Selecting stocks for intraday trading
They say that the female sex tends to “wind up” various thoughts, which are not always connected with reality. It is usually blamed on a heightened emotional background. However, in the world of trading, such “winding up” can be found everywhere (not only among women). And the most striking example is a trader’s commitment to a particular asset.
I am sure that each of you heard from someone, or maybe he himself uttered a similar phrase: “I only trade (for example) Sberbank shares, the movements on them are the most understandable, they are the most liquid, technical analysis works best for them, etc. .P. causes”. Someone also talks about a specific currency pair or about a specific future. Those. the person has thought to himself that he understands the movement of a particular stock more than in the movements of other stocks. I bet many people think that this is so … So it is in this very place that thoughts and reality diverge. You need to trade an OPPORTUNITY, not a stock! There is no such trading instrument in which there is an opportunity every day!
There are more than 8000 shares on American stock exchanges alone, and of course, it is impossible to analyze all of them, especially when it comes to several minutes, or even seconds, when you need to make a decision about an intraday trade and press a button. Later in this article, we will analyze the methodology for selecting stocks in which the most likely opportunities for the emergence of those opportunities can be traded.
Main criteria for the selection of shares
In order to make money on the difference in the rate of buying and selling an asset, this difference must be sufficient, i.e. the share must change in price.
Let’s start with the fact that the stock makes more than 70% of its daily movement in the first 30-60 minutes of the trading session, and as I already wrote in the article on technical analysis – if you see a formed movement (trend) on the chart, then it’s too late to meddle in it. , this had to be done before its formation. Consequently, some prerequisites will be needed for the stock to start moving exactly today, and these prerequisites must be either before the market opens or in the first seconds after the opening.
There is no need to go far here … This has already been understood more than once in the vastness of the blog. For a stock to start understandably strong moves, it needs a comparatively larger working capital than usual. In other words, on this particular day, this action should have somehow attracted larger capital. Well, of course, they ask for the language of events in the company, which we call “news”. And I note right away that thanks to the news, we get an assumption about the activity of the stock, and not about the direction of change in its prices in the future (we also analyzed this in the corresponding article on the fundamental analysis).
However, in spite of the root cause (news), such stocks will be monitored not only by the news but also, as confirmation of the arrival of capital, by the traded volume (in the article on the analysis of volumes, we started talking about this). These promotions are called “Active” or “Promotions in the game (In-Play)”.
Further, we will focus exclusively on stocks traded on the NYSE and NASDAQ, but the selection methods will be identical on other exchanges, including MOEX, only the sources and software will be different
Methodology for selecting stocks for trading
As we have already found out, only those stocks that are expected to have some activity at the opening of the trading session are suitable for intraday trading. And there are several ways to find stocks with the expected appearance of activity.
The simplest, but not always the most effective method is to simply copy stocks from reporting lists. Despite the fact that the publication of the report should attract the attention of investors, this does not happen in every stock, so not all selected stocks will show activity. Here some filters come to the rescue, which we will talk about later.
Now we will discuss where to find the same “list of reportable shares”. There are a lot of sources, there will be no difficulties even with an independent search through a search engine in the browser, however, for convenience and free access (many of the sources are paid), I made this list on the blog – https://tradersblog.ru/earnings-calendar/ (find it can be found in the section “Selection of NYSE, NASDAQ shares”). The list is updated automatically so that all the data specified in it will always be up-to-date. All you have to do is find the required date and copy the stock tickers to your list.