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How To Choose Good Stock For Intraday Trading?

Intraday Trending

Intraday Trading is a trend in the world of the stock market in the present. When newcomers discover trading for the first time, they picture themselves earning massive returns in just 24 hours.

This is completely different from the real picture created by this trading method. You may choose the most effective stocks for intraday trading using a myriad of data; however, this type of trading is best researched for a time before you begin to participate.

If you pick the top intraday stocks of the moment, you must choose wisely because this will greatly determine how your entire investing and trading experience will take shape soon.

You may be mistaken if you think that trading on intraday is exciting and thrilling. In reality, intraday trading stocks in the present is mostly about learning the best way to achieve discipline in various areas.

One area of the discipline is the choice of stocks that can be traded intraday. Be aware that you are not able to trade daily with any company. The right stock will help you in your endeavor.

However, the incorrect one may result in you getting absolutely nothing out of intraday trades. It is essential that you have to be extremely selective.

The most important aspect of a profitable trade is to pick the most profitable options the market offers; however, for intraday trading, you have to make sure to become more careful since you have to trade and close within that same day.

You have to think of the most effective methods to increase your profits in such a short time.

How to Select Stocks for Intraday Trading 

Here are five factors you should take into consideration when you are trying to figure out which stocks to choose to trade intraday:

Liquidity in Terms of Volumes is the Holy Grail – The Top of Your Intraday Trading Stock List Criteria

The liquidity of the markets is the most crucial factor when considering the stock value during intraday trading. Liquidity in stocks is a sign that the stocks are sufficiently liquid for you to purchase them and then sell them in the short-term quickly.

They are not the kinds of stocks that you need to hold in long-term positions. It is not a good idea to take a position only to be concerned about the best way to exit.

This issue is more evident in the instance of small-sized stocks. The majority of stocks on the F&O list stocks, as well as the index stocks, are typically extremely liquid.

Liquidity is defined as the quotient of daily average volumes on the stock and the capitalization of the stock.

Liquidity = Average daily volumes/ Capitalization of the market

Typically, a minimum liquidity of 10 percent can be utilized as a benchmark. However, it is essential to ensure that the liquidity is long-lasting, liquid, and of high quality.

The most suitable stocks for intraday trading offer a high amount of liquidity, which means you can leave them at any time.

Liquid stocks’ liquidity ensures buyers can purchase and sell large quantities of their stock without impacting the trends from which traders should profit.

Furthermore, highly liquid stocks guarantee quick trades, while intraday trading is a way where timing is essential to the success of intraday trading. Any delay can result in a loss in trades during the day.

You require stocks that respond to the news, not just silent and inert stocks

For intraday traders, you should depend on two things to trade: decipherable chart patterns and the sensitivity of news streams. The most effective options for intraday trading depend on news and are strongly influenced by it.

You can’t intraday trade in an investment that does not respond to the news. For instance, you would struggle to trade intraday on a company such as NTPC. It is because you are considering stocks that are dependent on announcements.

This is why your strategy of buying based on expectations and selling based on announcements can work in the world of the intraday market.

Thus, intraday trading depends on market sentiments that rely on news reports and, in turn, the shares based on that information and sentiments.

Will the cost of the stock increase by the time you place the order?

It’s not so bad if you take your time choosing stocks for trading on day trades to purchase today. In technical terms, this is known as “impact” costs.

It impacts the price of the stock when you place an enormous buy or sell request on the stock. The lower the impact cost, the more beneficial this is to you. Naturally, you can get stocks that have no impact cost.

However, you should always choose the ones with the lowest impact cost. If the cost of impact is high, the risk of intraday trading becomes too high, so these stocks should be kept out of intraday trading.

A high impact cost implies that you will purchase stocks at a cost that could be detrimental to you in the case of massive orders.

This will affect the economics of your intraday trading. This is essential if you opt to trade using a huge capital and place massive orders.

What is the structure of ownership of the stock? 

The best stocks to purchase currently in India are heavily held. You can look out for the details in the ownership patterns of the stock, which are accessible on the websites of the stock exchange. You can also learn from the trading patterns of the shares.

The stocks many people do not own are generally more volatile and can be easily hit by circuit filters. There is no need to be asked; you can certainly find these names on the ticker screen.

A small number of traders can easily capture the narrowly held stocks. If you are an intraday trader, you should always go for intraday trading stocks that are highly liquid and well-established. This will lower your risk significantly.

How to Pick Stocks for Intraday Trading?

Finding the best stock is one of Intraday trade’s most crucial and essential disciplines. The most important thing is to ensure that your portfolio is small to ensure you can effectively track the stocks you are interested in.

A few tips to ensure your trading of trades are successful are trading with stocks that are liquid to participate in fast trades.

Then make sure to filter your stocks to ensure that they are predominantly determined by percentage and rupee value changes and categorize shares as either strong or weak based on their relationship with the markets.

In the end, you have a time frame of 390 minutes for closing the two sides of your trading!

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