Identifying stocks for intraday trading requires a combination of technical analysis, market trends, and real-time data monitoring. Here’s a step-by-step guide to picking the right stocks for intraday trading:
1. Choose Highly Liquid Stocks
- Look for stocks with high trading volume and liquidity to ensure easy entry and exit.
- Avoid low-volume stocks as they can be volatile and difficult to trade.
2. Look for Stocks with High Volatility
- Stocks with high daily price movement provide better opportunities for quick profits.
- Check Average True Range (ATR) to measure volatility.
3. Follow Market Trends
- Trade with the trend (bullish/bearish) rather than against it.
- Use moving averages like 20-day EMA and 50-day EMA to identify trend direction.
4. Use Technical Indicators
- Moving Averages (MA) – Look for stocks breaking above or below key moving averages.
- Relative Strength Index (RSI) – Stocks with RSI above 70 are overbought (possible short), while those below 30 are oversold (possible buy).
- MACD (Moving Average Convergence Divergence) – A bullish crossover signals a buy, and a bearish crossover signals a sell.
- Bollinger Bands – If a stock is touching the upper band, it may be overbought; touching the lower band may indicate oversold conditions.
5. Check Pre-Market and Opening Price Action
- Monitor pre-market trends and market open movements to identify stocks with strong momentum.
- Stocks with a gap up or gap down often continue in that direction.
6. Identify Stocks with News and Events
- Stocks affected by news (earnings reports, mergers, government policies, etc.) tend to be more volatile.
- Use financial news platforms like Moneycontrol, Economic Times, or Bloomberg to stay updated.
7. Monitor Open Interest (OI) and Futures Data
- If a stock has a rising OI and price, it indicates strong bullish sentiment.
- Falling OI with falling price suggests a bearish trend.
8. Use Intraday Screeners
- Websites like TopStockResearch, Chartink, Investing.com, and Economic Times Stock Screener provide real-time bullish and bearish signals.
9. Set Stop Loss and Target
- Always set a stop loss to limit potential losses.
- A risk-reward ratio of 1:2 or better is advisable.
10. Avoid Trading the First 15-30 Minutes
- Market volatility is highest in the first few minutes. Let trends develop before entering trades.
