As a day trader, you will have plenty of choices to choose for picking stocks. To make the most of the stocks you select for intraday trading, you must carefully plan a strategy. If you do not the following intraday trading rules to pick the right stocks, you will not be able to make much profit.
How to pick the best stocks for day trading
- Volume to gain liquidity – The volume of stock that you trade within a day trading is significant. As you will tend to buy more liquid stocks which comes in high volume. A great number of such stocks being bought and sold is what the day traders typical day looks like. Do not forget to check the depth of stocks to understand the market presence of such stocks.
- Resistance tolerance – While you are monitoring the stock prices, stay alert for any stock which has broken the boundary. Such stocks may hold great promise. You must also do your market analysis before investing. However, do not get carried away by emotions.
- Trend analysis – Never undermine the ongoing trend while day trading. The trend of the day should determine your entry as well as an exit strategy. Watch out for any shift. Follow patterns. Make most of your time before a reversal hits. Ignoring what the market is saying can be detrimental for your interest as a day trader.
- Select a sector – It is advised by many industry experts to choose a few stocks or s special sector to invest in. It helps the process of monitoring and you will be able to track any significant development in the prices. Hence, group stocks are more reliable. Accordingly, you will be able to make a decision.
- Research – Though intraday trading involves buying and selling on the same day. Your research can be spread over days. Learn how you can pick up on trends, identify index and relevant sectors offering enough of liquid stocks on high volume. Pick a number of stocks to have choices. Prepare your plan of action. Let the day trading begin and you can jump in at a suitable time but do remember to leave at the right time as well.
- How much to invest – Every time you invest in day trading, prepare your budget. Do not invest an amount whose loss you cannot sustain. For day trading especially investing a fixed amount is often considered to be a good idea. Also, stick to a pedigree and then decide how much to invest.
- Know when to stop – the Understanding the trend of the market is imperative while day trading. You must react with spontaneity to the market calls. If there is a lull in the market, stay put. If you find the market to be too volatile, then refrain from trading that day. An experienced day trader has a tremendous amount of patience and control.
To make your intraday trading a success keep an ardent eye on the market trend. Figure out a good entry as well as an exit strategy. If you want to experience intraday trading, visit trusted brokerage like Kotak Securities and select the free intraday service today.