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Stock Picking Guide 5 Tips for Intraday Trading

31 Jul 2023


Intraday trading has numerous challenges. One of the primary hurdles is the inherent volatility of intraday trading. Prices of financial instruments can swing dramatically within a single trading session. This makes it difficult to predict market movements accurately.

Time pressure is another significant challenge. As a trader, you must make rapid decisions to capitalise on fleeting opportunities, often within minutes or seconds. This time constraint can lead to impulsive and emotionally-driven trading, negatively impacting overall performance. 

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Fortunately, there are winning strategies you can employ to master this type of trade- Ensure you are picking the right stocks.

Tips to Pick Stocks for Intraday Trading

1. Analyse Volume and Liquidity

Volume denotes the total count of shares exchanged for a specific stock during a designated period. Whereas; liquidity pertains to the ease of buying and selling the stock without causing substantial price fluctuations.

High volume and liquidity indicate active participation of traders, ensuring that you can enter and exit positions swiftly at desired prices. This reduces the risk of being stuck in a trade with no buyers or sellers, which is common in illiquid stocks.

2. Use Technical Analysis

Technical analysis involves studying historical price and volume data to identify patterns, trends, and support/resistance levels in a stock's price chart. This analysis aids in making informed decisions about when to enter and exit trades. It is crucial for maximising potential profits and minimising losses.

Through technical analysis, you can identify a stock consistently forming higher highs and higher lows, indicating an uptrend. You may also spot a strong support level where the stock's price has often reversed its direction. With this information, you can confidently buy the stock close to the support level, anticipating a rebound. It also helps strategically set a stop-loss just below that level to mitigate potential losses.

3. Look for Correlated Stocks 

These stocks are a group of stocks that tend to move in a similar direction, either up or down. This movement occurs due to underlying factors influencing their industries or sectors. When you pick correlated stocks for intraday trading, it can help you diversify your risk and enhance the accuracy of your trading decisions.

Choosing correlated stocks allows you to take advantage of the collective trends in a particular sector. Suppose you notice that technology stocks are rising. You may pick multiple tech stocks that are correlated. This increases the profit potential when the sector performs well. However, it is crucial to remember that if the sector faces a downturn, all the correlated stocks may experience losses simultaneously.

4. Choose Derivative Segment Stocks

The derivative segment includes futures and options. They can significantly impact the stock's price movements. The presence of stock in this segment indicates higher trading activity, increased liquidity, and heightened interest from market participants.

By choosing such a stock, you can benefit from tighter bid-ask spreads and better price discovery. Moreover, the derivative segment provides valuable insights into the market sentiment and potential price movements. It assists you as a trader in making well-informed intraday decisions.

5. Pick News-Sensitive Stocks 

These stocks are highly influenced by market news. These news include corporate announcements, economic data, or sector-specific developments. Trading in these stocks can present lucrative opportunities due to significant price movements triggered by news events.

Suppose you are monitoring news related to a pharmaceutical company awaiting regulatory approval for a groundbreaking drug. Positive information on the approval leads to a stock price surge. However, negative news can cause a sharp decline.

SEBI Guidelines for Intraday Trading

Having gained insights into the most effective methods of selecting stocks for intraday trading, it is equally crucial to acquaint yourself with the intraday trading guidelines outlined by SEBI.

  • SEBI has restricted the use of intraday profits for further trading on the same day or the next day. Traders can trade using intraday profits only after two days from the settlement date (T+2). It means they must fulfil the minimum margin requirement from their funds or collateral before taking any new position.
  • SEBI has mandated that brokers collect the minimum margin from the clients upfront for any leveraged trade, whether in the cash or derivatives segment.
  • The regulatory authority has changed the process of pledging shares as collateral for margin requirements. Under the new system, the shareholdings that client pledge is not transferable from their Demat account to the broker's account. Instead, there is a lien creation in favour of the broker, who can then pledge the shares to the clearing corporation.


Intraday trading can be both rewarding and challenging. The pathway to success lies in picking the best stocks for your trades. Remember to analyse volume and liquidity, conduct technical analysis, stay updated on market news, implement risk management, and avoid emotional trading. By following these comprehensive tips, you can improve your stock-picking skills.


Related Articles: 20 things you need to remember when you trade intraday | Best Intraday Trading Tips and Strategy | How to Make Profit in Intraday Trading | How to decide whether a stock is fit for intraday trading 

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