Today we are going to know about which stocks to select for intraday. Most of the people get confused by selection of stock. Not every stock is suitable for intraday trading, the dynamics on intraday movement should be satisfied to select the stocks which can be traded in intraday. We have to identify our stocks which satisfy below criteria and then wait for trade setup and follow the strategy. We should not forcefully trade daily. Below are the parameters on which intraday stocks should be chosen
1. LIQUIDITY :
- Liquidity means how easily shares can be traded in markets , basically how many shares are available for trading on a particular day. We should chose liquid stocks for intraday trading.
- For liquid stocks , at price point there will be a high number of buyers and sellers during day trade.
- Trade order will get executed immediately at market price without much spike if we trade in liquid stocks, otherwise placing market order for 1000 quantity of stocks will raise price high.
2. VOLATILITY :
- Volatility means how much up and down share prices move. For intraday , Shares should not be extremely high volatility.
- High volatile shares give higher swings in both directions, and trigger stop losses.
- Again, it should not be stagnant as well else there will not be intraday movement. Medium volatility is preferred on daily charts.
- Can use ATR indicator to measure volatility
3. CORRELATION :
- Correlation means how stock prices move compared to its peers or its sector movement . Usually , stocks have Correlation with major indices and sectors, stocks moves with index. We should understand this correlation while trading stocks.
- That is if the index or a sector moves up the stock belonging to that index or sector also moves up
- Example fall in crude index benefits aviation sector, paints sector. Weakening rupee means rise in the IT sector.
4. FIND STOCKS WITH UPTREND OR DOWNTREND :
- We should be trading in trending stocks , where some up move or down move is clear past 4-5 days. Sideways trend stocks tends to just trigger stop losses.
- If we are in a bull run, then it is advisable to find stocks which are in uptrend from past few days.
- If we are in a bear run, then it is advisable to find stocks which are in downtrend from past few days.
5. KNOW THE KEY DATES :
- Key dates will help you trigger stoplesses.
- Key dates likes results day, may help you decide stock trend.