Easy Tips to Pick Stocks for Intraday Trading

Process on How to Pick Stocks for Intraday Trading in India

Choosing a top stocks for successful intraday trading involves careful consideration of the following factors:

 

1. Liquidity

The liquidity of the said stock should be high to enable one to buy and sell stocks at any time. Another significant factor that accompanies the purchase of highly liquid stocks is that they often have large quantities. Consequently, you can purchase and sell in large volumes without affecting the price per share.

 

When selecting highly liquid stocks, make sure that you also evaluate the liquidity position of the stock at various prices. Some of these stocks can be highly liquid at low price levels, but the volumes might decline sharply at higher prices. This is something that you can understand to enable you to purchase them at the right time.

 

2. Volatility (Medium-to-High)

It is only possible for a day trader to make a return if the price goes up or down in the manner expected. Traders book a loss when the price of the stock goes in the opposite direction of what is predicted. To avoid such losses, traders should use stop loss in intraday. If the price of the stocks fluctuates, they can make more trades within the day and gain from the movement of the price.

 

However, you should remember that buying stocks that can have very high fluctuations in their price is not advantageous if the drop/rise is too steep. There is no rule about this but the majority of Intraday Traders like stocks that are volatile and can move between 3 – 5% either way.

 

3. Market Trends

Depending on the observed economic, political, social, and other conditions, markets either rise or decline. This means that if the markets increase, the stock prices can either increase or decrease. Therefore, while purchasing stocks for intraday trading, it is important to bear this correlation in mind.

 

4. Sector Trends

The market can be segregated on the basis of segments and they include technology, pharmaceutical, automobile, oil & gas, fast-moving consumer goods, banking, and more. It also helps an intraday trader to monitor the performance of all sectors in the economy most of the time.

 

If you can find any particular sector or sectors that have been ringing for months and showing bullish breakout, you may look for the companies in the particular sector to invest in. Also, if you find any stock that has greatly increased in value but you did not invest in the particular type, this can make you look at the peer stocks within the sector that you think are within the possible breakout area.

 

5. Momentum of Stocks

The rate at which the value of a stock changes over a given period of time is referred to as stock momentum. This can assist you in identifying the magnitude of the upward or downward-sloping pattern of the price of the stock.

 

If the stock price change follows the strength of the momentum, then the said stock is termed a momentum stock. They include stocks that are used in going long and going short by day traders to get profits.

 

Conclusion

Keep in mind that the selection of the right stock is crucial in order to make returns in intraday trading, investors and traders must apply for a demat account before starting trading. As suggested by the above pointers, you will be able to find them with time as you come up with methods or strategies that suit stock selection. Avoid intraday trading for the purpose of making returns from it while avoiding bias and making decisions based on emotions.