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How to choose stocks for intraday trading

Although it is quite risky, one of the best ways to generate profits in the equity market is through intraday trading. As the name itself suggests, intraday trading involves buying and selling stocks on the same trading day. 

Since the price movements tend to be quick, it is absolutely essential for traders to be open towards high levels of risk and low profit targets. Trading intraday involves making a high number of small-profit trades, which adds up in the long-run. 

That said, when it comes to intraday trading, not all stocks may be the right choice for this strategy. Therefore, it is very important to choose the perfect stock before you go ahead with this strategy. Wondering how to select the best intraday stocks? Here are some tips that you can follow. 

1. Look for liquid stocks 

Stocks that can be bought and sold easily are termed as liquid stocks. Liquidity plays a huge role when it comes to stock trading on an intraday basis since you would be buying and selling them on the same day. 

Generally, large cap and mid cap stocks tend to be more liquid compared to the ones in the small cap category. Therefore, it is advisable to stick to such stocks if you wish to make quick profits through intraday trading. 

2. Stay away from highly volatile stocks

Volatility is an indicator of how quickly the share price of a stock changes. Highly volatile stocks tend to change prices very quickly, usually within seconds or minutes. And stocks with low volatility have a more stable price with far less movement on either side involved. 

When partaking in intraday trading it is a good idea to stick to stocks that have moderate volatility. Not only will it be safer, but will also allow you to make multiple trades quickly. Although highly volatile stocks can be traded, they’re far too risky due to the wild changes in price.   

3. Pick stocks that move with the market trend

Not all stocks follow the market trend. Some may even move against it. For instance, if the benchmark indices are positive, it signifies a positive market trend and vice versa. Trading in stocks that follow the market trend has a much better chance of generating profits than trading in stocks that move opposite the current trend. So, if the market trend is positive, try to stick to stocks that are also bullish. 

4. Choose stocks that are also traded in the derivatives segment

And finally, when choosing the best intraday stocks, it is a good idea to stick to ones that have a presence in the derivatives segment. Such stocks tend to be moderately volatile and highly liquid, which are two of the best characteristics that you would want in a stock for intraday trading. That’s not all. Getting information about companies whose shares are in the derivatives segment is also far easier since they tend to be more transparent in nature. 


Using all of the tips outlined above, you can quickly and easily select the best intraday stocks to trade in within no time. That said, to start off with stock trading, you would first need to have a demat account. If you don’t have one already, visit the website of Motilal Oswal right now. You can open a demat account online through a paperless process within just a few minutes. 


Related Articles: Want to Open a Demat Account? Here's What You Should Know | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account 


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