How To Select Stocks For Intraday Trading: Intraday trading is a popular form of trading that involves ownership and selling financial instruments within the same day. This type of trading is popular among short-term traders who seek to take wholesomeness of short-term price movements.

However, the usual question that new traders have is – “which stocks to segregate for intraday trading and in what timeframe should they trade?”

In this article, we will understand how to select stocks for intraday trading and the time frames you can use for intraday trades.

Rules For How To Select Stocks For Intraday Trading

Selecting the weightier stocks for intraday trading requires you to follow the pursuit rules:

How To Select Stocks For Intraday Trading #1 – Squint for Liquid Stocks

Liquidity is the most crucial factor when selecting stocks for intraday trading. The price moves quickly when you are trading on an intraday understructure and a upper liquidity in the stock will ensure that you can buy and sell the stocks swiftly at any time.

Another significance of liquidity is its huge volume. It is possible to buy and sell big quantities of stocks with upper volume without it having an impact on the stock price, which disrupts the market unnecessarily.

How To Select Stocks For Intraday Trading #2 – Squint for Volatile Stocks

As you are aware, intraday trading takes place on the same day, and you can only profit if the stock moves in your direction. Only a volatile stock will wits good movement during the day. Thus, it is suggested to pick stocks with medium to upper volatility.

However, it is moreover important to note that picking volatile stocks can moreover prove to be counterproductive if they move in the opposite direction of your expectations. Thus it is crucial to place a stop-loss whenever you engage in intraday trading

How To Select Stocks For Intraday Trading #3 – Select Stocks that move with the Market

Markets commonly increase or fall due to a variety of factors, including economic, political, social, and other factors. While engaging in intraday trading, it is recommended for a trader to trade in stocks that move with the unstipulated trend of the market. This increases your likelihood of making profits in intraday trading.

How To Select Stocks For Intraday Trading #4 – Trade based on Sectoral trends

The stock market is divided into several sectors. Being knowledgeable well-nigh these sectors is essential for intraday traders. If you observe any trending news that influences a unrepealable industry/sector, you can segregate stocks from that sector and execute suitable trades based on that information.

How To Select Stocks For Intraday Trading #5 – Monitor select Stocks

The market has thousands of equities that are exchanged, making it untellable for one person to alimony track of them all. Thus, it is well-considered for traders to concentrate on a small number of shortlisted stocks.

Doing so can help the traders wilt increasingly familiar with the stocks, which will enable them to make largest trades. The weightier and most easy way to unzip this is to once have an intraday watchlist of companies.

Selecting the timeframe for intraday trading

Selecting the timeframe for intraday trading depends upon the type of trader you are in the market. Let us discuss the types of intraday traders and understand the time frame for each of these traders.

Scalpers: Scalpers are the type of traders that aim to capture the short-term volatility of securities and earn profits from it. The main aim of this trading strategy is to earn a lot of small profits from multiple trades undertaken. The elapsing for which the scalpers hold their position range from a elapsing of few seconds to a few minutes

As the scalpers execute many trades in a day, they need to find as many opportunities as possible which they will be worldly-wise to find in the lower timeframes. Thus, the weightier time frame for intraday trading can be the 1-minute, 3-minute, or 5-minute timeframe.

Day/Momentum traders: Day/Momentum traders are the type of traders that aim to capture larger price movements and execute fewer trades when compared to scalpers. Here, the traders follow the trend of security and hold onto the position for a elapsing of a few minutes to a few hours.

As Day/Momentum traders try to capture a big movement in security, they will need to squint at the larger time frame as the price moves increasingly in the long run. Thus, the weightier time for intraday trading can be a 15-minute, 30-minute, or 1-hour timeframe.

Intraday Trading Rules while executing trades

Following are the rules to be followed while executing intraday trades:

Have a well-defined trading plan

A well-defined trading plan is one of the things while intraday trading. Before you enter any trade, you should have a well-spoken grasp of your entry and exit points, stop-loss levels, and profit objectives.

This will indulge you to make increasingly educated trades, expressly in volatile markets. Your trading strategy should be based on your risk tolerance, investment objectives, and market analysis.

Stay disciplined

Intraday trading may be stressful, and it is easy to make wrong decisions that result in substantial losses. As a result, it is important to stick to your trading strategy and stave making bad judgements based on emotions. Staying disciplined will help you stave expensive mistakes and uplift your chances of success.

Manage risk

Because intraday trading is inherently riskier than longer-term investments, risk management is very important. One can manage risk by using stop-loss orders while trading which can automatically exit a trade when the price hits a specified level.

Capital preservation is flipside important part of managing risk. Thus, traders should limit the wanted invested in a single trade in order to stave huge losses.

Keep emotions in check

Trading based on emotions results in increasingly losses than profits, so it is important to alimony your emotions in check. When making trading decisions one should be enlightened of their emotional state and follow the trading plan which will help you stave making bad trading decisions

Stay informed

Intraday trading requires regular market monitoring and staying informed on the latest news and happenings that may stupefy your trades. This implies you should stay updated on market news and occurrences, as well as unriddle the markets regularly to make informed trading decisions.

Avoid over-trading

Many intraday traders make the mistake of overtrading. This involves inward too many trades in a short duration, which increases the risk of loss.

Overtrading increases the probability of losses, increases transaction financing and can moreover lead to mental vacuum making you vulnerable to mistakes. Thus, it is important to stick to your trading plan and only enter trades when conditions are favourable.

In Closing

As we conclude our vendible on ‘How To Select Stocks For Intraday Trading”, one should note that irrespective of the type of strategy or methodology one uses to execute intraday trades, it is not possible to earn profits every single time.

Rather, than getting disappointed with the losses, one should examine where you went wrong and learn from your mistakes so that you may stave them in the future. This can make you successful in the long run.

Written By Aaron Vas

By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors proceeds wangle to comprehensive tools that enable them to identify the weightier stocks moreover get updated with stock market news, and make well-informed investment decisions.

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