Intraday Stocks for Tomorrow

So, you want to be an intraday trader. That's great.

But do you have what it takes to be good at trading? Do you know the ABCs of trading or are you just punting money based on your broker's advice?

Many people have jumped on to the trading bandwagon recently to make extra money.

Unfortunately, most don't have the necessary knowledge or skill or even the temperament to become a good intraday trader. They don't know how to find intraday stocks for tomorrow.

Let's try and evaluate how to select intraday stocks for tomorrow. If done right, intraday trading can offer many advantages.

First, examine the market trend and stick to it.

This is one of the easiest ways to make profits from intraday trading. Market trends help in determining the movement of stocks.

A simple way to determine the trend is to look at price action and certain technical indicators.

There are more than 250 indicators and infinite more which a trader could develop on his own. So, it is completely on his own discretion what kind of indicators to use.

Some of the well-known technical indicators are focusing on price action, moving average convergence-divergence (MACD), relative strength index (RSI), etc.

Technical analysis considers statistics related to the market activity of the buys and sells. This analysis uses the stock's historical change in price and its trading volume.

A trader would believe that historic trends in a company's share price can be used to predict a future change in the share price.

Then there's moving averages. Moving average is a statistic used to chart a trend in a particular company's share price.

If the moving average increases at a faster rate, it indicates that a trader should buy the stock and vice versa. Traders also look at sectoral trend to trade in stocks. This method of identifying the market and sectoral trend is also known as top-down approach.

From a trading perspective, a top-down trader first analyzes the trend of the entire market, followed by the trend of the sector, and then the trend of specific stocks.

Apart from that, traders consider short interest as well as support and resistance levels.

Short interest measures the total number of shares of a company that have been sold short without being covered or closed out.

While support and resistance levels refer to price levels beyond which the price of an asset will not go in a certain direction. Support and resistance levels are not always reliable though. In a volatile scenario, they're not of much use.

Next, always trade in liquid stocks.

Liquid stocks are those which have decent trading volume daily and shares of these companies are exchanged on a daily basis.

If you trade in liquid stocks, you'll get to buy and sell the stock anytime you want.

This is not the case for illiquid stocks which don't have much daily trading volume. In these cases, you may as well just be stuck with it for many days.

Last, but not least, doing your own research should not be compromised even if it's trading.

Here, you'll enjoy the benefit of doubt and will be assured that the company won't be in news for any negative reasons.

Now that you know the steps, make sure you have an exit strategy. Because none of it will matter if you don't plan well and lay down certain rules.

And yes...don't forget to keep stop losses in place.

Stop loss is a way that could prevent your hard-earned money from draining beyond a certain point.

Traders need to be on their toes for quick entry and exits as the market volatility can hit them badly.

This way, you can make a living from trading stocks.

Check out this trading strategy that guarantees you never lose money with the use of stop loss.

For a deep dive in the world of trading, check out our guide on the secret to success in intraday trading.

You can also checkout our playlist on Intraday Trading on Equitymaster's YouTube channel.