Intraday trading is one of the popular trading strategies that helps traders earn handsome returns. However, it requires proper knowledge, skills and discipline to earn from an intraday trade.
To be a successful trader, it is essential for you to know how the stock selection is done for intraday trading. Since there are numerous companies listed on the BSE and NSE, it becomes very difficult to select stocks for intraday trading. To ease your task of stock selection, we will walk you through the golden rules that you must follow while picking stocks for intraday trading.
Tips for Picking Stocks for Intraday Trading
Follow the Trend
Intraday traders must follow the trend of the market and never trade against it. Like for example, if the market is going up then trade should be taken in stocks that have the potential to rise. Similarly, when the market is falling down then trade should be taken in stocks that can fall further from the current levels.
Trade In Liquid Stocks
Since intraday trading involves squaring off the positions on the same day, you must trade in liquid stocks. Liquid stocks are those stocks which have higher volumes. The traders can easily find buyers and sellers for the respective quantities in liquid stocks and close the trade by the end of the day.
Technical Analysis
It is advisable to take an intraday trade position after conducting technical analysis of the stock. Technical analysis involves reading and understanding the charts of the stock and accordingly taking a position in it. Technical analysis helps an intraday trader in predicting the future price movement.
Trade On News
You can pick an intraday stock on the basis of news flow. The stocks that are in news show big price movement. Furthermore, on the basis of news, it is easy to predict the direction of price movement. Like for example, if the news is positive for the stock, the stock price will go up. Similarly, if the news is negative for the stock, the price will come down.
Resistance Level
You can select a stock for intraday trade when it breaks its resistance levels. The resistance level of a stock is that level where the stock resists to move further. But, once the resistance level of any stock is broken, the stock price moves very quickly. Thus, monitoring the stocks near the resistance levels helps in picking the right stock for intraday trade.
Weekly Movement
You can pick a stock for intraday trade after tracking its weekly price movement. Weekly price movement signifies the trend of the stock and suggests which side the movement of the stock is highly probable. This approach must be put into intraday trade after a good study.
Trade on Sectoral Movements
There are days in the market when stocks of only a particular sector show good momentum. On days like these, picking the stock from such sectors to trade can prove to be a fruitful strategy. When there is a sectoral rise in the stock price, the price movement is fast and good profits can be made.
The above mentioned are few of the tips for picking the right stocks for intraday trading. You can even take the help of your broker or financial advisor for intraday trading. Kotak Securities is one of the leading brokers in India who is known for providing the most accurate intraday trading stock picks. All you need to do is get in touch and open a demat account with Kotak Securities.