How to select stock for intraday trading – The Ultimate Guide

Welcomethis article is going to be very important for all traders. In this article i will discuss in details, about “how to select stock for intraday “.

Before moving further you must have basic knowledge about stock market, if you are a novice then just go and read the article about Stock Market for beginners.

Now my question would be which style of trading you prefer, because for each type the technique will be different for selecting the stocks to trade.

Generally we can divide the trading style in two parts – Intraday and Swing Trading. In this article we will focus to select the stock for intraday trading.

How to select stock for Intraday

In Indian stock market almost 7K stocks are listed. But not all are used for trading, to choose the stock for trading purpose we have certain criteria.

Importance of liquidity in stock for Intraday.

The first criteria is stock must be liquid, in other words, you always choose a stock where the daily trading volume should be minimum 1 million.

When you will check the ask an bid price then the difference will be at 10 paisa to 15 paisa, means at every 10 paisa there is a buyer and seller.

The biggest benefit to trade in such type of stock is your entry and exit would be easy. Suppose you entry is a 220.50 and you want to suddenly exit then you can exit at nearest bid or asking price either 220.60 or 220.40 etc.

On the other hand if you choose a stock which is not liquid then there the difference between buyer and seller would be very high, if you entered in any stock then my be your exit would be 10 to 15 points far. So always try to choose a liquid stock for trading.

Importance of Volatility

Our next criteria is stock should be enough volatile on daily basis, generally a stock with daily volatility less than 1 is not good for intraday trading.

And a stock with volatility more than 1 is good for intraday trading, more volatile stock is generally said high beta stock, so these types of stock’s daily range is larger than the general low beta stock.

The reason to choose a volatile stock is , if the stock will not move from its place or, you got a very low movement then you cannot make, either profit or loss, so it’s very important to trade in a stock with good volatility.

Breakout or Breakdown with high volume

This is our third major criteria, always choose a stock where you get a breakout with high volume, it doesn’t matter the stock is in uptrend or downtrend.

If you get a breakout with low volume then generally it’s a false breakout, the chances are stock will be reverse back and you can trap, so always choose a stock where you get a breakout with high volume and stock sustains above its breakout level.

However you can check it during market hour, to scan for stock with high volume you can use a stock screener,  and software. There are lots of free and paid software are available which will generate a signal in real time.

You can also set a filter for high volume breakout. If you use a free software then it will generate a signal little bit late, where as a paid version will generate a signal in real time.

Select stock on the basis of future stock price

In future you can check such thing by checking the open interest data of a stock with its trend. If the open interest of a stock is increasing and stock is going upside then buyer and interested in buying. but if the stock is going upside but open interest is decreasing then its short covering.

Similarly if the stock is going to downside and open interest is increasing then trader and more interested to selling the stock, and they are make a short position in it. If the stock is going to downside and open interest is decreasing then it means traders are unwinding their long or buying position.


Now my recommendation would be select a list of 50 to 60 good liquid stock for your intraday list. And you need to track the chart of these stocks on daily basis, and do your daily research after market hour.

For your own research and analysis you can use several charting software like Amobrokermetatrader etc. So before opening the market choose few stock where you will trade according to your strategy.

That’s the end the this article “how to select stock for intraday”.  if you found this article informative and helpful then don’t forget to share it with your friends and social media account.

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