Intraday trading, or day trading, simply put, is among the most exhilarating ways to leverage the stock market. Traders operate by buying and selling shares within the same trading day, with the hopes of profiting from small price movements. Sequentially, speed and accuracy are critical – but again, the answer comes down to one thing – picking the best stocks for intraday can be the difference between consistent gains and losing trades.
At Moneyplantfx we believe disciplined strategies and statistically proven research is the best formula for making long-term gains in intraday trading. Let’s look at a way to find the best stocks for intraday trading and then the daily practices for intraday trading.
Understanding Intraday Trading
Intraday trading means that all open positions are squared off before the end of the market. For instance, if you bought 500 shares of Reliance at ₹920 in the morning and sold it at ₹928 later that same day, your profit would be ₹4,000. Similarly, you can also short sell, meaning selling first and buying later – you can benefit from declining prices. The beauty of intraday trading is your ability to perform both of these scenarios; however, that only works when you are looking for intraday trading opportunities on the best stocks.
A lot of novice day traders fail, for one reason: they go into day trades without knowing which stocks to day trade! The most suitable stocks for day trading are liquid, predictable, and moderately volatile. If you choose your stocks wisely, this will enable you to take advantage of a trend in the market, control risk and exit your trades when you should.
Here, we’re going to look at some of the most important factors to consider and assess.
Liquidity refers to how easily you can buy or sell a stock without having large price changes along the way. Ideally, the best stocks to trade intraday will always be very liquid stocks because they feature high volume and tight spread.
While volatility is good for intraday profits, extreme volatility can result in devastating losses. The best stocks for intraday will generally have a movement range of 3-5% in one day. Avoid penny stocks or low-cap companies, as their price movements can be unpredictable and manipulated.
Stocks that correlate with their sector or index can provide more predictable trading scenarios. For example, IT stocks will often move with currency changes, and aviation stocks move with changes in crude oil prices. The best stocks for intraday tend to mimic the sentiment of the broad market, increasing your trades based on trend-based decisions.
“Trend is your friend” is one of the golden rules for intraday trading. In a bull market, you will look for stocks exhibiting bullish characteristics; in a bear market, bearish stocks. The best stocks for intraday correlate with the overall market direction. Trading with trend reduces your risk and has a positive effect on consistency.
A good research process will keep you informed. Always:
If you do all of this, you will consistently find the best stocks to enter intraday.
Here are some technical filters, to help you pick the best stocks for intraday.
Reactive to News – Generally speaking news driven stocks are the best stocks for intraday momentum trades.
In order to develop a daily process, it is critical to find the ideal stock for intraday trades. Here is a routine that you may consider:
Intraday trading requires more than just a decision to buy and sell. It is about developing a plan, having discipline, and selecting the right stocks. Stocks that are ideal for intraday trades typically have:
At Moneyplantfx, we recommend traders use liquidity, patterns and disciplined research methods while resisting emotional decisions. What you will learn as you become better at finding best stocks for intraday and successful indefinite profit in your trades is the value of good trading habits.
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