Intraday trading is becoming one of the most popular forms of trading, where traders open and close all trades within a day. To succeed as an intraday trader, you need to identify the right stocks to trade-in. Once you have identified a selection of stocks, you can then monitor and analyze these further to identify trends. The entry and exit strategies are dictated by the trends you observe. In the below article we will cover What is Intraday Trading, Benefits of intraday trading, Which stocks to select for intraday trading.
What is intraday trading?
Intraday trading, also called day trading, is the buying and selling of stocks and other financial instruments within the same day so that there is no outstanding or delivery position of any kind pending at the end of the day for the next day.
Benefits of intraday trading
Most of the traders who want to make money in a short time or in a day, love intraday trading. The advantage of intraday trading is that it does not block your capital after the market is over. Day trading Brokerage is very less compared to the brokerage that is charged for delivery based trading.
Day Trading can get more returns on investment compared with Bank FD, Postal Saving, etc Many times the stock traders earn a profit within ten to sixty minutes. Thus, they do not have to sit for a very long time in front of the terminal of stock trading.
A comprehensive list of the best stocks for intraday trading
All stocks are not suitable for intraday training. Let us focus on how to pick stocks for day trading. Is there anything like the best intraday stocks list or a list of top 10 stocks for intraday trading? While such a list could be a very dynamic list and subject to constant change, here is a very fundamental approach to shortlisting stocks for intraday trading.
Remember, this is one of the most important steps before embarking on actual intraday trading. Basically, you need stocks that can give movement and at the same time are predictable. Here are 5 parameters you should consider when you select stocks for intraday trading.
Trade Only in Liquid Stocks
Liquidity means how easily shares can be traded in the market. At any point in time during day trade, there should be a high no of buyers and sellers available at a near pricepoint. Trade orders should get executed immediately at market price without many spikes.
Choose Medium volatile Stocks
Volatility share should not be highly volatile. High volatility means large price movements during the day which translates to more trading opportunities and low volatility means fewer trading opportunities. So Medium volatility is preferred on daily charts.
The Average True Range (ATR) is an indicator that measures the volatility of the market. You can use the ATR indicator to identify multi-year low volatility because it can lead to explosive breakout trades.
Trade-in Good Correlation Stocks
Correlation describes the relationship that exists between two stocks and their respective price movements like major indices and sectors stocks move with index. For example, a fall in crude index benefits the Aviation sector, paints sector, weakening Rupees means a rise in the IT sector.
Find stocks with uptrend or downtrend
Uptrend describes when the price of a stock is moving upward or getting higher. An uptrend is characterized by the chart’s peaks and troughs reaching new highs as the trend progresses.
Downtrend: As you probably already guessed, a downtrend is the opposite of an uptrend. It’s when a stock price is moving downward or getting lower.
If we are in a bull run, then it is advisable to find stocks which are on an uptrend for the past few days. If we are in a bear run, then it is advisable to find stocks which are in a downtrend for the past few days.
Know the key dates
Key dates will help you trigger stop losses. Key dates like the result day, May help you decide stock trends