With thousands of stocks being available in the market, it becomes quite tricky to pick stocks for trading. As a day trader, your first step is identifying the stocks that will help you achieve profits in the short run!
Remember that being contingent on your research is key to making the most out of stock trading. In this blog, we will uncover five best practices for picking the right stocks for intraday trading. We will also tell you how to pick multibagger stocks, so keep reading!
Begin with Research
Whether it is fundamental or technical analysis, the world of the stock market can not be decoded without comprehensive research. The first and foremost thing you need to do before you conduct research is to identify your financial goals.
Once your financial goals are clear, they will steer you in the right direction. Once the direction is clear, remember to perform an in-depth analysis and then pick the stocks that align with your trading goals.
When you are satisfied that a stock meets all the criteria, you can make a list of stocks! This way, you will also find multibagger stocks!
Find the Liquid Stocks
When choosing stocks, liquidity is one of the most critical factors. When a stock has high liquidity, you will find numerous buyers and sellers in the market, which makes exiting the market or entering the market easier for you.
Intraday trading revolves around speed, and precise timing, which is why choosing liquid stocks is one of the best practices! You can also enroll in the best finance courses to learn about picking stocks for intraday trading!
Avoid High Volatility Stocks
It is usually hard to predict the movements of stocks with high volatility. This is bad news because you can lose a lot of money in the trade if the wind goes in the opposite direction! These stocks usually have low trading volumes due to their unpredictability, making them illiquid.
Follow the Trend
If you want to receive lucrative returns on your trades, following the market trends is the best practice! During a bullish market, keep an eye on the stocks that have the potential to rise in value.
Market trends are one of the best indicators, and if you are able to master the art of following them, you can certainly make your trade fruitful!
Find Correlation in Stocks
It is important to find good correlation stocks, i.e., you should trade in stocks that have a higher correlation with the major indices in the market. So what benefit do you avail by finding good correlation stocks?
When you pick good correlation stocks, you are essentially picking stocks whose value will rise with an upward movement in the indices!
We hope you will keep these practices in mind before you begin your journey of intraday trading. When you incorporate these practices, you will gain a deeper insight into how the market works.
Equipped with these insights, you can trade in those stocks which will help you obtain the maximum returns on your investments!