Among different trading types in the stock market, intraday trading offers many trading opportunities to make quick money. However, picking the right intraday stocks on any trading day decides the success of a trader.
Day trading can also give a fatal blow to your account if done casually. Hence, picking the right stocks on any trading day is vital in trading.
Most of us can prepare instant noodles, right? Using similar simple methods, we can also shortlist the stocks for intraday trading.
Below three points give clarity about picking the right stocks for intraday trading with ease:
Intraday Trading System
2 Steps to Shortlist the Stocks
Market Confirmation to Trade
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Intraday Trading System
“All you need is one pattern to make a living” – Linda Raschke
“The man who chases two rabbits, catches neither” – Confucius
“I am not afraid of a person who knows 10000 kicks. But I am afraid of a person who knows one kick but practices it for 10000 times.” – Bruce Lee
Can you think of the similarity among the above statements given by three achievers from different areas?
It is all about getting mastery in concept. Intraday trading is no different, and every trader should ask a question to himself - "What is important to me in trading - making money in the long run or trading every pattern?"
If you choose ‘making money’ over ‘trading every pattern,’ you have to finalize a trading strategy/system among many intraday trading strategies.
Then how to do intraday trading?
Do you agree you want to trade only the stocks which have a higher probability of giving big moves on any particular trading day?
There are varieties of intraday trading systems. But ask any experienced trader, they agree ‘Breakout Trading’ is an excellent intraday technique to catch good moves in day trading.
The above image shows an example of a breakout trade at the intraday level. The price opened above the previous day high, rallied throughout the day, and closed at the day’s high.
Many intraday tips providers use the same strategies to pick the best shares for intraday.
2 Steps to Shortlist the Stocks
We have narrowed down the trading system for intraday trading from a vast intraday technical analysis area. But we have 1000s of stocks in NSE, and how to shortlist the stocks for subsequent day trading?
Definitely, we should have intraday stock selection criteria.
This is where screeners help us! First, they shortlist the stocks based on certain conditions (like today’s move, volume, etc.).
Below are the two screeners:
Excel Screener
Chartink Screener
Excel Screener
This scanner picks the data from the NSE India website for Nifty-50 stocks, Nifty F&O stocks, large caps, mid-caps, and small caps stocks.
Then it compares today’s range concerning the past few days range.
If it is bullish and the volume is high compared to the past few days, it will list the stock as a breakout stock.
The advantage of this screener is that it also lists whether the breakout candle has selling wick or not and information about the volume.
Please watch the below video to know how it works.
Download Breakout Screener
Please note:
You will be able to run this screener only after 6 PM IST.
It doesn’t support the Mac system and older versions of MS Excel (older than 2010).
Once you run the screener on any trading day, it shortlists the breakout stocks from the extensive list of stocks from NSE.
Not all the stocks listed here are ready as a breakout trade for intraday stocks for tomorrow. Besides, it is impossible to track these many stocks in the live market.
Hence a trader can click on the link (last column) to view the charts. Then one can apply the primary price action or support & resistance concepts to shortlist the stocks.
For example, on 26th May 2021, this screener shortlisted Bajaj Finance as a breakout stock.
There is a clear resistance trend line, and the price closed a little above the trend line.
The stock has displayed more buying volumes in recent days, and also it consolidated over 7-8 days (short buildup) before the breakout.
Hence, it is a good breakout candidate for the next day.
Chartink Screener
Chartink is one of the leading screener providers in India. They have plenty of screeners in their arsenal, and ‘Bullish for Next Day’ is one famous screener which helps to shortlist only the breakout stocks for the next day.
Again, it is better to manually view all the shortlisted stocks before deciding to trade on them.
Market Confirmation to Trade
It is not a good idea to take a long trade in all the shortlisted stocks. Because shortlisted stocks only give a hint. But market confirmation in the live market is crucial before taking a trade.
‘Open-Low’ and ‘Open-test-drive up’ are two solid confirmation signals for the breakout trades.
Open-Low indicates the absence of sellers from the open level itself. Whereas, open-test-drive-up shows sellers tried their best to break the previous day high, but strong buyers negated them.
Day traders can observe these patterns in either 5-min or 15-min timeframe to get a confirmation for their trades.
Best 10 Intraday Trading Tips/Rules
If you are playing intending to win any game, you should know about the game rules upfront. Then, based on the gathered information, you have to plan accordingly.
Similarly, below are some of the rules which are helpful in intraday trading:
Don't lose more than 10% of your capital on any trading day.
Don't risk more than 5% of your capital in one trade.
It's better to take a break from intraday trading if you are not feeling good emotionally.
It's impossible to catch all the excellent trade opportunities every day.
If you see the profit screenshots of other traders, it will trouble your emotional balance. So follow your trade plan.
It's better to stick one trading system across different market conditions. Your learning curve will not improve if you keep on jumping from one strategy to another.
Avoid trading when you see a significant drawdown or when you get a few successive failed trades.
If you lose money on any trade, then you have made a mistake. There is a lesson to learn (no matter what).
There is no need to argue with anyone for any reason. You are right if you are making money in the market.
Learn how to ride your profits. It is the most challenging task in trading.
Intraday Trading Course
Intraday Trading is like any other skill which demands focus, dedication for some time.
Pick a trading strategy that suits your personality, study in-depth, backtest it with past data. If the results are promising, start taking a small risk.
In this process, traders make a few mistakes. Note down these mistakes and don’t repeat them. This is the simple way to succeed in trading.
To learn more about intraday trading take the below online course.
You will learn 3 tested intraday trading strategies.
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Nice article with good trading tips. Keep it up.
https://www.mntreecapital.com/
Indeed an amazing tip ! Your blogs are simply a benchmark of the service you render to thousands of traders who are lost. More power to you Sir ! Stay Safe. Best Wishes