Stocks To Watch For Intraday Today – There are thousands of stocks to choose from and day traders can choose almost any stock they want. A day trader executes a relatively large number of short and long trades in one day in order to take advantage of the intraday market price. Their goal is to profit from very short-term price movements. So the first step for a day trader is to figure out what to trade.
Once you have this information, you still need to understand the characteristics of these stocks, especially their liquidity and volatility, in order to choose the best ones to trade. Once a trading opportunity has been identified (a single stock, multiple stocks, or exchange-traded funds known as ETFs, etc.), the next step is to find some ways to profit from them.
Stocks To Watch For Intraday Today
Liquid stocks usually have a large trading volume. This makes it possible to buy and sell larger quantities without significantly affecting the price. Because intraday trading strategies depend on speed and precise timing, high volume makes it easier to enter and exit trades.
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Depth is also critical because it shows how much liquidity a stock has at various price levels above or below the current market bid and offer.
Day traders require price movements to make money. Day traders can pick stocks that tend to move a lot, either in dollars or percentages. The two filters often produce different results.
Keep in mind that if volatility increases, it may be possible to make higher than average profits, but you risk losing more capital in a relatively shorter period of time.
While there are those who specialize in contrarian plays, most traders look for stocks that move in correlation with their sector and index group. This means that when an index or sector ticks up, the price of an individual share goes up as well. This is important if a trader wants to trade the strongest or weakest stocks every day. If a trader chooses to trade the same stocks every day, it makes sense to focus on that one stock; no need to worry if it is correlated with anything else.
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You may have picked the sweetest stock in the world, but reaping the benefits depends on following specific strategies. Although there are many intraday strategies, it is important to stick to certain specific guidelines. By looking for certain intraday trading signals, you are more likely to succeed.
The market always moves in waves and it is the trader’s job to ride these waves. During an uptrend, focus on taking long positions. During the decline, focus on taking short positions. Intraday trends don’t last forever, but you can make a trade or two (or sometimes more) before reversing. When the dominant trend shifts, start trading the new trend.
Isolating the trend can be the tricky part. Trend lines provide a simple and useful entry and stop loss strategy. The following chart of the SPDR S&P 500 (SPY) shows several short-term trends during a typical day.
When trading live, you can draw more trend lines to see each trend to a different degree. Drawing more trend lines can provide more signals and also provide better insight into changing market dynamics.
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To select the best stocks for intraday trading, most traders find it useful to look at stocks or ETFs that have at least a moderate to high correlation with the S&P 500 or Nasdaq indexes. Then isolate those stocks that are relatively weak or strong relative to the index. This creates an opportunity for the day trader because a strong stock can rise 2% when the index rises 1%. A stock has more options that move more.
When indices and market futures move higher, traders should look for stocks that move more aggressively than futures. When futures pull back, a strong stock won’t pull back as much (or may not pull back at all). These are stocks that trade in an uptrend because they tend to lead the market higher and thus offer more profit potential.
When indexes and market futures fall, it can be profitable to short stocks that fall more than the market. If the futures move higher in a downtrend, the weak stock will not move as much (or at all). Weak stocks offer greater profit potential when the market falls.
Stocks and ETFs outperforming or underperforming the market can change daily, although certain sectors can be relatively strong or weak for weeks at a time.
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The following chart compares the SPDR S&P 500 and the SPDR Select Technology Fund (XLK). Blue line XLK was relatively strong compared to SPY. Both ETFs were higher throughout the day, but because XLK had such a large gain on rallies and a slightly smaller decline on pullbacks, it was the market leader and outperformed SPY on a relative basis. If you are going to buy something, choose the strongest investment.
The same goes for short trades. Short sellers should isolate stocks or ETFs that are relatively weak. That way, when prices fall, you’re likely to be in the stocks or ETFs that fall the most, thus increasing the profit potential of the trade.
Trendlines are simply a rough visual guide to the beginning and end of price waves. Therefore, when selecting stocks for intraday trading, traders can use the trend line to early enter the next price wave in the direction of the trend.
When entering a long position, buy after the price moves down towards the trendline and then moves back up. To draw an uptrend line, you need a low price and then a higher low price. A line connecting these two points is drawn and then extended to the right. In the chart below, the price bounces back from the trendline a couple of times before breaking through it a third time.
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Short selling in a downtrend would be similar. You should wait for the price to move to the downward sloping trend line. Then, when the stock starts to move back down, you use that as a trading signal for your entry.
If you’re patient, these two long trades provide a low-risk trade. The purchase is made near the stop-loss level, which is placed a few cents below the trend line or the last low immediately before entry. As mentioned, trends do not continue indefinitely, so there are losing trades. But as long as an overall profit is made, even at a loss, it matters.
Day traders have a limited amount of time to accumulate profits and therefore need to spend as little time as possible on trades that lose money or move in the wrong direction.
The diagram below shows the entrances and exits. The chart shows that if the trend continues higher, the price will push through the previous highs. It provides an exit for each corresponding long position taken. The same method can be applied to downtrends; profit is taken at or slightly below the previous low of the trend.
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Markets are not always trends. Sometimes intraday trends reverse so often that it is difficult to identify an overriding direction. If big highs and lows are not achieved, make sure the intraday moves are large enough that the potential reward outweighs the risk. For example, if you are risking 10 cents per share, the stock or ETF should move enough that you can make at least 15-20 cents profit by following the above guidelines.
If the price is moving in a range (not trending), switch to a range trading strategy. During the range, the lines we draw are horizontal, not at an angle. However, the same general concepts apply: Buy when the price moves to a lower horizontal area, support and then starts to move higher. Short sell when the price reaches the upper horizontal line, the resistance, and starts to move lower again.
If you are buying as a day trader, look to exit near the top of the range, but not right at the top. While shorting, look for the exit at the bottom of the range, but not directly at the bottom. The potential reward should be greater than the risk.
Place the stop-loss just below the most recent low prior to entering a buy signal, or just above the most recent high prior to entry for a short signal.
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Many traders may find it difficult to switch between trend trading and range trading. Therefore, many traders choose to do one or the other. When trend trading, step aside when markets are volatile and focus on trading stocks or ETFs that tend to trend. When trading in a range, avoid trading during trends and focus on trading stocks or ETFs that tend to range.
Day traders use a number of strategies to profit from their activities. Techniques include: scalping, momentum trading, breakout trading, trend trading, reversal trading and news trading.
Stock depth and liquidity are important metrics that day traders use to trade. There are several techniques for determining stock depth and liquidity. These are: trading volume, bid-ask spread, order books, time and sales, and market depth.
The stock’s volatility is