for your trades.
• Market Conditions: Consider the overall market sentiment. Gappers might behave differently in bullish or bearish markets.
   

Best Canadian Day Trading Stocks This Year

It’s hard to recommend specific day trading stocks as it's inherently risky and success depends on individual decisions and market conditions. However, I can provide some information to help you with your search for suitable Canadian day trading stocks in 2024. There are certain types of stocks tend to be more favorable due to their liquidity, volatility and opportunities. 

While any stock can be day traded, some characteristics tend to be more favorable for this type of active trading strategy:

• High Liquidity: This ensures you can easily enter and exit positions throughout the trading day without significant price impacts. Look for stocks with high trading volume.
• Volatility: Day trading profits stem from price movements. Stocks with higher volatility offer more frequent opportunities for short-term gains (or losses). Look for stocks with a history of price swings.
• News and Events: Stocks sensitive to news and upcoming events can experience price fluctuations due to anticipation or reactions. Keep an eye on company-specific news and broader market events.

Here are some sectors that generally house these characteristics:

• Blue Chip Stocks: While these established companies tend to be stable, they typically have lower volatility, making them less ideal for frequent day trades. However, some blue-chip stocks with higher trading volume can be suitable, especially if they're experiencing temporary price fluctuations due to news or market events.
• Commodities: These raw materials like oil, gold, or wheat can be highly volatile due to supply and demand fluctuations, global events, and currency movements. This volatility can present day trading opportunities.
• Technology Stocks: Technology companies are known for innovation and can experience significant stock price swings due to product launches, earnings reports, or industry trends. This can create day trading opportunities.
• Sector-Specific Plays: Certain sectors, like healthcare, might be experiencing heightened activity due to research breakthroughs, regulatory changes, or mergers and acquisitions. This can present opportunities for day trading within that sector.
   

Canopy Growth (WEED.TO) (CGC)

Canopy Growth is a world-leading cannabis and consumer packaged goods (CPG) company. They focus on producing and selling high-quality cannabis products for both medical and recreational use under various brands including Doja, 7ACRES, Tweed, and Deep Space. Their CPG portfolio also includes wellness products by Martha Stewart CBD and vaporizer technology.

Canopy Growth is headquartered in Smiths Falls, Ontario, Canada. They primarily focus on the Canadian cannabis market, with both medical and recreational offerings. However, with their recent acquisition approval by shareholders, they are looking to expand into the US market in the near future.

Market Position

• Canopy Growth was once the world's largest cannabis company by market capitalization.
• In recent years, their share price has declined, but they remain a major player in the Canadian cannabis industry.

Latest Important News

Canopy Growth recently reported mixed financial results, with some revenue growth but overall decline. Importantly, shareholders approved the creation of a new class of shares to facilitate their entry into the US THC market, a potentially massive opportunity.

They are also finalizing the acquisition of Acreage Holdings, a US-based cannabis company, which will be a key part of their US expansion plans.
 

First Quantum Minerals (FM.TO)

First Quantum Minerals is a Canadian-based mining and metals company. Their primary focus is on exploration, development, and production of mineral properties, with copper being their main product (accounting for 80% of revenue as of 2016). They also explore and produce other metals like nickel, pyrite, gold, and zinc.

First Quantum has a geographically diverse portfolio with operating mines in Zambia, Panama, Finland, Turkey, Spain, Australia, and Mauritani. They also have development projects in Zambia and exploration projects in Argentina and Peru.

Market Position

First Quantum is considered one of the world's top 10 copper producers. They has a strong portfolio of high-quality, low-cost copper mines, particularly Kansanshi in Africa and Cobre Panama in Latin America.

As of June, 2024, the latest news appears to be their positive stock performance. The share price rose 3.09% to $16.69 CAD.
 

Shopify Inc. (SHOP.TO) (SHOP)

Shopify is a leading global commerce platform designed for businesses of all sizes. They offer merchants a subscription-based software service that allows them to:

• Create online stores and mobile apps

• Manage products and inventory

• Process payments and fulfill orders

• Market and analyze their business

• Shopify also provides a vast app store with additional features and functionalities for merchants.

Shopify is a global company with operations in over 175 countries. Their platform is available in multiple languages and currencies, catering to a wide international audience.

Market Position

Shopify is considered a leader in the e-commerce space, particularly for small and medium-sized businesses (SMBs). They hold a significant market share and continue to grow as online commerce expands.

Latest Important News

Recently, Shopify's stock price experienced a slight decline. However, analyst firm Evercore ISI upgraded their rating on Shopify to "Outperform," citing an attractive entry point for investors. This upgrade suggests confidence in Shopify's future growth potential. Additionally, Shopify is benefiting from the overall increase in e-commerce activity.
 

Veren Inc. (VRN.TO)

Veren Inc. is an oil and gas exploration and production company. They focus on finding, developing, and extracting crude oil, tight oil, natural gas liquids, shale gas, and natural gas reserves. Their operations are spread across Canada and the United States, with properties in Saskatchewan, Alberta, British Columbia, Manitoba (Canada), and North Dakota (USA).

Market Position

Veren Inc. is a mid-sized player in the North American oil and gas exploration and production sector. They recently rebranded from Crescent Point Energy to Veren Inc., signaling a shift towards a more sustainable future, but details are still emerging. Bullish analyst ratings suggest potential for future growth.

Latest Important News

The most significant recent news is Veren Inc.'s name change from Crescent Point Energy in May 2024. This rebranding suggests a potential strategic shift, but the company hasn't released many details yet.
 

Lundin Mining (LUN.TO)

Lundin Mining is a diversified base metals mining company, meaning they extract and process various essential metals. Their primary focus is on copper, zinc, gold, and nickel, but they also produce molybdenum, lead, and silver. They are involved in the entire mining life cycle, from exploration and development to extraction and processing.

Lundin Mining is a Canadian company headquartered in Toronto, Ontario. Their mining operations and projects are geographically spread across several countries, including:

• North and South America: Chile, Brazil, Argentina, and the United States.
• Europe: Portugal and Sweden.

Market Position

Lundin Mining is considered a mid-tier base metals producer with a strong focus on operational excellence and cost control. While not the largest mining company, they have high-quality mines with competitive margins.

Lundin Mining's next earnings report is expected between July 31st and August 5th, 2024. This report will provide insights into their financial performance and future outlook.

Curious about the companies driving the Toronto Stock Exchange (TSX)? Look no further! IFC Markets, a popular Canadian broker, can help you explore  TSX most active stocks
 

Conclusion

Choosing the right stocks is the cornerstone of successful day trading. By carefully selecting your targets, you increase your chances of capitalizing on short-term market movements.

When selecting stocks for day trade always pay attention to 

• Liquidity: Ensure smooth entry and exit by focusing on stocks with high trading volume.
• Volatility: Look for stocks with price fluctuations that offer opportunities for profit within a single trading day.
• Technical Analysis: Use charts and indicators to identify trends and predict price movements.
• News and Events: Stay informed about company news and industry developments that may impact stock prices.

Utilize them to conduct your research and build a strong foundation for your trading strategy. 

Final Tips for Day Trading Success

• Trend Strategy: Align your trades with the overall market trend, whether bullish (upward) or bearish (downward).
• Risk Management: Always implement stop-loss orders to limit potential losses on any trade.
• Discipline and Emotion Control: Stick to your trading plan and avoid letting emotions cloud your judgment.

Good Luck!

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