Guide to Day Trading Strategies

R O S S C A M E R O N
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in 
Á
oat and typically, an increase in share price. Alternatively, a company can increase their 
Á
oat 
by selling more shares on the open market through offerings. Selling more shares will increase 
the 
Á
oat and decrease the value of the shares. Secondary offerings are a form of dilution used 
for the purpose of raising more capital for the company. This is where the concept of supply and 
demand in the markets comes from.
Day traders will always want to be aware of the 
Á
oat size of the stocks they trade. If a stock has 
a great catalyst and a very low 
Á
oat, the supply and demand effect can cause 100% intraday 
moves. In contrast, a stock that has a very large 
Á
oat is unlikely to result in more than a 10% 
intraday move, even with the best news. By understanding the 
Á
oat, we can recognize the 
potential of a stock. Whether we are looking at a pre-market runner or reviewing a stock that 
just popped up on a scanner mid-day, the 
Á
oat is always going to be one of the 
À
rst things 
we check. As day traders, we hunt for volatility, which means we prefer to trade lower 
Á
oat 
stocks. Investors looking for less volatility and less risk may look for companies with a larger 
Á
oat. This again highlights the unique skill set required for different market participants.
I prefer to trade momentum stocks with a 
Á
oat of under 50 million shares. Stocks with a 
Á
oat 
of under 10 million shares will produce some of the biggest percentage gainers. There are 
days when a stock with a 5 million share 
Á
oat will trade more than 20 million shares. That 
means the entire number of outstanding shares has changed hands four different times. When 
stocks trade the entire 
Á
oat of available shares, it is commonly known as 
Á
oat rotation. When 
we see stocks that move 100%-200% intraday, they will almost always experience at least one 
full 
Á
oat rotation.
When I trade reversals, I will trade any 
Á
oat. A reversal setup that has a great 5min chart with 
a strong daily chart can be a good candidate regardless of the 
Á
oat. The target on these 
types of trades will typically be a move back towards the open price. Stocks with a 
Á
oat of 
more than 500 million shares will typically be less volatile and less interesting for most day 
traders.

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