Intraday trading, otherwise known as day trading, is all about buying and selling stocks. However, to be successful in this form trying, you need to choose the right stock equities to choose from. But with over a thousand equities to choose from, which of them would net you the highest profit?
The first step is always for you to figure out what to trade. Once you have selected your stocks or ETFs, it is now time to come up with a plan to make them profit. And for that, you should use this list as a guideline into understanding the crucial factors for intraday trading.
Intraday Trading Factor #1: Liquidity
Liquid stocks are usually thriving with big opportunities. And it is with that large ocean of shares, that you can purchase a significant amount of the stock and still not make enough to ripplet through the price. Thus making it easier to get into and out of trades easier. Not only that but the depth is also critical. Because it shows the amount of liquidity a stock has to offer on different price points.
Intraday Trading Factor #2: Volatility
One major difference in intraday trading as opposed to long-term trading is in its volatility risk. Since you are trading as much as you can in just a whole day you would want to choose a stock that moves a lot. And as we know, price movements are the life and blood of forex trading. But with intraday trading, you should go for stocks that move up to 3% or more. As a result, the higher the volatility the more consistent larger intraday moves are there to trade.
Trading Factor #3: Group Followers
As was previously mentioned, you must decide beforehand what you want to trade. And that is still evident here. Because most traders will only trade assets that they know they can earn a quick buck. Thus whenever the sector or index moves up, so does the individual stock price. That is important because you can trade both your strongest and weakest stock each day. If you opt to just trade the same stock every single day, then it would be smart to focus solely on that. Learn to stick with what you know and what you decide to invest in only.