Ways To Analyze Market Trends For Intraday Trading

There has been a massive increase in traders and investors in recent years due to the increased momentum of online applications that offer multiple ways to multiply money. These apps and websites provide platforms to perform these fancy trading options and educate their users about the pros and cons of share market investments. One such scheme is intraday trading, which came into existence after the technological revolution in the trading sector. It was introduced to replace the cumbersome methods of trade execution that took place through open outcry auctions on the floor of stock exchanges.

The process of day trading begins with deciding on the equity to trade among the many equities available in the trading app. Most online trading websites and mobile applications present real-time monitoring of price movements and analytical details. Once there is clarity on stock selection, next comes the process of comprehending the essential characteristics of those stocks. For example, volatility, liquidity & group followers of stores determine which one to select for day trading.

Let’s try to understand in detail how certain factors influence the profitability of stocks when we are looking for intraday trading with our trading account:

  • Liquidity: Intraday trading involves buying and selling stocks on the same day to leverage quick price movements. So, the higher the liquidity of the stocks, the greater the volume of trading activity, which shows that the market is active and efficient. It also helps the traders to enter and exit the market easily, and the bid-ask spread is narrower in the liquid market because there are several buyers and sellers. There is an increased chance of getting more favorable prices, and large trades are less likely to impact the stock prices because of the reduced price volatility.
  • Relatively higher volatility: Stocks that tend to move more in a day, either in dollar or percentage terms, are the top choice of intraday traders because, ultimately, they rely on this movement to earn bigger profits. Generally, stocks that move 3% or more by $1.50 daily have consistent large intraday moves to trade.
  • Impact of group followers: Following the herd is a regular norm in stock market business because the group decision can cause the price movements to upsurge and decline depending upon the mob buying and selling the stocks, respectively. Similarly, information sharing among the group traders helps the intraday traders make informed decisions about when to buy and sell. Market sentiment is an integral part of the technical analysis of stocks and price movements, so professional investors rely on mass movement strategies for decision-making.
  • Trading with the current day trend: No matter, if you have selected the sweetest stock to invest in share market, implementing sound strategies will only decide how much you can profit from them. One such technique is riding the stock market wave, which means taking long positions during an uptrend in share market live data, holding short positions during a downtrend, and switching to new trends when the dominant shift changes.
  • Strong stocks for uptrend & weak stocks for downtrend: When the indexes are moving higher, stocks that move aggressively have greater profit potential and do not pull back even if the futures pull back. On the other hand, when indexes are dropping, weaker stocks will prove to be more profitable, and being updated with the latest stock market news will only provide true insight into price movements.

Among other requirements of online trading, a prominent one is to open a demat account which helps to store the assets in the form of electronic data as it facilitates the settlement of securities in a paperless manner.