How to pick stocks for day trading in India

How to pick stocks for day trading in India? This is a mystery that every investor hopes to solve. Investments in the intra-day market are done with the intention of earning a profit, quickly if possible. But selecting the right intra-day stock to invest in, involves a lot of calculation and research. You have to consider many factors such as the performance of the stock over a specific period of time, the management running the company that is trading the stock on the exchange, new launches and upcoming plans and so on. Therefore, we have listed some tips that can help you pick the rights stocks for intra-day trading

How to choose stocks for intraday trading

Stick to liquid stocks: Trading in liquid stocks proves to be extremely beneficial in intraday trading. Liquid stocks typically have higher trading volumes, thus enabling you to purchase and sell larger quantities, without affecting the price of the stock significantly. Liquid stocks are generally more volatile but intra-day trade statistics have proven that volatile stocks often show greater movements in a shorter time span.

Stay away from unpredictable stocks: While fluctuations and unpredictability are by-products of the stock market there are some stocks you need to stay away from. These are usually stocks that are the biggest newsmakers. It is generally found that a low daily volume of traded stocks of companies announcing some huge news or event often moves in an unpredictable fashion. The stock can show volatility despite announcing a big news story. While the intra-day trading indicator may recommend investing in such stocks, it is better not to conduct trades in them.

Try to move with the trend: Moving with the trend can prove to be highly advantageous. As an investor conducting intra-day trades, you must try to identify the stocks that may potentially rise during the bull trend in the market. Conversely, you should also try to identify stocks that are more likely to decline during the bear trend in the market.

Research your stock picks: Picking stocks is a science. You need to have adequate research and information to back your stock picks. It is recommended that you identify the index and then find the sector to invest in. You must then create a list of several stocks from within these sectors and conduct day trading technical analysis. Technical analysis allows you to determine the support and resistance levels and study the fundamentals of each stock, which further helps you in picking the right, profitable stocks.

Consider the share volume: The volume of the stock is an important criterion for day trading. The volume is reflected by the total number of shares traded within a particular market, at a specific time. As such, it is better to purchase high-volume stocks for intra-day trading.

Consider the movement of the stock as per the week: While conducting your day trading technical analysis, you should keep an eye on the movement of your top stock-picks on a weekly basis. Study the movements of such stocks which are constantly closing in positive or negative for the previous one to two weeks. This technical analysis can help you pick the right stocks for intra-day trading.

Now that you know how to pick stocks for day trading in india, remember to consider these tips while investing. You should also consider the stock’s resistance levels, look at the top gainers and losers and trade in good correlation stocks while conducting your intraday trades.

Maithili Pawar is a finance professor. She has written on share market basics. Through this article, she has provided detailed information on stock market.