November 11, 2025
4 mins read
Intraday trading is one of the most common trading styles in the stock market. In this type of trading, you buy and sell shares within the same day. That means no stock is carried forward to the next day.
For a day trader, knowing how to select stocks for intraday trading is a must. Choosing the right stocks decides whether you end the day in profit or loss. Even if you are new to the market, this is a skill you can learn with practice.
The right stock should have good movement during the day, enough buyers and sellers, and be supported by news or trends. With careful selection, intraday trading can be profitable and rewarding.
Intraday trading simply means buying and selling a share on the same day. Traders enter the market when they see an opportunity to profit from small price changes. All positions are squared off before the market closes.
The goal here is not long-term growth but short-term gains. Unlike investors who hold shares for months or years, intraday traders look for smaller profits, many times, within the same day.
Here are some main points about intraday trading:
Short holding period: Shares are not kept overnight.
Quick decisions: You must react fast to market changes.
Market focus: Intraday trading depends more on technical analysis and less on company fundamentals.
Lower overnight risk: Because you close positions before the market closes, global events at night don’t affect your trades.
Multiple trades possible: Some traders buy and sell more than once a day. So, intraday is all about speed, strategy, and discipline.
Now let’s understand how to select stocks for intraday trading. Not every stock is suitable for this style. Successful traders follow certain rules to narrow down the list of stocks they trade daily.
Here are eight golden rules to follow:
Liquidity is the measure of how easy it is to buy/sell a stock. Stocks that are liquid are those with a high trading volume so you can enter and exit the stock without delays. Typically, large-cap companies will provide high liquidity.
If you want to be a successful intraday trader, you will need trading with price movement. Volatile stocks will move up and down more during the day, which creates opportunities for you to make profits.
Sometimes stocks move in a price direction similar to the companies in their sector or as the broader market indices such as Nifty or Sensex. When selecting correlated stocks, you will have a better indication of price movement.
Don’t pick stocks when their direction is moving against the overall market trend. For example, if the overall market is bullish, pick stocks that are also showing bullish movement, and vice versa.
Tools like moving averages, RSI, and MACD help identify buy or sell signals. Intraday is more about charts than company balance sheets.
Stocks of companies receiving news coverage will tend to have larger price movements. For example, earnings releases, regulatory changes, or product announcements will produce more frequent intraday opportunities.
Certain sectors will outperform others on certain days with local or global events. Tracking sector movement and picking stocks based on your research will lead to better intraday trading.
Additional Read: What is Sector Rotation
Very risky stocks that are dirt cheap and have low volume, the "penny stock," may look enticing but be the most dangerous stocks for an intraday trader due to liquidity.
Following these rules increases your chances of making profitable intraday trades.
Addtional Read: What is Tracking Stock
Let us consider more closely the main considerations when deciding on intraday stocks.
Why it is important: You want to buy and sell quickly. Highly liquid stocks permit you to trade and minimise the impact on price.
How to assess: Search for stocks that have high daily trading volume. Large-cap stocks and widely held sector-leaders in all likelihood will provide some sufficient liquidity.
Why it matters: Without movement, there is no profit. Volatility ensures the stock price changes enough to give entry and exit points.
How to identify: Track stocks that show regular price swings or are reacting to fresh news and announcements.
Why it matters: News moves markets. A positive update may push stock prices up, while negative news can drag them down. Staying updated helps you ride the right wave.
Example: A new government policy favouring renewable energy may push energy company stocks higher.
Day Traders use specific, short-term strategies to make profits. These strategies are based on technical analysis, chart patterns, and time horizons. Below is a list of the most popular strategies.
Scalping: This is a method involving a significant quantity of trades in one day, with the time of the position generally being only seconds or minutes to make the small profits.
Momentum Trading: Involves buying stocks that are moving strongly in one direction, with an exit when it begins to reverse momentum.
Breakout Trading: Involves buying and selling trades whenever the price breaks through price resistance and support with high volume.
Pullback Trading: Involves buying on small decreases within an upward trend and selling on small increases in a downward trend.
VWAP Trading: Involves using the volume weighted average price as a source for entry and exit.
