By opening a Demat account, you have a wide range of stock options to choose from; this is why, as an intraday trader, you have the opportunity of accepting any kind of company stock. Hence, you may want to figure out what is the right type of stock to pick up.
Here are a few tools that you need to abide by when selecting stocks for intraday trading. These include:
Opt for liquid stocks as far as possible: Large quantities of liquid stocks can be easily bought and sold, without affecting its price. This is because liquid stocks have large volumes. As an intraday trader, your strategies are dependent on precise timing and speed; hence, large quantities of liquid stock can help you to get in and out of trading transactions easily.
Consider medium to high volatile stocks: The price of intraday trading is to look into price movement to make money. As a day trader, you can select a stock that fluctuates with regards to rupee terms or percentiles, as these filters can reveal different results. Share prices that show an approximate movement of 3% or more tends to have consistent large intraday moves to trade. Similarly, the same can be held true for share prices concerning rupee terms.
Thorough and efficient research: Regardless of it being a short-term or long-term investment, an integral component of trading in the stock market is research and analysis. By studying the profile and financials of the company, you can determine if it is worth investing. It is not necessary for such stock to be market leaders, but you may want to ensure it has high liquidity. In addition, you may also want to apply fundamental and technical analysis tools that can further define and identify a stock’s trend, its current standing and accurate entry and exit points. You can prepare for unanticipated volatilities and plan ideal trading strategies for various scenarios with the help of research.
Examine the intraday trend: Typically, intraday trends may not last for more than two trades. Hence, it is essential to concentrate on executing a trade before the direction alters or overrides. Look into specific shares that are steadily rising using trend lines to understand more about their dynamics.
Establishing entry and exit strategies: You can only profit from stock by relying on intraday strategies. It is crucial to stick to specific guidelines and keep a lookout for particular intraday trading signs that can help you succeed. Here are some guidelines that can help you establish the right entry and exit strategy.
- Trading only with existing intraday trends
- Conduct transactions of strong stocks in an uptrend and weak stocks in a downtrend
- Exercise patience and wait for the right time to pull back
- Profit from uptrends and downtrends regularly
To identify the right stock for intraday trading, you may want to disconnect the existing market trend from the encircling commotion, and taking advantage of the trend. Specific features, such as liquidity, volatility and correlation distinguish the best intraday trading stocks. However, it is also crucial to establish entry and exit strategies. In addition, you may also want to study price waves and trend lines to help you refine your stock picks.