How to filter stocks for intraday and how come we know whether to buy/ sell for intraday?
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Intraday Trading Tips, Strategies & Basic Rules
The following are some of the learnings from my experience. Beginner traders who want to do intraday trading must follow the below-steps to minimize the losses.
Use Stop-Loss Orders:
Always put stop-loss orders immediately after executing trades to limit potential losses. Most of the beginners don’t place stop loss orders, instead they wait for market to get reversal, it leads to a huge losses by the end of the day.
Plan Your Entry and Exit:
Before taking a trade, have a clear plan of when to enter and exit a trade. Setting a proper entry/exit plan help you make consistent profits.
Announcements:
Stay updated of earnings announcement dates & important news announcements of that particular stock. Stocks tend to be volatile during these times, huge volatility creates opportunities and risks.
Keep an Eye on Financial News:
Stay updated to economic news like GDP, unemployment rates, and other central govt. related news/ articles.
These can impact market sentiment and stock prices. An intelligent trader will always make use of these opportunities.
Risk Management:
Only risk a small portion of your trading capital on a single trade. Never risk more than you can afford to lose in a single day.
Learn from Experience:
Learning from mistakes will lead to great progress in making consistent profits. Keep a trading journal to record your trades and analyze what worked and what didn’t. Learn from your experiences to improve your intraday trading strategies.
Remember, intraday trading is risky and requires discipline, quick decision-making, and continuous learning. start with a paper trading or with small capital, gain experience, and modify your strategies over time.
Stock Selection for Intraday
Stock Selection for intraday trading involves finding the stocks with high volatility in a single day.
Here’s a simple guide to select the stocks for intraday traders:
Liquidity is the Key:
Choose stocks with high trading volumes. High liquidity ensures you can buy and sell shares easily.
High Volatility:
Look for stocks that have huge volatility, the stock price should fluctuate significantly during the day. This creates an opportunity for a day trader to execute multiple trades in a single day.
Price Action Patterns:
Technical analysis plays a major role for intraday traders.
Do a basic technical analysis like support, resistance, moving averages, and trendlines. Identify trends that can help predict price movements.
Follow Market News:
Stay updated with financial news and events affecting the stock market on that particular day.
Breaking news can influence stock prices, providing a huge volatility. The news that affects the stock price in the same day will give a good returns if you can identify it earlier.
Focus on Sector Performance:
Evaluate how a particular sector is performing. Stocks within a strong-performing sector are more likely to have huge potential for intraday trading.
These are some of the tips for those who want to trade intraday. I always suggest you to do your own research rather than taking buy/ sell calls from others.
There is nothing to do with the fundamentals of the company when it comes to intraday trading. Consider the following rules while selecting the stocks for intraday.
If you are good at technical analysis, you can predict the next day movement with simple price action.
If you are a beginner, I suggest you to learn technical analysis before entering in to day trading.
There are more than 3000 stocks under equity segment. It is really difficult to choose the best stock for intraday. Choosing more number stocks and changing them day to day is not advisable for intraday.
Most of the professional traders choose only few stocks (less than 5 stocks)for intraday. Trading frequently in same stocks for a period of time will give you confidence. You will know how it reacts in gap up, gap down situations.
In a way the stock will become friendly to you. You know when to buy, when to sell and what not.
You better master the single stock rather than trading in multiple stocks. But choose the stock from mid or large cap. Small cap stocks may undergo stimulation. You may incur huge losses due to unexpected movements in the stock.