Long-term positions have been stagnant, and many people start to consider short-term investing. To be honest, short-term trading does have its attractions—quick capital turnover, clear rhythm, and easier to find entry and exit points in volatile markets. But to make short-term investing stable, stock selection is the most critical hurdle.

I’ve noticed that many people have a misconception about short-term investing, thinking it’s enough to just look at technical analysis and follow market sentiment. That’s not true. The core logic of short-term trading is rapid capital turnover and making money from price differences, so there's no need to blindly trust fundamentals when choosing stocks. Even companies that are considered good long-term investments can experience periods of profit-taking, pullbacks, or consolidation, with no significant volatility. At such times, it’s better to switch to technical analysis, identify resistance and support levels for range trading, or catch clear trends to go long or short.

A qualified short-term investment target, in my opinion, should have three characteristics. First, it must have a theme—industry trends, policies, company news, financial reports—all of which can attract investors to buy and sell. Themes attract people, which leads to trading volume; with volume, there’s volatility, and we can profit from price differences. For example, NVIDIA, as a leader in AI chips, benefits from high AI enthusiasm and market attention, with strong trading momentum.

The second point is sufficient trading volume. The biggest risk in short-term investing is buying in but being unable to sell out. Stocks with high trading volume have several advantages: smaller bid-ask spreads, quick price reactions, and transparent information. You can seize opportunities or cut losses in time, and your entry and exit won’t impact the stock’s price trend. Conversely, if trading volume is low, you might not find a counterparty to sell to, or suffer significant losses when selling.

The third point is that the stock’s price volatility should be large. Some stocks, despite having themes and trading volume, have small price swings and remain steadily upward or downward over one or two years, making them more suitable for long-term investment. Tesla’s volatility is much greater than Walmart’s, so Tesla is more suitable for short-term trading. Earnings reports often cause gap-ups or gap-downs because the market reflects whether expectations are met. For example, Netflix beats earnings estimates and jumps up, while Meta’s earnings below expectations cause a gap-down. These are the ideal timing points for short-term traders.

Based on these characteristics, I categorize the currently popular short-term investment targets into five major groups.

The first category is AI and semiconductors, which are the clearest current capital themes. As long as the AI story persists, semiconductors will be repeatedly traded. NVIDIA, AMD, Intel, and SMCI are all worth watching. By 2026, the focus will be on chip design and server-related stocks, which tend to have higher volatility and faster capital flow than application software.

The second category is high-volatility thematic stocks. These stocks are prone to explosive gap-ups, with clean technical signals, but their liquidity is not as good as leading stocks, so watch out for slippage when entering or exiting. Many people treat them as junk stocks, but that’s not accurate—they have clear themes, just their volatility is amplified by market sentiment. Use proper stop-losses and treat them as tools.

The third category is cryptocurrency concept stocks. If you don’t want to trade Bitcoin directly but want to participate in its volatility, Coinbase and MicroStrategy are the most straightforward options. When Bitcoin rises, they rise; when Bitcoin falls, they fall—perfect for short-term trend following. Moreover, their volatility is usually greater than Bitcoin’s because of added stock market premiums.

The fourth category is high-profile leading stocks. Tesla and Palantir do not rely on fundamentals to rise or fall but on retail investor popularity. These stocks have the advantage of always attracting attention, with sufficient daily liquidity, and relatively reliable technical signals.

The fifth category is event-driven stocks. Oracle may not move much normally, but when earnings are released, they instantly become focal points. Implied volatility surges before earnings, and the stock can gap more than 5% on the day. Besides earnings, major contracts, new products, and regulatory rulings are also triggers. These stocks are suitable for positioning before earnings to capture volatility or waiting for trend confirmation after direction is clear.

When I trade short-term, I first observe stocks with high trading volume, then select those with large volatility. Tesla is one I often watch because Elon Musk’s posts, delivery data, and autopilot progress can cause 5% to 10% swings within a day. NVIDIA, as a GPU giant, plays a key role in AI and cloud computing, with high price volatility. AMD, as a core supplier for AI servers, often shows daily fluctuations exceeding 12% around earnings reports, making it very suitable for range trading.

The most important aspects of short-term trading are discipline and transaction costs. The US stock market has high liquidity, no commissions, and allows multiple trades within a day, making it the most popular market globally for short-term investing. If you want to test strategies, start with a simulated account to get familiar with the rhythm of volatility, then use small capital for real trading. Remember, stop-loss is crucial—don’t treat tools stocks as beliefs.