How to Select Stocks for Intraday?

How to Pick Stocks for Intraday?

The key to choosing stocks for intraday trading is to analyze the market situation in real-time. To make good decisions, you need to know how the price moves, why it's moving, and what other traders are doing. You also need to understand what your broker's position is.

Stock selection- Look for stocks that have a high volume

The difference between low-risk and high-risk stocks is not just their volatility. It is also their price. If you buy high-risk stocks, you need to get paid more for the risk you are taking.

Some high-risk stocks pay off by becoming high growth companies. If you buy these, you want to hold them for several years while they grow into their valuations.

Other high-risk stocks pay off by becoming takeover candidates. These are the ones to buy for intraday trading. They can double in price in a day when a takeover rumour surfaces and then reverse themselves when the deal falls through or competition emerges.

If you trade this kind of stock, you want it to be volatile enough that there will be trades of this magnitude -- though not so volatile that there will also be short term trades against you.

Stock Selection- Look for catalysts to make the market move

The market reveals the most valuable information in the least flattering way. A stock quote flashes a bid or an ask, so if you can predict which direction the market will move, the odds are good that your guess will be reflected in the price. And yet, you have less than a second to make your decision.
 

What is Intraday Trading?

One popular type of market speculation is intraday trading, in which traders initiate and close all of their deals in a single day. Intraday traders are those that join and exit the market inside a single trading day.
Choosing stocks for intraday trading is a critical skill for day traders to have in order to be successful. Choosing the wrong stocks to trade during the day frequently results in people losing money.
 

What factors to consider while choosing Intraday Stocks?

1. Trade Only in Liquid Stocks: Choosing extremely liquid stocks is the key to identifying the top intraday stocks.
When selecting equities to trade during the day, liquidity is the most crucial intraday trading advice. Due to their high trading volume, liquid equities allow for greater purchases and sales without appreciably changing the price.

Less liquid stocks often don't provide traders the chance to buy and sell in bigger amounts since there aren't as many buyers. There are traders who contend that equities with less liquidity have more chances due to their quick price changes. On the other hand, data indicates that equities that are volatile exhibit larger swings in a little amount of time. As a result, the majority of potential benefits evaporate while the danger of loss remains.

Remember to look for liquidity at different price points when choosing equities that are liquid. specific stocks are quite liquid when they are trading at a lower price, but once they approach a specific price range, the volume sharply declines. 

2. Avoid Volatile Stocks: It is often seen that stocks with little daily trading activity or those where significant news is anticipated to move in an erratic manner should be avoided. Sometimes, even after the major news is announced, the stock may exhibit volatility. It is advised that traders stay away from intraday trading in these equities. While the majority of stocks traded in the low-cap categories, such as S, T, and Z, are extremely turbulent, there are a few volatile equities in the mid-size group. These stocks are illiquid in addition to being volatile due to their low daily volumes.

Remembering the aforementioned caution, let's now add that a certain level of volatility denotes a lively market, and traders may make money by betting profitably on these stocks on an intraday basis. The finest intraday equities, according to most traders, are those with three to five percent of price fluctuation on either side. However, there is no set rule.

3. Invest in High connection Stocks: An immediate recommendation for selecting the best stocks is to go with those that have a stronger connection with indexes and significant industries. This implies that the stock price rises in tandem with any upward movement in the index or sector. Equities that follow the collective sentiment of the group are dependable and frequently move in line with sector expectations. For instance, all information technology businesses that rely on US markets will be impacted if the Indian Rupee gains strength against the US dollar. IT businesses will make less money if the rupee strengthens, and they will make more money from exports if the currency weakens.

4. Follow the Trend: One of the most crucial intraday trading pointers is to constantly keep in mind that following the trend is advantageous. In a bull market for stocks, traders need to look for stocks that could grow in value. On the other hand, it is wise to identify equities that are expected to decrease during the bad market.

5.Pick after Research: One of the most important intraday recommendations that traders should never forget is to conduct thorough research. Regretfully, most day traders steer clear of conducting research. It is advised to first identify the index and then look for interesting sectors. Making a list of many stocks in these industries is the next stage. Traders should look for liquid equities instead of necessarily include leaders in the industry. Traders may choose the best companies to benefit from intraday/day trading by using technical analysis, identifying support and resistance levels, and researching the fundamentals of these equities.

While there are dangers associated with intraday trading, speed is a key factor that may make all the difference. It's difficult to make money on little price changes that occur throughout the few trading hours.

Intraday Stock Selection - Types of Strategies Day Traders Use

Intraday trading is a business of guessing which companies will be up and which down. It's the same as any other kind of investing, except that you have to do it all day long. And for that reason, it's a lot harder to find places to invest. You can't just run a portfolio of stocks and hope they'll go up over time. There are two reasons for this:

One is that there are too many stocks out there. You can't follow them all, and neither can your broker. The other is that the market never closes, so you never have a chance to take a break from the news feeds and the tweets. The consequence of these two things taken together is that intraday trading tends to be dominated by people trying to beat the news rather than people trying to pick stocks. This means that intraday trading follows the same principles as day trading. In particular, it's not about buying good companies at reasonable prices; it's about buying companies whose information has just been released in a way that makes them look good now.
 

Types of strategies day traders use

Scalping: Scalpers focus on making small profits from tiny price changes throughout the day. traders buy and sell stocks rapidly, aiming to profit from small price movements. By making many trades, they accumulate gains from these small price differences.

Momentum Trading: Momentum traders buy and sell based on recent price trends. They believe that stocks moving in a particular direction will continue to do so. If a stock has been rising, they might buy it, hoping the upward trend will continue, allowing them to profit from these short term movements.

