How to select stocks for intraday trading

Authored by
Team Espresso
March 02 2023
5 min read

Intraday trading is the practice of buying and selling a security on the same day to clock profits. It is a market order in which you do not intend to take delivery or fulfil it. Intraday trading has grown in popularity among younger investors who want to profit quickly without having to wait a long time, and it can be a profitable undertaking if done correctly. However, intraday trading tools and techniques are substantially different from long-term investing. Intraday trading necessitates extensive market knowledge, and because trades are executed within hours, the margin of error is extremely small.  

Additionally, because you only have a few hours before closing your position, success in intraday trading is heavily reliant on selecting the right stocks. Therefore in this blog, you will get to know more about choosing the right stocks for intraday trading that will lead to successful trades and generate higher profits. 

How to select stocks for intraday trading 

Here are some stock-picking rules for intraday trading that will help you successfully choose the right stocks for intraday trading: 


The most important intraday trading tip when selecting the right stocks to trade during the day is liquidity. Liquid stocks have high trading volumes, allowing for larger purchases and sales without dramatically affecting the price. Less liquid stocks, in general, do not allow traders to buy and sell in huge amounts due to a lack of buyers. As a result, when selecting liquid stocks, keep liquidity at various price levels in mind. Some stocks are highly liquid at lower price levels, but the volume drops dramatically once they reach a certain price zone. Understanding the variability of liquidity at various price levels will assist you in purchasing these stocks at the right time. 


Choosing stocks that are news-sensitive is a common intraday stock selection strategy. Any positive or negative news reported in the media typically has an impact on these stocks. Taking positions becomes easy once you have a grasp of the movements that the news causes. However, you need to exercise caution when trading in stocks that are highly news-sensitive because these stocks may move in opposition to the news. Even when there is good news, the stock price could still drop. Therefore, you must always trade with a stop-loss order in place to reduce the risks of an unexpected movement. 


Volume is another important factor for intraday trading. Stocks with a higher trading volume in the market at any given time have an impact on price movements. Most intraday traders choose stocks with a high trade volume because it allows them to exit their positions quickly while also providing the opportunity to earn higher profits. 


People often notice that stocks with a low daily volume of trades or that are due to get big news move in unpredictable ways. Although even after the big news is announced, the stock may experience volatility. Therefore, traders are advised to avoid trading in such stocks during the day. A few volatile stocks are traded in the mid-cap segment, while the majority of stocks traded in the low-cap sections such as S, T, and Z are highly volatile. These stocks are not only volatile, but they also have relatively low volumes, making them illiquid. However, a certain level of volatility indicates an active market, and intraday traders can profit by successfully trading on these stocks. Although there are no hard and fast rules, most intraday traders consider shares with 3-5 % price movement along either side to be the best intraday stocks. 


It is always better to invest in stocks of companies that provide the market with adequate information about their business activities. When you take into account everything you know, it's easier to make decisions. On the other hand, if critical information is concealed, you may choose the wrong position, resulting in losses. For intraday trading especially, only companies with transparent business operations should be chosen. Another factor to consider before selecting a stock for intraday trading is stable management. 

Market Trends:

Not all stocks adhere to market trends, and some may even flow against them. For example, a positive trend in the benchmark indices indicates a positive market trend and vice versa. Trading stocks that move in the direction of the market trend has a much better chance of producing profits than trading stocks that move in the opposite direction of the market trend. So, if the market is trending upward, try to stick to stocks that are also trending upward. 

Derivative Market:

Derivative markets are frequently referred to as secondary markets in which traders can trade futures, options, forward contracts, and swaps. Stocks traded in both primary and secondary markets are subjected to greater scrutiny and analysis. This allows traders to better understand price and volume movements, allowing them to take better trading positions. 


Choosing the right stocks for trading can often mean the difference between a successful and an average trader. As a result, traders must have a thorough understanding of the market at both the macro and micro levels. If the trader is unable to conduct a better market analysis, it is best to seek the assistance of a professional stockbroker who can make informed trades based on the trader's risk-return profile. 


Q. Can I become rich by intraday trading? 

Many traders begin intraday trading with the belief that they can make a lot of money by making profits on a single trade. Day trading will not make you rich overnight — but this is both practically impossible and unreal. 

Q. What is the best strategy for intraday trading? 

Momentum trading strategy is all about making sure you trade in the right direction and at the correct momentum. Investors choose the best stock before there is a big change in the way the market is moving and then invest accordingly. Although this trading strategy is excellent, it necessitates quick investments as soon as the news is released. 

Q. Which stocks are not allowed for intraday? 

Specific intraday (MIS/CO) order types may be banned if markets are volatile (or if there is an unexpected movement). This ensures that clients do not lose more money than they have in their accounts, posing a significant credit risk to the broker. 

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In this article, we talk about those intraday tips and strategies on how to choose the right stocks for intraday trading to help you generate profits.