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Things to Know while Picking Stocks for Intraday Trading

18 Feb 2022 0 COMMENT

Introduction

Intraday trading is becoming increasingly popular with market participants. With the right intraday trading strategy, it is possible to profit from trade. A crucial part of an intraday trading strategy is proper stock selection. Read on to learn some handy tips that will help you pick stocks for intraday trading.

Rely on technical analysis

The first step before selecting stocks for intraday trading is to hone your abilities as a technical analyst. The good news is it isn’t as difficult as it may seem at the outset. Further, with a good broker that provides adequate support through research, analytics and advanced charting tools, you can easily decipher charts patterns and make informed decision. It is prudent to pick stocks that have a history long enough to indicate clear chart patterns. Intraday trading is based on the premise of the recurrence of past patterns. This makes chalking an intraday trading strategy that much easier.

Look for volumes

One of the first factors to be considered in the process of choosing intraday trading stocks is liquidity or high volumes. A liquid stock can be bought and sold easily whenever you need to, in keeping with your intraday trading strategy. Even high volumes on the counter of such stocks do not alter the price drastically. Further, when you choose liquid stocks, you stand to benefit from any potential gains that arise from large price movements.

Alternate Reading: Five suggestions for intraday trading

Pick transparent businesses

The one factor that is crucial   to understand is that it is always best to trade in the stocks of companies that have transparent businesses. When companies make all the relevant information available in the public domain, they tend to have stable managements. All this adds up to a good track record and makes choosing stocks for intraday trading that much easier.

 Alternate Reading: Things to Know While Doing Intraday Trading

Correlated stocks

 Another factor to look out for is picking stocks correlated to indices or major sectors for intraday trading. For instance, stocks in the ITES sector are sensitive to currency movements. A stronger rupee lowers the stock price, and vice versa. The performance of a sector can thus be an indication of a clear trend.   This could help you to be profitable in intraday trading.

For beginners therefore, using simple intraday trading strategies such as these may prove to be helpful.

Stocks hitting headlines

Another popular intraday trading strategy is selecting news-sensitive stocks. These stocks can react to both positive or negative developments and media coverage. Taking positions in these stocks becomes simpler once you have an idea of the movement triggered by the news. However, it is important to exercise caution when you are selecting such stocks. Sometimes, even positive news may trigger a fall. It is therefore mandatory to have a stop-loss order in place.

Conclusion

Selection of the right stocks is an important part of chalking a good intraday strategy. However, it requires time and patience. Choosing the right stock broker that provides the necessary support with quality research and good charting tools can make your trading journey seamless and profitable.

Disclaimer:

ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.