How to Choose Stocks for Intraday Trading

Intraday trading is just one part of the story. The important thing is working out which stocks to trade during the day.


Not all stocks are eligible for intraday trading. The most effective picks are easy to predict and react quickly to news. There are different methods to choose stocks, but you can use a mix of stability, responsiveness, and patterns to decide.


It's essential to focus on selecting stocks that are best for day trading. When we say 'best' day trading stocks, this refers to stocks that offer stronger volatility and whose price movements can be easier to predict.


You can make a list of stocks to keep track of with the help of online tools to help you find these stocks. But it's important to remember that the stocks you choose should meet all your requirements for intraday trading.


Let's start with some simple steps to identify the best stocks to trade for just one day using an analytical and organized approach.


1. Look for high liquidity: Choose stocks with high trading volumes and a narrow spread between bid and ask prices. This ensures you can enter and exit trades quickly without significant price movements.


2. Check volatility: Intraday traders typically look for stocks with high volatility, which can present more trading opportunities. Look for stocks with regular price movements and avoid stocks with low volatility, as they may not offer enough growth potential.


3. Technical analysis: Use technical analysis to identify potential trade entry and exit points. This can include using tools such as moving averages, trend lines, and indicators like RSI and MACD to identify patterns and trends in a stock's price movement.


4. Keep an eye on news and events: Stay informed about events that could impact the stock market, such as economic data releases, earnings reports, and geopolitical events. These can cause sudden price movements in stocks, presenting trading opportunities.


5. Set strict entry and exit points: Before entering a trade, have a clear plan for entering and exiting the trade, as well as your stop-loss and profit-taking levels. Stick to your strategy to avoid emotional decision-making.


6. Practice risk management: Limit the amount you are willing to risk on each trade and never trade with money you cannot afford to lose. Use stop-loss orders to protect your capital and minimize losses.


7. Backtest your strategy: Before risking real money, backtest your trading strategy on historical data to see how it would have performed in the past. This can help you identify any weaknesses in your plan and refine it before putting it into practice.


As an intraday trader, it's crucial to prioritize identifying the right stocks to trade. This step lays the groundwork for monitoring and evaluating these stocks to pinpoint trends accurately.




The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFl makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.