In intraday trading, the trader will look to earn profits from the fluctuations in the stock market. The stock market is unpredictable, and fluctuations are quite regular. Day traders generally follow the principle ‘buy low, sell high’. They will buy the stock at a low price and sell it once it goes high, profiting from the upwards price movement of the stock.
When done correctly, intraday trading can be an effective way to earn substantial profits from the stock market. Along with this, a crucial part of earning good profits from intraday trading is to select the most suitable stock.
If you want to earn substantial profits from intraday trading, you can follow the steps listed below:
- Liquid stocks:
Liquid stocks are the ones that have a high volume trading through the day. These stocks can be quite optimal for intraday trading. You will get to purchase and sell large volumes.
- Medium-to-high volatility:
As it is intraday trading, your stocks should see a good amount of price movement daily. If you opt for stocks with less price movements, you will not earn good profits in a day. It is important to select the stocks which experience a price movement every day. It would help if you choose stocks that move at least 3% per day on average. Stocks with a medium level of volatility can be of great help to profit from intraday trading.
- Follow indicators:
A crucial part of day trading is the ability to predict the price movement in the short term. There are multiple indicators available that allow you to understand the stock’s performance in the market accurately. It would help if you learn how to use the indicators to help you read the chart well and consequently help you make profitable decisions.