Reversal Trading: Taking trades when a stock shows signs of changing direction, using tools like RSI or MACD.
Gap and Go: Trading stocks that gap up or down in pre-market and continue moving in the same direction after the market opens.
For intraday trading, liquidity is key. Otherwise you may have trouble getting out of trades quickly enough. Here is how a trader measures liquidity:
Average Daily Volume: A good guide is using +500,000 shares traded in a day.
Bid-Ask Spread: A narrower spread means higher liquidity.
Depth of the Order Book: Level 2 data gives you the buy and sell orders at different price levels.
Turnover Ratio: The higher the ratio of daily trading volume to shares outstanding, the more trading activity is occurring.
Price Impact of Large Orders: If a stock is liquid, it is able to absorb a large buy or sell order without a large price movement.
Market Participation: Stocks with both retail and institutional activity are more liquid.
Intraday Price Movement: Consistent volume spikes during the day suggest strong liquidity.
Stock correlation helps manage risk. If you pick two stocks that move in the same direction, you double your risk.
Here’s how correlation is analysed.
Correlation Coefficient: This is a value between –1 and +1 that indicates how two stocks are moving relative to one another.
Sector Correlation: Be careful not to pick too many stocks from the same sector.
Index Correlation: Some stocks move in close correlation with an index, such as the Nifty.
Pair Trading: Taking an opposite position in two highly correlated stocks.
ETF Comparison: Compared to ETFs for the sector and get overall movement direction.
Correlation Charts: Use charting tools to visualise stocks and permutations of stocks.
By studying correlation, traders diversify and avoid unnecessary risks.
Additional Read: Intraday Trading Strategies & Tips: A Guide for Beginners
Predefined stop-loss and target price: Traders decide their exit levels before entering a trade. A stop-loss limits potential losses, while a profit target secures gains, based on a calculated risk-reward ratio.
Support and resistance levels: Exits are planned around strong support or resistance zones. These levels help maximise profits by locking gains while minimising the risk of sudden reversals during market swings.
Trailing stop-loss: Traders adjust stop-loss levels upwards or downwards as the stock price moves favourably. This method locks in profits while keeping the position open for potential further gains.
Time-based exits: Some traders exit trades after a fixed duration or before specific market events. Closing early avoids volatility risks, especially near market close or major announcements.
Volume confirmation: Traders monitor trading volume during price moves. A noticeable decline in volume after a strong trend signals momentum weakness, encouraging an exit to safeguard against possible reversals.
Technical indicators: Tools like RSI, MACD, and Bollinger Bands reveal overbought or oversold market conditions. Traders use these signals to time exits effectively and protect profits from reversals.
To succeed in intraday trading, picking the appropriate intraday trading stocks is crucial; as a result, make technical analysis your companion. Moreover, by following the above tips, you will have a clear understanding of selecting the right stocks for day trading. Finally, to avoid emotional bias, ensure your judgments are data-driven.
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Intraday trading involves buying and selling stocks within the same trading day to profit from short-term price movements. Unlike regular trading, where stocks are held for longer periods, intraday trading requires all positions to be closed before the market closes.
Key criteria include liquidity, volatility, and current market trends or news. These factors ensure that the selected stocks have enough trading volume, significant price movement potential, and are responsive to market events.
Market trends and news can greatly influence stock prices. Positive news can lead to price increases, while negative news can cause declines. Staying informed about current events helps traders choose stocks that are likely to move in a favourable direction.
Technical analysis plays a crucial role in intraday trading by helping traders identify patterns, trends, and key levels like support and resistance. This analysis aids in making informed decisions about when to enter and exit trades.
Liquidity is vital in intraday trading because it ensures that traders can quickly enter and exit positions without significantly impacting the stock price. High liquidity reduces the risk of slippage and allows for smoother transactions.
Common time frames for intraday trading include 5-minute, 15-minute, and 30-minute charts. These shorter time frames allow traders to closely monitor price movements and make timely decisions.
Risk management and stop-loss strategies are essential to limit potential losses in intraday trading. Setting stop-loss orders ensures that positions are automatically closed when a stock reaches a predetermined price, helping to protect capital.
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