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How to Select Stocks for Intraday Trading?

Written by - Akshatha Sajumon

June 28, 2023 7 minutes

Investment in stocks is fast becoming a favored investment option not just for the young and aggressive investors but also for the older generation. Investors have long realized the benefit of equity markets and the probability higher of returns as compared to traditional investment options like Bank FDs, Post Office Schemes, etc. Apart from investment in share markets, intraday trading is also gaining a lot of popularity. This can be attributed to increased awareness among the investors as well as an increase in the disposable income among them. However, among the various important aspects of intraday trading, one of the key factors involved is the ability to pick good stocks that can maximize their profits.

Given below are the prime factors that can be considered while selecting stocks for intraday trading.

What is intraday trading?

Before we understand the key factors that can help pick quality stocks for intraday trading, it is important to understand the basic meaning of intraday trading. The correct meaning of intraday trading is day trading where the traders buy and sell shares, commodities, or other assets by taking potentially profitable positions and squaring off the trade in the same day i.e., before the end of the current trade session. 

Intraday trading is considered to be a risky form of trading due to the extreme volatility. The prime benefits of intraday trading are the possibility of higher returns as compared to mere investment in shares as well as the benefits of freeing up the capital at the end of the trading day.

What are the factors to consider while selecting stocks for intraday trading?

Let us now discuss the top factors that can be considered while selecting stocks for intraday trading. 

Liquidity of the stocks

The prime factor needed for intraday trading in stocks is their liquidity. It helps the traders take suitable positions and make a timely exit from their positions. If the stocks selected for trading are not liquid enough, traders may be held up in their positions which can potentially drain their profits as well as their capital.

Volume of the stocks

Volume is another crucial aspect that is needed for intraday trading. Stocks having a higher volume that can be traded in the market at a given time also impact the price movements. Most intraday traders pick stocks that have a high trade volume as it helps them exit their positions efficiently at the same time provides the probability to earn higher profits.  

Volatility of the stocks

Volatility of the stocks is considered to be the best friend of traders. It helps traders take more profitable positions and alter their strategy based on the price movements. Using the stop loss feature in the face of high volatility also safeguards them from extreme losses. While volatility is good for trading, it is also important to stay away from extremely volatile stocks as it can result in high losses if the traders are not careful. 

Select a trading strategy and stick to it

There are many strategies that can be adopted by traders for intraday trading. These strategies can include focusing on a particular sector and therefore picking stocks from the said sector. When the trader focuses on a particular sector it makes it easier for them to track its movements as well as any latest developments in the said sector. Hence, it is important to note that when such a strategy is adopted, traders do not move away from their sector in favour of any impulsive decisions. 

Intraday trading has an ocean of opportunities to make profits but is also highly risky. Hence, one of the simplest trading strategies, especially for beginners in trading is to select stocks that are co-related to the movement of their sector of the index in general. This will help them get a clear idea of the price trends and make better trading positions.

Choose stocks that have a presence in the derivative market

Derivative markets are often known as the secondary markets where the traders can trade in futures, options, forward contracts, and swaps. Stocks that are traded in primary s well as secondary markets have a higher degree of scrutiny and analysis. This makes it easier for the traders to understand the price and volume movements thereby helping them take better trading positions. 

Types of strategies day traders use

Some of the commonly used intraday trading strategies are:

  • Momentum Trading: Capitalizing on strong price movements driven by news, events, or high trading volume. Traders buy into rising stocks and sell when momentum slows down.
  • Breakout Trading: Identifying key resistance levels and entering a trade when the price breaks above those levels, anticipating further upward movement.
  • Scalping: Profiting from small price changes by executing multiple trades throughout the trading day, aiming for quick gains with minimal risk exposure.
  • Reversal Trading: Detecting potential reversals in price trends and taking advantage of the change in direction. This strategy requires a keen understanding of market sentiment and technical indicators.
  • Range Trading: Trading within a well-defined price range, buying at support levels and selling at resistance levels.

Importance of stock selection in intraday trading

The importance of stock selection in intraday trading cannot be overstated, as it lays the foundation for successful trades and profit generation. By focusing on the right stocks, intraday traders can enhance their trading experience and outcomes in several ways:

  • Maximizing Profit Potential: Choosing stocks with high liquidity and volatility increases the chances of capturing significant price movements, leading to greater profit potential within the trading day.
  • Reducing Risk: Proper stock selection, including diversification across sectors, helps mitigate risks associated with sudden market fluctuations or unforeseen events impacting specific industries.
  • Efficient Capital Utilization: Allocating resources to well-performing sectors and fundamentally strong stocks ensures that investors make the most of their capital, avoiding unproductive trades.
  • Informed Decision-Making: Keeping up with news and market sentiment enables traders to anticipate potential price movements, allowing them to make timely and informed decisions.
  • Long-term Growth: Learning the art of stock selection not only benefits intraday trading but also contributes to developing skills that can be applied to long-term investment strategies.


Selecting the right stocks for trading is often the difference between an average and a successful trader. It, therefore, requires the traders to have a thorough market understanding at the macro as well as micro level. If the trader is unable to make a better analysis of the markets, it is advisable to take the help of a professional stockbroker that can make informed traders according to the risk-return profile of the trader. 


Is technical analysis important in intraday trading?

Yes. Technical analysis of the stocks is the backbone of intraday trading

Why is it necessary to select companies that have maximum data publicly available?

It is always advisable to select a company’s stock, where the maximum information of the company is available publicly, for intraday trading. This will safeguard the trader against any hidden information that may be detrimental to their interests. Transparency and stable management are prime factors to consider for good quality stocks for intraday trading.

What are some of the strategies for intraday trading?

Some common intraday trading strategies are moving averages, relative strength indicators, CPR indicators, momentum oscillators, OBV, etc.

Why is it important to use stop loss in intraday trading?

Stop loss protects the traders from extreme volatility. Hence, it is an important tool that should be used by every trader.

What are the other factors that traders can look out for while selecting stocks for intraday trading?

The other factors that traders can look out for while selecting stocks for intraday trading include,
Selecting stocks after due research
-Opting stocks that have clear and decipherable charts and patterns
-Opting for stocks that are price sensitive
-Monitor the resistance and support levels of the stocks and look for breakout stocks.

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