Intraday trading stocks need to be selected carefully. There are hundreds of stocks available in the market for trading. You can pick any stock there but still the stocks for intraday trading should have certain properties.
Be it an intraday trading or a positional trading, the stocks should meet more or less similar criteria. Choosing wrong stock may lead to unnecessary losses. You can avoid these losses by carefully picking trading stocks.
For intraday trading, you would need fast entry and exit into a trade. That is possible when the liquidity in the stock is high. Pick a stock where trading volumes or liquidity is high. Index stocks are favourite trading stocks for day traders. They are highly liquid stocks.
Short list 10-15 stocks for trading. Never pick any random stock and initiate a trade. Having a small list of intraday trading stocks helps in better research into these stocks. It is not possible to research hundreds of stocks daily.
Read technical charts of these stocks on daily basis. Look for the trading opportunities. Clearly identify your entry and exit points before the market opens. Execute your plan when market opens.
Do not trade if there is no trading opportunity found on technical analysis. Remember ; everyday is not a trading day. There are days when market behaviour is dull. Avoid trading on those days.
A senior technical analyst Ashwani Gujral says only novice traders and idiots trade in all stocks. So be a good and professional trader and keep yourself limited to minimum number of trading stocks. Smaller number of stocks is easy to track.
Pick the stocks for intraday trading which are highly volatile. Volatility is fluctuation in prices a stock shows in a trading session. High volatility results in better profits.
Avoid intraday trading in two digit price stocks. Stop losses and targets are usually difficult to manage in these stocks. Intraday volatility is also less in these kind of stocks. Less volatile stocks are not ideal intraday trading stocks.
To sum-up, follow these simple rules to pick intraday trading stocks
1. Pick high liquidity stocks.
2. Pick a few number of stocks only, 10-15 being more specific. Do not trade in everything.
3. Pick high volatility stocks.
4. Prefer index stocks for intraday trading.
5. Avoid trading in small price stocks.
To read about the various formulae and theories useful for intraday trading, you can click here to read another interesting post.