How to Select Stocks for Intraday Trading?

When I ask people how to select stocks for intraday trading, I always get different answers. Some say track the news, some suggest to go for volume gainer, some recommend looking for high quality stocks, etc. I tried them all but nothing worked.

Then One day I met a professional trader who taught me the most important basic of trading.

It is: in trading a single trick never works. You have to follow a couple of tips together to earn profit.

This applies well when you select stocks for intraday trading where a single suggestion never work. You have to look for a combined set of characteristics to select stocks that go well with Intraday Trading.

Best Tips to Pick Stocks for Intraday Trading

Here’s the list of 5 Qualities your Stock must have to be Qualified for Intraday Trading:

Go for High Liquidity Stocks

Basically, high liquidity stocks have 3 key elements

There should be a small difference between stock price bid-ask (i.e. there should a narrow difference between: higher price buyers are willing to pay and lowest price sellers are willing get)
High trading volume dictates traders’ interest on particular stock and a pretty good chance to earn from that stock
High number of shares are available for public trading

Never Trade in High Volatile Stock

High volatile stocks are those with less volume for the day or stocks with big news. Some may prefer to trade in such stocks but they are in high risk. With high volatile stocks, you hit the 50-50% chance of winning and losing. So, keep the track of news to confirm that you are not trading under stock in news.

High Volatile stock give you instant money but same time it takes you from. So better avoid high volatile stock once you master in Day trading. Select stock who give you average momentum of 1-3% Day.

Find a list of Correlative Stocks

Stocks whose movements are related to each other are called correlative stocks. For e.g. weakening dollar indicate bear trend for IT sector and strong dollar indicate bull trend of IT industry. Another good example is correlation between commodities and stocks. You can find stocks going according to the increase or decrease in price of commodities.

It can be a positive correlation (both stocks moving in the same direction) or negative correlation (stocks moving in opposite direction of each).

Correlative direction of stocks gives you confirmation on today’s movement for particular stock.

Hit at Nifty Fifty First

If you want a list of stocks where you can confirm above given points, start with Nifty Fifty list. This list has more chances of profit when it comes to Intraday Scripts. If you find the qualities of intraday scripts among Nifty-Fifty, you are at luck. If not, you can go for others too. Nifty fifty is good to go but not 100% necessary.

Avoid Mid-Sized and Small cap stocks like T group, Z group for trading. You can trap anytime. So better stick to Nifty 50 scripts. Nifty 50 Scripts mostly hold by all mutual funds and HNI clients they will give you good volume as well as decent moments for trading.

Hold the hand of Trend

Finding stocks to buy while the whole market is down and finding stocks to sell while the whole market is up, is simply not going to work. Follow the trend, Trend is traders best friend. You can take help of Moving average here create scanner for Nifty 50 script and check breakout of any script during trending market and take the ride.

Better to make a list of stocks which you can buy during uptrend and a list of stocks to sell during downtrend. This decreases your chances of getting trapped.

This doesn’t end here

Keep your Intraday Scripts ready, with above qualities, to roll on the market. We will be back soon with indicators which are useful for Intraday Scripts.

Also Read:

Which Indicators are the best for Intraday Trading?

Which is the best Intraday trading AFL code for Amibroker?

How to Select Stocks for Swing Trading?

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