How To Select Stocks For Intraday

More on Intraday Trading

How To Select Stocks For Intraday? Is that one of the questions that are banging in your head and still you have not been able to figure out the answer?

Well, in this quick review, we will try to figure out a complete solution to that concern so that you are not left clueless!

We all know that Intraday trading is trading within a period of one trading session. It implies that the buying, as well as selling of stocks or indices, has been done on the same day or in other words in a single trading session.

But which are the stocks you must be eyeing and how do you filter those stocks? If you had the answer to these questions, life would have been amazing and profitable too. In this quick review, let’s try and find answers to these REALLY important questions.

How To Choose Stocks For Intraday

There are a couple of ways of getting the answer to How to Select Stocks for Intraday, depending on your inclination.

  1. If you are feeling bullish about some stock or index, you can buy it first at a lower price and then sell it later during the day.
  2. If you are feeling bearish about a stock or index, then, you can sell it first at a higher price and then buy it later at a lower rate. This is also called Shorting of stocks.

These two ways are of earning profits and this seems simple but the whole process of intraday trading and how to make decisions in it is quite complicated. Thus, how to select stocks for intraday trading is not just complex but risky too. 

Deciding this is essential to avoid any Intraday Trading Mistakes that can lead you to losses.

Before we move on to the point of selection of stocks, there are some tips that should be followed irrespective of the stock we are dealing with.

For instance, you should identify the trend of the current market and try to follow it.

It is a very difficult thing to do accurately and a lot of practice and experience are needed to do this correctly. Another important thing is that try not to overtrade. In the emotions of greed or hope, this thing should be avoided at all costs.

Also, you should make sure to place trades on the basis of some solid reason and not just gossip or rumor about a particular stock or sector. And the most important thing of all is to have a pre-defined stop loss for all the trades even before you initiate them.

It is difficult for even the most experienced traders to get every trade right when they are looking to pick stocks for intraday trading.

There are some chances of a trade going wrong even when you have all the knowledge and experience of intraday trading. In intraday trading, things can go wrong very quickly in a very short span of time. Therefore, it is recommended to have a stop loss and use it strictly every time you trade.

Now, let us see and understand the crux of the matter – how to select stocks for intraday trading?

1. Liquidity

The first thing that you should check in stock is its liquidity. It is of no use to trade in a stock where you are not able to enter or exit a position when you want to.

Furthermore, liquidity brings in different price points in the market depth, giving options to retail traders to place their trades (buy or sell) at their chosen price points. Try to avoid penny stocks as they have liquidity issues while stocks in the large or mid-cap segment face fewer such issues.

To give you a perspective, real estate as an investment product has low liquidity while Gold is seen as a high liquidity product.

On top of that, the stock should be volatile and capable of showing some good price movements within a day. Trading in very stable stocks will not be able to give you profits in intraday. Thus, when you are looking for an answer to How To Select Stocks For Intraday, you need to be aware of the kind of stocks that you are filtering for your trades.

2. Technical Analysis of a Stock

It is recommended to use the knowledge of technical analysis of stocks in order to select stocks more effectively for intraday trading.

Technical analysis will include reading the technical charts and use the knowledge of technical indicators to generate buy as well as sell signals on charts.

There are different kinds of strategies that can help you in the selection of stocks.

One of the most commonly used strategies is trading using the momentum of stocks. Such stocks should be chosen whose momentum is quite good for intraday trading purposes.

Furthermore, while performing the technical analysis, you are advised to use to get the optimal answer to how to select stocks for intraday using:

  • Technical Indicators
  • Chart Patterns
  • Candlestick charts

If you are a beginner you can gain a thorough understanding of all these tools and aspects in some of the best technical analysis books.

3. Gap and Go Strategy

Then, the other kinds of stocks that can be chosen are the ones that are showing gaps in the stock prices in either of the directions.

The gaps could be because of any reason like an earnings announcement or any kind of news affecting the whole sector or the company.

Another way to find stocks is to select stocks whose prices are breaking their own support and resistance levels.

This trading strategy is called the gap and go strategy.

At the breakout of resistance and support levels, the trend has the potential to reverse if the move is accompanied by huge volumes of trade.

4. Screeners

The question is how to find these stocks in a live-running market. Such stocks can be selected with the help of stock screeners. You can fill in the desired criteria in stock screeners and they will help in selecting stocks as per the defined criteria.

Screeners are available easily online and some of the stock screeners are free of cost while some are paid. 

Wondering how to understand the whole concept and from where to learn stock market basics and analysis?

So here is the solution!

In case you are interested in learning technical analysis, technical indicators and oscillators and how you can use them for stock selection as well as placing trades in intraday trading, you should consider taking online courses on the same topics. Stock Pathshala is a phone app just right as a stock market education app.

It provides different stock market-related courses which can be taken for free for the beginner level. It has specific courses on technical analysis and technical indicators and oscillators.

Lastly, in case you are looking to get started with stock market trading and finding the right answers to how to select stocks for intraday, let us assist you in taking the next steps ahead in your investment journey.

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