October 13, 2023

How to Select Stocks for Intraday Trading [ GOLDEN RULES ]

After learning about the amazing trading strategies and indicators, you might be wondering, How to select stocks for intraday trading? Or Which are the best stocks for intraday trading? 

All your questions will be answered in this article.

Let’s get started!

Content:

How to choose stocks for intraday?

You can choose stocks for intraday based on different criteria like:

Liquid Stocks

First things first, in intraday trading, as you are supposed to close all your positions before the market closes, it is advisable to invest in stocks that have good liquidity. Liquid stocks are considered to be the Best Intraday Stocks to trade.

The liquidity of a stock is measured by the ease at which you can buy or sell it at the current market price. In simple terms, the stock should have an ample number of traders buying and selling the stock at every given point of time during the day.

Know more about the liquidity of stocks in our blog. 

Let’s say you bought ACC Shares at ₹ 1000 in the morning, and in the afternoon, the stock price rose up to ₹ 1100. You decide to sell the stock and hit the sell button on your trading terminal; the speed at which the order gets executed decides the liquidity of the stock. 

If the order gets executed within milliseconds, the stock is said to be highly liquid, and if the order execution takes more than 3 to 5 seconds, it is said to be less liquid stock. 

Usually, large-cap stocks are highly liquid. Some of the highly liquid stocks are listed below:

  • Reliance
  • Indusind Bank
  • Axis Bank
  • Auro Pharma
  • HDFC Bank
  • Yes Bank
  • Infosys
  • Tata Steel

You can track the most active stocks on the NSE Website

Medium Volatile Stocks

Volatility is the rate at which the stock moves during a given time period. If you are buying and selling a stock on the same day, the stock should make enough movement during the day to help you get good profits. 

For instance, let’s say you bought 100 shares at ₹ 1,500 in the morning; that is, you made an investment of ₹ 1,50,000 (100 shares x ₹ 1,500) and by the end of the day, if the stock price moves to ₹1,505 only. You will be making a profit of ₹ 500 only (100 shares x ₹ 1,505). That’s like 0.33% profit on your investment only. Stocks that make such small movements are known as low-volatile stocks.

On the contrary, if the same stock moves to ₹ 1,550 by the end of the day, the stock can be called a medium to high volatile stock. 

News-Based Stock Selection

Various company news like Earnings Announcements, Change in the CEO or Key Member of the Company, Mergers & Acquisitions, etc., move the stock prices quite a lot. 

If the company announces that it has made a good amount of profits during the year, the stock prices of that company are likely to rise, and if the company announces that it has suffered losses during the year, the stock prices are likely to fall.

Similarly, changes in key members of the company or mergers & acquisitions contribute to the rise or fall of stock prices. Also, there are External News that can affect the prices of the stock like: 

  • New Economic Reforms by the Government
  • Global Market News
  • Natural disasters like Floods, Pandemic, etc.
  • Political Changes, etc.

So if you can keep up with the news, you can select the stocks based on different news factors. Stock selection for intraday based on news is one of the most effective ways followed by professional traders all over the world.

IPO First Day

On the first day when the stocks are listed in the stock market, they are most volatile (make a good movement) depending on the demand of the IPO and the good/bad financial figures of the company. 

Learn about IPO here!

Here are some latest stocks that performed really well and some not so much on the day they made a debut in the stock market: 

Company NameIssue PriceFirst Day OpenFirst Day CloseFirst Day Gains/Losses
Equitas Small Finance Bank3331.132.8+ 5.47 %
Likhitha Infrastructure Limited120165.9159.1– 4.10 %
UTI Asset Management Company Limited554500476.2– 4.76 %
Mazagon Dock Shipbuilders Limited145214.9171.95– 19.99 %
Computer Age Management Services Ltd123014201401.4– 1.31 %
Chemcon Speciality Chemicals Limited340731584.8– 20 %
Route Mobile Ltd350717651.3– 38.42 %
Happiest Minds Technologies Ltd166350370.95+ 5.98 %

As you can see some stocks have even risen or fallen more than 20% on the first day. Hence a great opportunity to trade. You can keep track of the Upcoming, Current & Past IPOs on the NSE Website.

Stock Selection Based On Technical Analysis

You can select the stocks based on different technical factors like: 

Support and Resistance Breakout

You can track stocks that are hovering inside the key support and resistance levels, wait for the stock to break out from the zone, and take the position accordingly.

Moving Average Breakout

You can track stocks that are moving above or below the Moving Average Line, wait for them to break the line, and take the position accordingly.

Now that you have learned how to pick stocks for intraday trading, it’s time to begin trading.

To get started with trading, you need to open a Trading and Demat Account, learn about different order types, and calculate the risk and brokerage of every trade. Learn all of it in this article: How to do Intraday Trading?

We hope that you are clear about the topic. But there is more to learn and explore when it comes to the stock market and mutual fund, and hence we bring you the important topics and areas that you should know:

What is Intraday Trading
Best Intraday Trading Strategies
Best Indicator for Intraday
What is SIP in Mutual Funds?
Debt Free Companies
Small Cap Companies

Quick Summary:

  • It is important to trade in liquid stocks to be able to buy and sell stocks at the current market price.
  • The volatility of stock plays an important role in the amount of profit or loss you will make.
  • You can select the stocks based on different news factors like Earnings, Mergers & Acquisitions, New Economic Reforms by the Government, Global Market News, Natural disasters like Floods, Pandemic, etc. News-based stock selection is a great way to find the best shares for intraday trading.
  • On the first day when the stocks are listed in the stock market, they are most volatile (make a good movement) depending on the demand of the IPO and the good/bad financial figures of the company. 
  • Various technical analysis strategies also help select the right stocks to trade in.

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