Stock selection is one of the most important aspects of intraday trading. There are various steps involved in determining which stocks must be chosen for intraday trading. Also, you must decide which stocks you will invest in one day prior to trading so that you get sufficient time to study the market and make a right decision.
To make the complex process of selecting intraday stocks one day before, we have some techniques for you. Let us have a look at the techniques-
Select the stocks that have performed well today
The first step to select the top-performing stocks is to select the best performing stocks of today for trading tomorrow. This is because the stocks that have performed well today have a higher chance of performing well tomorrow. Thus, it is important to scan the outperformers of today to trade well tomorrow.
To select the stocks that have performed well today, go to the NSE India website, select from Top gainers/losers (i.e. stocks that gained/lost the most), Volume shockers (i.e. stocks that traded with high volume), Open = low; open = high , Index toppers (Stocks that belong to sectors with biggest intraday change).
This will give you a fair idea of the stocks that have performed well and give you a fair idea of which stocks to select for tomorrow.
Check the prices of the stocks
On a daily basis, you must do a study of the 52 weeks highs and lows of a stock. This will help you in understanding the fluctuations of the prices. When prices rise to their 52 weeks high or fall below their 52 weeks low the chances of increase or decrease in the prices rise significantly. Thus, you must keep an eye on the 52 weeks highs and lows of a stock.
Trade mainly in liquid stocks
The most important intraday trading tip is liquidity. Liquid stocks have huge trading volumes as larger quantities can be purchased and sold without any significant impact on the price. While selecting stocks, check the liquidity at various price levels and accordingly, you will ascertain the variability of liquidity at different price levels. This will help you to buy the right stock at the right time.
Analyze stocks on multiple timeframe charts
Another method of selecting intraday stocks one day before is to analyze the stocks that you select on multiple timeframe charts. For doing this, you can use technical indicators like candlestick patterns, support and resistance levels, trendlines, patterns like flags, wedges, triangles and technical indicators like moving averages, Bollinger Bands, RSI etc.
After conducting a proper technical analysis, you can have the list of stocks ready for the next day of trading.
Miscellaneous factors
There are various factors that you must consider before selecting a stock for intraday trade. For e.g.- look at the number of shares being traded within a particular timeframe. It will inform you about the volumes being bought and sold. As an intraday trader, one must pick stocks that trade in high volumes.
Secondly, you should also consider whether there is a buzz around a particular stock. This offers lucrative opportunities to day traders as such stocks are likely to show momentum in some direction, along with good trading volumes.
Next, check on the closing price of the stocks for some time. Has the closing price been showing positive or negative trend over a certain period of time? Also, keep a check on the resistance and support levels*of your chosen stocks so that you can make the best choice of stocks for day trading.
*Resistance level refers to the price beyond which a stock is not expected to rise while the support level is the price beyond which a stock is unlikely to fall.
Choosing the right stocks is highly important for intraday trading. One needs proper advice backed by knowledge and experience so that they can invariably pick the best shares for intraday.
mastertrust helps you with the right set of tools, guidance and knowledge so that you can maximize your returns from intraday trading.
