How to choose stocks for Intraday Trading

The selection of stocks for intraday trading stocks is a key component of developing a trading strategy. This selection should be based on the type of strategy that you intend to use.

Which stocks are best for intraday trading stocks? Several general criteria must be met by stocks that are ideally suited for intraday trading. Only papers with these parameters should be considered if you want to develop a truly profitable day trading strategy. Read more about this in the articles Short Selling strategies for Trader, Top 5 most accurate intraday trading indicators, How to choose broker platform for day trading.

Key criteria for stock selection

In order to make money on the difference in the rate of purchase and sale of an asset, it is necessary that this difference is sufficient, i.e., the stock should vary in price.

To begin with, the stock makes more than 70% of its daily movement in the first 30-60 minutes of the trading session, and as I already wrote in the article on technical analysis – if you see the formed movement (trend) on the chart, then it’s too late to meddle in it, it had to be done before its formation. Therefore, any prerequisites will be needed for the action to begin to move today, and these prerequisites should be either before the market opens, or in the first seconds after the opening.

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Tangible stock movement

For the stock to begin strong, understandable movements, it needs a comparatively larger working capital than usual. In other words, on this particular day, this stock was supposed to attract larger capital somehow. And note right away that thanks to the news, we get an assumption about the stock’s activity, and not about the direction of its price changes in the future (we also analyzed this in the corresponding article on the fundamental analysis).

The ideal for intraday trading stocks should have a good average volume

The first important parameter for selecting good for intraday trading stocks is liquidity. The paper should be sufficiently liquid, i.e., have a high volume of trade. This condition is critical because it directly affects risk and capital management.

It is good if the stock has a high average daily trading volume. But not all high volume stocks are suitable for day trading.

There are how to choose stocks with high volumes in which there is not enough movement during the trading session. These tickers should be avoided.

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The price of the ideal intraday trading stocks

The stock price for day trading is the next parameter that must be considered in the selection process.

Many day traders starting to trade with little capital think it is best to trade cheap stocks. As a rule, they select papers with a price from (or even lower) 1 to 5 dollars.

This is a bad way. Stocks known as penny stacks should be avoided. Trade in them is associated with very high risks. It is impossible to manage risks in such stocks; therefore, for a beginner, this is far from the best trading strategy.

It is best to work with stocks worth over $ 20. It should be understood that $ 20 is the minimum, and it is better to look for tickers for more than $ 30. Such promotions have the necessary daily price range, which opens up good and potentially profitable opportunities when trading on best intraday stocks strategies.

And the last point that I would like to draw attention to is expensive stocks. By applying the selection parameters described above, you will find several stocks with a price above $ 100.

A typical day trader may account for risks when trading stocks over $ 100 or $ 150 unacceptably high, especially if he has a small trading account.