How to select stocks for intraday trading

At the outset, intraday is meant for experts in stock markets. One can earn profits only if you are proficient in intraday trading. It is definitely not meant for beginners.

Stock selection for intraday trade is a major challenge.A smart investor would never opt for intraday trading.

When so many stocks are available for trade it becomes difficult for intraday trader to choose a stock. The market is flooded with plenty of stocks.

So, at this juncture what should be the criteria for selection of stocks. In intraday trade you need to buy and exit from the stock on the same day in few hours. This limited time factor builds up the pressure on the trader.

Stock market analysis in itself is a complex subject so a simplified process to identify the stock becomes imperative. In intraday trading you will not make the decision of stock selection on that day. You have to decide on the previous day itself.

Try to make a study of the stocks which are in uptrend and try to analyse which sectors are performing. Make a study of the price behaviour of stocks and sectoral indices and the market as a whole.

Intraday trading should never be treated in isolation. The previous days price behaviour affects the price movement on the successive day. Today's price is an extension of yesterday's price behaviour.

So,primarily the previous days price behaviour of a particular stock will affect stock selection.

After the market is closed,check the NSE website to have a look at the top gainers and top losers list. Try to analyse the charts of these stocks.

From this list try to observe the stocks which are in uptrend. Any stock will be in uptrend for 2-3 days. Shortlist the stocks and invest in them.

Another golden rule to be followed is never trade in the first half hour for intraday. Then try to observe the average traded price of the chosen stocks.

If the price of a particular stock is trading above its ATP then buy the stock. Finally maintain stop loss at its support price. Proceed to calculate your risk reward ratio.

Remember that in intraday you can never expect to achieve more than two to 4 per cent and that should suffice a smart trader. Always try to align yourself to the trend of the market to earn profits.

If the market is in uptrend try to buy stocks and if it is in downtrend try to sell stocks.

Select your stocks after you make a study of the broader markets and try to align with the markets to make steady and consistent profits.

(The author is a homemaker who dabbles in stock market investments in free time)