How To Select Stocks For Intraday Trading | Intraday Stocks Selection Strategy
How To Select Stocks For Intraday Trading | Intraday Stocks Selection Strategy : Check out important parameters likes
1) Liquidity, 2) Medium to High Volatility, 3) Group Followers, 4) Entry and Exit Strategies, 5) Take Regular Profits, 6) Market Trends, 7) Trade Current Intraday Trend only, 8) Be Patient and Wait for Pullback, 9) Sector Trends, 10) Technical Analysis. We can pick any stocks they like as per our need. After selecting the stock the next step is to make a profit. The day traders who execute intraday strategy will attempt profit of price changes for a given asset. This process is done through different techniques.
Process to Choose Stocks For Day Trading
1) Liquidity : -Stocks tend for high volume numbers. It allows large quantities to purchase and sell without impacting the price. The intraday strategy will depend on speed and time at a high degree of volume by getting into/out of trades. The depth is critical because it shows how much liquidity stock is at various price levels above/below the current market bid. So while choosing high liquid stocks we should ensure that you assess the liquidity at different price levels. Some stocks have high liquidity at low prices as volumes can drop beyond a certain level by understanding it.
2) Medium to High Volatility : The day traders require a price movement to make money. They can choose stocks that tend to move and are easy in dollar term percentage terms. The two filters will produce different results. Stocks that tend to move 3%/ more per day have consistent large intraday moves to trade.
Many traders look for equity that moves in correlation with their sector and index group. When the index ticks upward an individual stock price will also increase. This is important if the trader wants to be trading the strongest/weakest stock every day.
4) Entry and Exit Strategies
You must pick the sweetest stock in the world, but profiting from it will rely on a specific strategy. There are a number of intraday strategies so the important thing is to stick to some guidelines. So by observing certain intraday trading signals you can succeed.
5) Take Regular Profits
Day traders to have limited time to capture profit and spend as much time as possible in trades. That is losing money/moving in the wrong direction.
6) Market Trends
They are based on the economic, political, and factors as markets tend to move upward/downward. The stocks have a positive/negative correlation with the markets. If the market rises the stock prices can rise/fall respectively.
7) Trade Current Intraday Trend only
When the market moves in waves the trader's job is to ride the waves. During an uptrend, we focus on long positions and the downtrend focuses on short positions. Intraday trends will not continue but one or two trades can be made before a reversal occurs. When the dominant trend shifts then the trading with the new trend begins. Trend lines will provide a simple and best entry.
8) Be Patient and Wait for Pullback
Trend lines are simple guides where price waves begin and end. At the time of selecting stocks for intraday trading, the traders use a trend line for entry into the next price wave in the direction of the trend. At the time of entering a long position, we buy when the price moves down toward the trend line and moves back higher. To draw an upward trend line price is low and a higher price low is needed. The line is drawn by connecting the two points and extended out to the right.
9) Sector Trends
The market can be divided into sectors such as technology, pharmaceuticals, automobile & gas. Intraday traders are important to maintain the level performance of all sectors in the economy. When you identify any sector it is consolidating over months and ready to break out. Then search for the companies to invest in.
10) Momentum of Stocks
The speed of change in the price of a stock over time is also known as the momentum of the stock. It helps you determine the strength of an upward/downward trend in the price of the stock. These stocks are used by day traders for going long/ short by earning a profit.
11) Technical Analysis
The strategies will help you to conduct the technical analysis of stock and identify buy/sell signals. So you can observe the stocks that display gaps in the stock prices in other directions. These gaps can earn opportunities for day traders. The technical analysis can find stocks that are breaking support and resistance levels.
Summing Up :- Here buying the right stocks is important to generate profits in intraday trading.
