Intraday Stock Tips: How to Select Stocks for Intraday| Espresso

How to Select Stocks for Intraday?

Intraday trading involves buying and selling stocks on the same day in an attempt to earn profits. You execute market orders without any plans to take delivery. In simpler words, in an intraday trade, you buy securities and hope that their price increases for you to sell them before the market closes.




The success in this kind of same-day stock trading depends heavily on the selection of the right stocks. You have to square off positions within the same day, and therefore, picking securities is crucial.

How to Select Stocks for Intraday?

Before we explore how to select stocks, it is vital to note that a day trader cannot take delivery and keep the stock for long. As a result, one wrong decision and you may have to incur heavy losses. For stock or commodity that you have to buy and sell within the same day, you should analyze factors like:

  • liquidity
  • medium to high volatility
  • sector trends
  • market trends
  • technical analysis
  • company information available
  • segments traded
  • momentum stocks
  • news-sensitive stocks
    Know How to do Intraday Trading?

Let’s discuss some of these stock selection rules for intraday trading:

1.Find transparent companies:

If you are stock trading online, you have thousands of companies to choose from. Always pick companies that provide adequate information to the market. It becomes easier for you to make decisions when you factor in all the available information.

If you don’t have access to crucial information, you can make the wrong trade, leading to losses. As an intraday trader, you must buy stocks only of transparent companies with a history of fulfilling promises. Another factor to take into account is stable management.

2.Select stocks that exist in the derivatives market:

Some companies are traded in the derivatives market as well. Being present in multiple financial segments leads to extensive analysis of the company. This analysis makes decision-making easier as you have more information to look into.

3.Invest in news-sensitive stocks:

A popular strategy to pick intraday stocks is to focus on scripts that are sensitive to the news. These scripts respond to any positive or negative development in the media. When you understand how the stock will move based on the news, it is easier for you to take positions. However, you must be careful when you trade in stocks that are news-sensitive. In some cases, these securities move in the direction opposite to the news. While the news update is positive, the stock price will fall. To steer clear of the risks of an unpredictable movement, you must always trade with a stop loss in place.

4.Look for momentum stocks:

The rate at which a stock’s price changes over time is the stock’s momentum. The momentum helps you understand the strength of an upward or downward trend in the stock’s price. Stocks whose prices move with the strength of the momentum are momentum stocks. Intraday traders use such scripts for going long or going short and earning a profit.
Also Read: How to Make Profit in Intraday Trading?

Every investor has an investing personality and some investment objectives. While the above-mentioned features are essential, you must take them only as a starting point to build your trading strategy further. Before selecting a stock, you should assess your risk appetite and conduct the necessary diligence always.
Know More Intraday Tarding Strategies

Summing up

The success of an intraday trader depends on the choice of stocks. After you identify a portfolio of securities and ETFs, you can monitor and analyze the same to identify trends. Your observation of trends determines your entry and exit strategies.

To start stock trading online, it is mandatory to have a Demat account. If you don’t have a Demat account yet, you cannot trade intraday.
Know How to Open a Demat Account


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Frequently Asked Questions

Reading technical charts is a vital skill for intraday traders. You must know the meaning of trading indicators that share volume, trends, and volatility in the market. When you read indicators, you can evaluate if a stock is showing clear patterns.

Some shares receive large buy or sell orders. This volume affects their prices significantly. Consequently, they have a high impact cost. Generally, less liquid scripts tend to have this feature. Day traders should either stay away from such scripts or trade only in small quantities. Exiting the position can get challenging if you trade in larger quantities.

The easiest trading strategy is the breakout trading strategy. Traders need to identify the threshold points when stock prices rise above or fall below the specified time.

There are many intraday trading strategies followed and recommended by various experts. Some of the popular strategies include momentum trading, reversal trading, breakout trading, gap and go trading and moving average crossover trading.

Intraday traders should select stocks that are widely owned. The volatility of such stocks is lesser.