How to Select Stocks for Intraday Trading

By | January 16, 2023
(Last Updated On: January 16, 2023)

How to Select Stocks for Intraday Trading

Selecting stocks for intraday trading is a different process than selecting stocks for long-term investments. It is quite different with new rules and selection criteria. So, let us talk about how to select the best stocks for intraday trading. We have several tips to help you choose shares ideal for short-term holding like intraday trades. You can refer to our other articles to learn more about the stock market.

Opt for Liquid Stocks

If you are looking to trade stocks intraday, you need to have liquid stocks. Liquidity is the ability of an asset to be quickly bought and sold without affecting its price. In other words, it means that the volume of a stock will be high enough that you won’t have trouble selling it whenever you want.

Liquid stocks are also more predictable in their price movements than illiquid stocks. The best way to find a liquid stock is by looking at its volume and price history charts. If the volume is high and there’s been little change in price over time, it is a liquid stock worth investing in.

Do Not Choose Volatile Stocks

Volatile stocks can be subject to extreme changes in price even within a single day. You might be taking on too much risk if your portfolio includes these stocks. It’s better to choose less volatile stocks. Your investments will be more stable and less likely to fluctuate wildly during the day.

Volatility can be due to several factors, and one of them is news. For example, a company may announce bad earnings or other information that causes its stock price to fluctuate dramatically. Another factor is investor sentiment. The overall mood of investors can affect how much they will pay for a company’s stock.

Pick Correlated Stocks

Is intraday trading profitable? The answer completely depends on your stock selection strategy. Correlated stocks are the ones that move together. When one goes up, the other one usually follows suit. That means if you buy one of these correlated stocks at the beginning of a trading day and sell it at the end of the day, you’ll probably make money on your investment.

For example, it would be better to invest in companies closely related to the airline industry if you want to trade airline stocks. The same goes for oil companies, technology firms, and so on. 

Watch Out for Market Trends

Stocks that follow the market trend are the best stocks for intraday trading. You can see it by looking at the stock’s movement with the overall market. If a stock moves up or down with the overall market, it is most likely a good stock for intraday trading.

You also want to ensure you are following the right trends and not buying anything that looks like it might be going up. You need to know what stocks are likely to go up or down on any given day.

Look for News-sensitive Stocks

If there’s a news event or even a rumour, you want to be aware and ready to act on it. For example, there may be a merger between two companies or a company announces they’re going to lay off employees or close down an office. These things can affect the stock prices of these companies.

You also want to track what is happening globally that might affect your stocks. Things like natural disasters, political events, and scandals play a part in determining whether or not people will invest in some stocks

Bottom Line

That’s the stock selection strategy you want to implement when dealing in intraday trading. It also bears a lot of wisdom in the realm of long-term investing. Just ensure you’re buying your stocks at a fair price. Anything less, and you’re likely to be selling at a loss.



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