My hunch is that if you're a novice or inexperienced trader, you will have heard and may have been advised to stay well clear of any stocks that are volatile, or highly volatile. Well, this advice is not necessarily wrong, but you need not overlook these stocks altogether.
Correctly traded, the possibility of higher returns, or returns over a shorter period of time, is a key feature they have, over the less volatile stocks. Because of their nature, their price will move both quite erratically, and further, in any given time frame than their more slowly moving cousins.
Commodities and currencies for example serve to show the characteristics of volatile stocks, and it probably best to trade them of software that allows dual functionality, in that it has both data feed and a trading platform. The advantage of this is that the data feed is real time.
With most end-of-day static trading data feeds, the closing price for the day is downloaded after the market close, and you see it on a static chart. But real time feed is exactly that, and you can open and close your positions literally based on the price movement you see happening in front of you.
Most real time software allows you to zoom in on your position too. You may prefer to trade in a time frame of as little as five seconds, if you wish, so it's really easy to macro-analyse your trades.
Although I wouldn't necessarily advise it, but because you are following your trade face to face so to speak, you could omit using a stop loss facility, which most day traders use, since once they've opened a position they tend to close down and allow the stop loss to do it's work for them.
As said, trading volatile stocks requires close attention, but the advantage of this is there's more potential to gain more from your trade in a shorter time frame. You may only need to be exposed for twenty minutes or sometimes a few seconds. Taking a currency trade like the US Dollar against the UK pound or USD/GBP, for instance, you should be aiming for a maximum gain of say 3 points, no more. This gives your capital the minimum exposure for the maximum return.
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