How to Choose Stocks for Intraday the Right Way?

Stock market enthusiasts throughout India seek to understand how to choose stocks for intraday trading as part of their elaborate trading strategy. Stock market participants do intraday trading to obtain quick profits by making numerous transactions throughout the day. 

The correct stock selection stands as the key determinant for trading outcomes. The following article provides essential guidelines together with proven methods to determine optimal stocks for intraday trading.

Stock Selection for Intraday: What to Look For?

The objective when picking stocks for intraday trading is to find those with high price volatility. Stocks that display substantial daily price fluctuations make the best choices because they present numerous chances to earn profits. The essential factors mentioned below will help us better understand the process of intraday stock selection.

1. Liquidity Matters

A high trading volume generally indicates stocks will have better liquidity. Stocks experience high trading activity due to numerous market participants engaging in frequent transactions. Quick execution of trades combined with the expected execution price is the main benefit of doing intraday trading in liquid stocks.

• Intraday trading heavily depends on liquidity as an essential element.
• Stock liquidity describes the ease of trading stock without triggering substantial price alterations.
• The optimal solution to how to select stock for intraday one day before is to choose stocks with a high average trading volume for the past several days.
• The quick execution of trades without price slippage becomes possible because of this strategy.

2. Price Range and Volatility

• It is vital to choose stocks that exhibit a wide price movement. A stock showing substantial daily price movement creates substantial trading opportunities for traders.
• The best choice for intraday trading consists of stocks that exhibit high volatility because they demonstrate frequent substantial price movements.
• Stocks that experience daily price movements exceeding 1% or 2% usually make suitable choices for intraday trading. 

3. Market Sentiment and News

• Stock prices undergo significant changes due to news events that occur within the market hours. Intraday traders can take advantage of the short-term price movements due to stock-specific news.
• The right way to choose stocks for intraday trading is to stay on top of corporate announcements and earnings reports, as well as government policy changes and economic news announcements.

Read Also: Intraday Trading Rules and New SEBI Regulations

How to Select Stock for Intraday One Day Before?

Stock selection for intraday trading should not be delayed until the market opens. The process of stock selection the day before provides you with an advantage and eliminates morning preparation time.

1. Study the Previous Day’s Performance

Identify the most liquid stocks from the previous session that showed significant movement. The stock that demonstrates price movement along with high trading volume normally maintains this pattern the following day.

• You should review stocks that experienced substantial price changes, paying special attention to those stocks that ended near their daily peaks or valleys.
• The stocks that showed price movement in the previous session, backed by strong trading volumes, usually maintain that same trend into the next trading day.

When trying to figure out how to pick stocks for intraday, stocks with high trading volume from the previous session should also be examined. Higher stock liquidity allows smooth execution in intraday trades.

2. Identify Pre-Open Trends

To prepare for intraday trading, it is essential to monitor trends before the market opens. The pre-open session in the Indian financial markets enables investors to get an idea of future stock price movements before the start of regular market hours. The degree of movement in pre-open trading indicates the market momentum that will prevail throughout the day and presents the best answer for how to select stocks for intraday.

3. Use Stock Screeners

• Stock screeners operate as efficient tools that let you choose the stocks for intraday trading according to their volume, price movement, and volatility levels.
• A stock screener lets you quickly filter out stocks suitable for your intraday strategy before the market opens.
• Your time efficiency improves significantly while you maintain a ready selection of intraday stocks.

Read Also: Top Indicators Used By Intraday Traders In Scalping

Choosing Stocks for Intraday: Tools and Techniques

The process of stock selection for intraday trading needs proper tools combined with analysis techniques to discover optimal trading opportunities. The following list provides proven approaches to stock selection.

1. Technical Analysis

Stocks showing defined upward or downward trends make the best targets for intraday trading because their current momentum indicates they will likely continue to follow the trend during the day.

• The technique requires analysis of charts, which requires traders to use several indicators to forecast future price trends.
• The most commonly used technical indicators for analysis are moving averages, Relative Strength Index (RSI), and Bollinger Bands.

2. Sector Performance

Factors within specific sectors can cause collective movement among stocks that belong to that sector. For example, positive news regarding the banking sector can create favorable market conditions for other banking stocks and cause them to perform better. 

• Sector performance monitoring allows investors to identify stocks suitable for intraday trading.
• Traders should read plenty of industry-specific news and economic reports to identify stocks suitable for intraday trading.

Read Also: Bank NIFTY Intraday Options Trading: Steps, Strategies & Tips

Conclusion

The selection of suitable stocks for intraday trading demands traders to focus on market liquidity and volatility together with market sentiment. Pre-open session study, technical analysis, and analyzing stock’s previous day’s performance allow traders to effectively achieve stock selection for intraday trading. 

The selection process for intraday stocks requires both attention to specific details and time spent practicing these skills. The methods presented in this article will boost your chances of success in the demanding intraday trading environment.

Frequently Asked Questions (FAQs)