Is $500 Enough to Day Trade?

Ever toyed with the idea of diving into day trading but hesitated because you’ve only got $500 to play with? Believe me, you’re not alone in wondering if that sum is your ticket to trading glory or just a one-way road to a financial facepalm.

So What Makes for a Day Trader’s Dream Stock?

Before we start gambling with that $500, it’s essential to know what we’re actually looking for in a day trading stock.

You’ll want to find stocks that are easy to buy and sell (that’s called liquidity), don’t burn you with high transaction fees, swing enough in price to make things interesting (hello, volatility), and have enough people trading them to ensure there’s always a buyer or seller when you need one.

And hey, if the stock typically marches to the beat of the broader market’s drum, that’s icing on the cake. Now that we’ve laid down the rules of the game, let’s size up eight stocks and see how they fare against this wish list.

Tesla (TSLA)

There’s a reason Elon Musk’s electric vehicle brainchild, Tesla, is a day trader’s darling. Tesla is volatile—there’s always something brewing in the Tesla universe that keeps the stock bouncing around.

That’s a day trader’s dream, as it allows for multiple buying and selling opportunities within a single day. Its high liquidity ensures you’re never stuck holding the bag, wanting to sell but unable to find a buyer.

Celsius Holdings (CELH)

In the world of health and fitness, Celsius Holdings, a maker of fitness drinks, offers a unique appeal to day traders.

Though not as volatile as Tesla, it’s no slouch in liquidity. It’s not uncommon for CELH to see price swings that can offer quick profits if timed correctly.

Lower share prices also mean you can buy a good number of shares with your $500, allowing you to leverage even small price moves.

SPY

The SPDR S&P 500 ETF Trust, commonly known as SPY, is not a stock but an ETF that tracks the S&P 500 index.

It’s a popular pick for day traders due to its extreme liquidity and relatively low volatility. While SPY won’t make you rich overnight, its predictable movement and vast trading volume make it easier to play the small gains game, perfect for a $500 budget.

QQQ

The Invesco QQQ ETF, which tracks the NASDAQ-100 Index, is another ETF preferred by day traders.

It’s particularly suited for those who have a good understanding of the tech sector because it’s heavily weighted towards tech stocks.

QQQ offers similar advantages to SPY but adds a bit more volatility into the mix, increasing the potential for higher returns (or losses).

Nvidia (NVDA)

Nvidia, the tech behemoth, definitely tempts as a day trading option, but let’s be real—it might just make that $500 of yours feel a bit inadequate. With its share price leaning towards the pricier side, you won’t be buying stacks of shares anytime soon.

But here’s the silver lining: Nvidia is a hotbed of trading activity, has cash flowing in and out like water, and tends to jump or plummet based on the latest news. So, even if you’re not throwing your hat in the Nvidia ring right now, it’s one to keep a close eye on for future plays.

Airbnb (ABNB)

Airbnb’s stock is like a rollercoaster, whipped around by travel trends, people’s opinions, and whatever new rules the government decides to throw its way. The stock’s price can swing wildly within a single day, making it a thrill ride for day traders—but also a bit of a gamble.

With its pricier share costs, you won’t be making any grand plays with just 500 bucks, but if you’ve got an appetite for a bit of market excitement, Airbnb could be the spicy ingredient your trading strategy’s been missing.

Palantir (PLTR)

Palantir is a bit of a wild card on the stock market, deeply influenced by its government deals and the rumor mill. Unlike the big dogs like Tesla and Nvidia, Palantir’s more budget-friendly share price means you can actually do something with your $500 stake.

Thanks to its bustling trade volume and quick-as-a-wink liquidity, you can dive in and exit without getting stuck, a dream come true for any day trader.

Duolingo (DUOL)

Duolingo might not be a household name like Tesla or Airbnb, but it’s got its own unique allure for day traders. This ed-tech star might not give you the rollercoaster thrills of more volatile stocks, but what it lacks in drama, it makes up for in stable growth and reliable trading activity.

The icing on the cake? Its modest share price means you can spread your $500 around a bit, rather than putting all your eggs in one basket.

Internet of Things Inc. (IOT)

This Canadian-based tech company specializes in IoT solutions and software. It’s a relatively low-priced stock, which means your $500 can buy you a considerable number of shares.

Though it doesn’t see the same volume as some larger-cap stocks, it has enough liquidity for most retail traders.

The stock can be volatile, especially when news drops about new partnerships or contracts, making it a potentially lucrative option for day traders who are tuned into the IoT space.

Southern Copper Corporation (SCCO)

SCCO digs deep into the world of mining, focusing mostly on metals like copper, molybdenum, zinc, and silver. While it may not give you the adrenaline rush that tech stocks do, its middle-of-the-road volatility and liquidity mean you can jump in or bow out without too much fuss.

And let’s not overlook the unique trading chances that the commodity market has to offer. If you’ve got a knack for understanding the ups and downs of base metals, then SCCO could be right up your alley.

Coupang (CPNG)

Coupang, South Korea’s e-commerce powerhouse, is creating waves in the stock market akin to a roller coaster’s loops and turns. Though it’s a relatively new kid on the Wall Street block, it’s capturing eyeballs for its erratic price behavior.

Shares of this company are changing hands at a brisk pace, ensuring you won’t have a problem hopping in or out of positions. Got $500 you’re eager to put to work? You could snag a small bundle of shares and try your luck riding the market’s daily twists and turns.

Pinterest (PINS)

Pinterest is a stock that spikes and dips regularly, partly due to its business model and market sentiment.

Often the stock reacts strongly to earnings reports and any major updates about user growth or advertising revenues. Though the stock isn’t cheap, its high liquidity and trading volume mean you can still make quick trades, even if you’re working with a limited budget.

Rivian (RIVN)

As an electric vehicle manufacturer that recently went public, Rivian is certainly in the spotlight. While its high stock price may limit the number of shares you can purchase with $500, its considerable volatility provides room for significant gains (or losses).

It also sees high trading volumes, so liquidity isn’t an issue, making it worth considering for day trading.

Li Auto (LI)

Another player in the electric vehicle market, Li Auto, provides a lower entry point compared to Rivian or Tesla.

It sees reasonable trading volume and is fairly volatile, particularly around news related to the Chinese auto market or EV policies. Your $500 could be put to good use here if you’re looking for more affordable exposure to the EV market.

Sterling Construction Company (STRL)

Sterling Construction specializes in heavy civil construction projects, which may not sound too exciting, but the stock can provide some trading opportunities.

It’s a lower-priced stock with moderate liquidity and volume. It’s not the most volatile option out there, but it does offer enough action for traders who have a keen eye on infrastructure or construction trends

So, Is $500 Enough?

The short answer is: it depends. If you’re starting with $500, focus on stocks or ETFs that allow you to diversify your holdings and take advantage of small, consistent gains.

And remember, while these stocks may fit the general criteria for good day trading options, nothing is guaranteed in the world of trading. What matters most is how you manage your trades and your discipline in sticking to your trading strategy.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.