Breakout Trading: This strategy involves looking for stocks nearing a crucial price point, known as a breakout level. Traders identify key support and resistance levels and buy stocks when the price breaks through resistance. This often leads to a price increase, offering a chance to make a good profit.

Trend Trading: Trend traders analyze the current market trend and make trades that align with it. They use tools like moving averages, trendlines, and chart patterns to determine the direction of the market. If the trend is upward, they buy stocks to benefit from the rising prices.

Contrarian Trading: Contrarian traders go against the crowd. They buy stocks when most people are selling and sell when others are buying. They believe that market sentiment can lead to temporary price changes that don’t reflect the stock's true value and that prices will eventually correct themselves.

News Trading: News traders focus on the impact of news and events on stock prices. They watch economic and financial news closely and trade based on how they think the news will affect stock prices. For instance, positive news might lead them to buy, while negative news could prompt them to sell.
By understanding and applying these strategies, traders can better navigate the stock market and make informed decisions.
 

Tips for setting limits for your losses in Intraday Trading

Look for stocks that have been moving in the same direction for the past couple of hours. This is because there will be many people already interested in buying or selling this stock which will lead to a high volume on that day.

Choose stocks that have been moving against each other lately. This might indicate that one stock has been bought more than others and might be a good candidate for a sell order, while the other stock would be a good buy order candidate.

The first tip is aimed at those who want to follow quick trends, while the second tip would be helpful if you have a longer time frame set up – say an hour or more – during which you would want to trade these stocks as they move against each other.

You can look at the news about a company and calculate how it should affect the price. You can look at what other investors are doing and figure how their actions should affect the price. And you can say with great confidence what the right price for a stock should be. But you'll be wrong.
 

Pick best stocks for Intraday Trading

Intraday trading is the act of buying low and selling high as quickly as possible. You can do it with any stock, but it is straightforward with those that trade in an immense volume, have low trading costs, and have a steady price trend.

In the US, these stocks tend to be big brand-name companies that people are familiar with. In India, they tend to be financial institutions or commodity companies. They don't have to be large-caps; midcaps and small-caps also work.

Intraday trading is not for those who are impatient. There is no shortcut to it. There is, however, a way to make your life easier and your chances of success higher.

One idea is to look at the behaviour of the stocks and see if they are moving in a particular pattern. This can help you decide how you should trade them.
 

How to Spot and Follow Market Trends for Stocks Trading

Market trends play a critical role in determining the direction of stock prices. Here’s how to spot and follow trends effectively for intraday trading in India:

Use Technical Indicators: Tools like Moving Averages (SMA, EMA), RSI, and Bollinger Bands help you understand whether a stock is rising, falling, or just going sideways.
Watch Nifty and Sectoral Indices: If Nifty 50 or sector indices like Nifty IT or Nifty Bank are bullish, look for intraday plays within that sector. Stocks often follow the broader trend.
Check Pre-Market Signals: Before the market opens, glance at SGX Nifty, global markets, or major news. These clues often hint at how the day might unfold.
Volume + Breakouts = Action: Keep an eye on stocks that break key support or resistance levels with strong volume, this usually means momentum is picking up.
 

Timing Your Exit: How to Protect Your Profits

Getting in is easy. Getting out at the right time? That’s where the pros shine.

• Set Stop Losses and Targets: Before you even buy, decide how much you’re okay with losing, and how much profit you’re aiming for. This takes emotion out of the trade.
• Use Trailing Stop Losses: If the price moves your way, move your stop loss up. It helps you protect profits without cutting the trade short too early.
• Don’t Get Greedy: It’s tempting to stay in just a little longer. But if your target is hit, exit. Overstaying can turn a win into a loss.
• Close Before the Bell: If your targets weren’t hit, consider closing your position before the market shuts. Holding overnight defeats the purpose of intraday trading, and adds extra risk.
   

What Is Stock Correlation and How Is It Measured?

Correlation is a number between -1 and +1:

+1 means they move together perfectly.
-1 means they move in opposite directions.
0 means no real connection.

Avoid putting your money into two stocks that move the same way. If the market turns, both could tank. Instead, pick stocks from different sectors to spread the risk and keep your portfolio balanced.
 

How to Select Stock for Intraday a day before?

Following are the tactics by implying which you can pick a stock day before:

Share Volume: The volume of the stocks is a primary factor in intraday trading. Volume is the total number of shares traded in a certain market at a given moment. Generally speaking, buying stocks with a large volume is advised.

Stocks of the Day: A few stocks should do well if there is positive news. It is expected that these stocks will move with significant volume in either direction. You are able to trade these shares intraday.

Movement for the Week: Examine the movement of the stocks that have been closing in the black or positive over the past week. Examining this trend can assist you in choosing the stocks to trade intraday.

Resistance Level: Stocks that have breached resistance levels and are trending upward are some to keep an eye on. These stocks are among the most popular options.

Investing in Limited Stocklists:A small percentage of intraday traders trade just certain shares. This is as a result of the traders' extensive research of share movement. One of the primary intraday methods used by traders is this one.

Greatest Winners and Losers:Certain shares are classified as top gainers, while others are classified as top losers. These stocks might see some decent swings. To start trading, however, keep a careful eye on these.
 

Conclusion

Selecting the right stocks for intraday trading isn't easy. You have to know a lot about it. There are so many resources today to get stock data, track, and forecast. Using these tools at your disposal, you must choose stocks wisely depending on your portfolio size and risk appetite. how to select stocks for intraday trading, focus on high-liquidity stocks with significant price movements. Stock selection for intraday involves looking for stocks with strong volume and volatility patterns. To plan ahead, learning how to select stock for intraday one day before includes watching market news, analyzing technical indicators, and setting up a watchlist of stocks likely to show momentum. In summary, how to select stocks for day trading is about identifying those with high trading volumes and observing patterns that suggest potential gains within the same day.