Recently, I've seen many people holding long-term stocks without moving, and they start thinking about doing short-term trading to profit from price fluctuations. I have also gone through this stage myself and found that short-term trading is both simple and difficult—mainly depends on how you choose stocks.

Short-term usually means quick buying and selling within one or two days, making profits from price swings. Unlike long-term investing that looks at fundamentals, our short-term investments rely more on technical analysis, market sentiment, and news events. The advantage is fast capital turnover and a clear rhythm, but the risk is also high—mistakes in judgment can lead to quick losses.

I’ve discovered a pattern: stocks suitable for short-term trading usually have three common points—have a theme, high trading volume, and large price volatility. All three are indispensable.

First is the theme. Stock prices are formed by investors’ buying and selling behaviors. Only when current hot topics attract attention will people follow the trend to buy and sell, increasing trading volume. Themes can be industry trends, policy changes, financial reports, or even statements from important figures. For example, AI and semiconductors have been the clearest main investment themes in the past two years. As soon as related news comes out, stocks like NVDA and SMCI will move accordingly.

Second is trading volume. My biggest fear is being able to buy but not sell. Stocks with sufficient trading volume have several benefits: smaller bid-ask spreads, quick price reactions, and transparent market conditions. If you choose obscure stocks, you might buy in and see the stock price rise due to your own buying, but when you want to sell, there may be no buyers.

Third is the magnitude of volatility. Some stocks, even with themes and trading volume, just steadily go up or down. These are more suitable for long-term holding. Short-term trading requires stocks to fluctuate up and down, especially around earnings announcements, where gaps often occur—these are the times short-term traders love.

Based on these characteristics, I divide the current market short-term targets into five categories.

The first is AI and semiconductors. This is currently the clearest main investment theme. NVDA, AMD, INTC, SMCI—these are repeatedly traded targets. Semiconductor-related stocks tend to have higher volatility and faster capital flow compared to software applications. If you can only choose one main line, this one is the most efficient.

The second is high-volatility theme stocks. These stocks often experience explosive gaps with high trading volume, and technical signals are relatively clean. However, their liquidity is not as good as leading stocks, so you need to watch out for slippage when entering and exiting. Many people equate these stocks with junk stocks, but that’s not accurate—they have clear themes, just their volatility is amplified by market sentiment. Manage your stop-loss and treat them as tools.

The third is crypto concept stocks. If you don’t want to trade Bitcoin directly but want to participate in crypto volatility, Coinbase (COIN) and MicroStrategy (MSTR) are the most direct alternatives. They tend to move in sync with Bitcoin—rising when Bitcoin rises, falling when Bitcoin falls. Their volatility is usually greater than Bitcoin’s because of added stock market premiums.

The fourth is high-popularity leading stocks. These stocks don’t rely on fundamentals to rise or fall but on popularity. Tesla (TSLA) is always a short-term favorite, with retail funds often causing sharp rises and falls. Palantir (PLTR) is also one of the most loved stocks among retail investors, with clear support and resistance levels. The advantage of these stocks is daily liquidity and discussion volume, making technical signals more reliable.

The fifth is event-driven stocks. They may not move much normally, but once earnings or major news are released, they instantly become the focus of the market. Oracle (ORCL), for example, often sees implied volatility spike before and after earnings reports, with the stock easily gapping over 5% on the day. Besides earnings, major contracts, new product launches, and regulatory rulings are also triggers.

If I were to recommend a few, Tesla is a classic short-term target—its stock price swings significantly, often moving 5% to 10% within a day due to Elon Musk’s tweets or delivery data. NVIDIA (NVDA), as a GPU giant and core beneficiary of the AI era, also has high volatility. MicroStrategy (MSTR), as an AI server supplier, has always had very large price swings, with daily volatility during earnings often exceeding 12%.

Discipline and cost control are the most important in short-term trading. The US stock market has high trading volume and no transaction fees, making it the most popular market for short-term trading globally. It also allows multiple trades of the same stock within a day, providing greater flexibility. If you’re interested in short-term investing, start by observing stocks with high trading volume, then select those with large volatility for trading. It’s recommended to first use a demo account to familiarize yourself with the volatility rhythm, then consider small capital real trading.