Select stock for intraday trading is becoming very popular nowadays to make quick money from the stock market. People are using the process of intraday trading to increase their investment portfolio, especially those who are in their twenties or thirties and are eager to get into the stock market.
Fast decisions, and achieving instant payoff are the reasons why intraday trading is extremely appealing. But, picking the best option for intraday trading is complicated if you’re not used to this area. In this article, we’ll discuss some of the essential factors you should consider when selecting stock for intraday trading, which will benefit making better decisions and boost your chances of being successful.
What is intraday trading?
Intraday trading is nothing but a process of making money from the stock market by buying or selling stock within the same business day.
How To Select Stock For Intraday Trading?
Selecting stocks for intraday trading is based on some categories of stocks, such as liquid stock, Newes stock, volatile stock, and many more. Here are some of them that are explained below and will help you to select stock for intraday trading.
1. Liquidity Stock
Liquid stocks are highly preferred by professional traders because there are a lot of buyers and sellers in liquid stocks, due to which the trading volume in such stocks is very high. Due to high volume, traders can easily enter and exit such stocks.
Liquid stocks are quite volatile and give very good movements in the short period, due to which traders get a very good opportunity to book profit by entering.
2. Market News and Events Stock
News and events are the reasons for the sudden rise in the price of any stock. Keeping abreast of current developments and news related to selected stocks is a must for intraday traders. Trader Bloomberg, Money Control, etc. can follow reputable news sources.
3. Volatile Stock
Volatile stocks are those whose prices go up or down during short periods. Professional traders mostly select such stocks for intraday trading. Due to the high price movement in volatile stocks, traders get good opportunities to earn profit.
The price of such stocks swings a lot due to which traders can buy low and sell high or else sell high and buy low such stocks in a single day. The trading volume in volatile stocks is also very high due to which traders do not face any problem in executing the trade.
4. Based on Technical analysis
For intraday trading in the stock market, you can select stock based on technical analysis. Suppose you use the Relative Strength Index for trading, then you can select such stock that is in overbought or oversold condition.
If you use any strategy like moving average crossover, then you should prepare a list of such stocks one day in advance that have crossed the moving average on that day, and then you can use such stocks for intraday trading the next day.
5. Based on the Chart Pattern
The chart pattern is one of the formations of the stock price that traders use to predict the future of the stock. Every chart pattern has a setup rule which traders have to follow. There are many types of chart patterns in the stock market such as head and shoulder, double top and double bottom, triangles, flags and pennants, cups and handles, and wedges. You can prepare a list of stocks using such chart patterns and trade in those stocks.
6. Based on the candlestick Chart Pattern
The candlestick chart pattern is a very popular method to predict the next move of any stock. The candlestick chart pattern is formed by one or more candles. You can see this pattern in any time frame such as one minute, five minutes, or one hour and one day.
Each candlestick shows four key pieces, such as open price, high price, low price, and close price.
Doji, hammer, hanging man, and engulfing are single candlestick patterns. The method of using each candlestick is different. If you build a strategy in the market based on such candlesticks, then you can trade in the stocks in which this candlestick chart pattern is being formed by selecting them.
