How to Select Stocks for Day Trading and Trading Index Futures Using Volume Price Analysis
Volume price analysis (VPA) is a powerful method for selecting stocks and trading index futures. It focuses on volume alongside price action. This reveals true market intent. High volume on moves shows conviction. Low volume warns of weakness. Use VPA to identify high-probability day-trading setups. In the US trading session, we take another step along the road in explained how to select and day trade stocks using volume price analysis, along with trading index futures and commodities.
Selecting Stocks for Day Trading with VPA
Day trading stocks requires liquid, volatile names. Start with scanners:
- Volume Filter: High relative volume (2x average)—shows participation.
- Price Range: $20-100 for decent tick value.
- VPA Signals: Look for accumulation—rising volume at lows. Avoid distribution—high volume at highs with failing price.
Use RadarScreen on TradeStation or scanners on NinjaTrader. Quantum Accumulation/Distribution indicator highlights building phases. Focus on strong sectors (e.g., tech during rallies).
Trading Index Futures with VPA
Index futures like /ES (S&P 500), /NQ (Nasdaq), or /YM (Dow) track broad markets. VPA excels here due to centralized volume.
- Trend Confirmation: Rising prices with increasing volume = strong uptrend.
- Reversal Spots: Divergence—new highs on low volume = potential short.
- Key Levels: VPOC (Volume Point of Control) acts as support/resistance.
Quantum Trend Monitor aligns direction. TickSpeedometer reveals surges for entries.
Practical Steps
- Scan for Candidates: High volume stocks or active futures.
- Higher Timeframe Bias: Daily/4-hour for trend.
- Lower Timeframe Entries: 5-minute or tick—enter on volume-confirmed pullbacks.
- Risk Management: Stops beyond VPOC or swings. Targets at next resistance.
Anna Coulling’s VPA methodology, combined with Quantum indicators, turns selection into disciplined trading. Focus on volume conviction for consistent day trading results in stocks and index futures.
Different Types of Stocks for Day Trading: Volatility and Opportunities
Day trading stocks requires choosing the right type. Not all stocks suit fast-paced trading. Volatility drives moves. Volume price analysis (VPA) reveals conviction. Traders select based on risk tolerance and strategy. Here’s a breakdown of common types—and their volatility relationship.
Momentum Stocks
Momentum stocks surge on news or volume spikes. They trend strongly short-term. Examples: Tech breakouts or earnings winners.
- Volatility: High—sharp, fast moves.
- Day Trading Appeal: Quick profits on momentum. VPA confirms—high volume on surges shows conviction.
- Risk: Reversals hit hard on low volume.
Quantum Trend Monitor aligns direction perfectly.
Growth Stocks
Growth stocks focus on future potential (e.g., tech like NVDA or TSLA). High P/E ratios. Rapid expansion drives them.
- Volatility: High—news or sentiment swings big.
- Day Trading Appeal: Big intraday ranges. VPA spots accumulation on dips.
- Risk: Overhyped—low volume highs often reverse.
Ideal for aggressive traders.
Penny Stocks
Penny stocks trade under $5. Low capitalization. Often speculative.
- Volatility: Extreme—percentage moves huge.
- Day Trading Appeal: Small capital for large % gains. Pump-and-dump common.
- Risk: Manipulation, low liquidity, gaps. VPA essential—low volume spikes = traps.
Not for beginners—high failure rate.
Megacap Stocks
Megacap stocks (e.g., AAPL, MSFT, AMZN) dominate indices. Market caps in trillions.
- Volatility: Moderate to low—stable but news-responsive.
- Day Trading Appeal: High liquidity, tight spreads. Reliable VPA signals.
- Risk: Slower moves—smaller % gains.
Safer for consistent trading.
Dividend Stocks
Dividend stocks pay regular payouts. Focus on stability (e.g., utilities, consumer staples).
- Volatility: Low—steady prices.
- Day Trading Appeal: Limited—few intraday swings. Better for long-term.
- Risk: Low, but missed opportunities in trending markets.
Not ideal for day trading—lack of movement.
Volatility Relationship and VPA Edge
High-volatility types (momentum, growth, penny) offer big moves but traps. Low-volatility (megacap, dividend) are safer but slower. VPA reads volume across all—high volume confirms real moves. Low volume warns of reversals.
Quantum indicators on NinjaTrader enhance this. Trend Monitor aligns, Accumulation/Distribution spots phases.
Choose stock type by style. High volatility for aggressive scalping. Moderate for balanced day trading. VPA with Quantum tools delivers conviction in any.
Select wisely—match volatility to your risk. Quantum makes VPA reliable across types.
By Anna Coulling