HOW TO SELECT STOCKS FOR INTRADAY
HOW TO SELECT STOCKS FOR INTRADAY ? Read this article delight to know all about top three factors you should consider when you select stocks for intraday trading.
Factors to consider when you select stocks for intraday trading
1. Check Liquidity : Trade Only in Liquid Stocks!!
Liquidity of stocks imply the ease with which you can buy or sell that particular stock at the prevailing market rates. It is typically seen that large-cap stocks, belonging to companies with high capitalization, are quite liquid and have enough takers for them in the market at different price levels.
Liquidity = Average daily volumes / Market capitalization
A minimum liquidity ratio of 10% should be the benchmark to consider a stock for intraday trading. Liquid stocks have huge trading volumes whereby larger quantities can be purchased and sold without significantly affecting the price.
2. Check Volatility : Go for Medium to High volatile !!
In Intraday, stocks should be Medium to highly volatile in order to get some decent movement returns. The term volatility refers to the fluctuation or varying movements in a stock’s value.
You can check volatility by following steps here : https://zerodha.com/varsity/chapter/volatility-calculation-historical/
3. Check Trends : Moving with the trend is always beneficial !!
During a bull run in the stock market, traders must try to identify stocks that can potentially arise. On the other hand, during the bear run, finding stocks that are likely to decline is advisable. If the market is in an uptrend , it is usually a good idea to stay long. And if the market is looking for downtrend, then either you can short or wait for stocks to hit their bottom before taking a long position.
You should consider using Beta ( know more https://www.bankrate.com/investing/use-beta-to-evaluate-stock-risk/) of a stock to evaluate a stock’s risk
How to select stocks for intraday : Final Takeaways
The stock market is unpredictable, and intraday trading involves profiting from the stock market fluctuations that take place in the market. As In intraday trading, the traders square off their position within the day, it can be quite profitable when done accurately. However, a key element of earning profits from intraday trading involves selecting the most optimal stocks. Apart from consideration of above three top factors, you must analysis price sensitivity to news flows. The selection of your intraday trading stocks would require immense research work, and through the news, you can keep yourself apprised of updates of companies also Choosing the right stocks is important to make a profit in intraday trading; hence, you must make technical analysis also as your ally.
Read more : 52 week Low/High : Delivery trading Strategy 1 ( https://thebrightdelights.com/long-term-stock-selection-strategy-52-week-low-high/ )