For intraday trading, you can find the most liquid, highly active stocks that can give a return on the same day. However, there are various criteria to find the stocks for the intraday that you can choose while trading. Picking the trending stocks for intraday is one of the best strategies for betting on the right stocks for the day trading or intraday trading.
And finding the trending stock is another challenging task for the traders. Don't worry if you are also a day trading player and looking to pick stocks that are in trend, then you have to follow certain rules. Trending stocks are highly active having high volume trade that has better chances of moving either side and can give the return in a short period.
10 Rules to Select Most Trending Stocks for Intraday
#1 Look for News Sensitive Stocks
The stocks are highly influenced by the various types of news and are one of the best-trending stocks when certain types of news spread in the market. Banking stocks are the best option when the central bank (RBI in India), takes any measurable step like hiking or reducing the interest rates, then banks or financial institutions involved in lending business moves.
Similarly, when GDP data comes, the stocks from almost all the sectors react with positive and negative economic growth data. You can pick the most trending stocks that are highly influenced by economic activities and government policies. The stock of infrastructure, engineering, construction and energy-related companies are mainly becoming in trend when favourable governments are formed in the country and you can pick the trending stocks.
Similarly, when any sector or industry-related news comes into the market, the stocks of industry players become more active and trending in the market. However, when company-specific news comes into the market, the stock of that company comes into the trend.
You can find the trend stocks, when there is any kind of corporate announcement like a merger, demerger, stock split, bonus share or dividend announcement and quarterly results declared by the company. You need to keep yourself updated with such news that is likely to come during market hours, and news-sensitive stocks become trending.
#2 Stocks Moving with Market Trend
One of the very important rules while selecting the trending stocks for the intraday is trading pick the stocks that moving as per the market trend. However, there are some stocks that move against the market trend, usually, the stocks of Pharma, FMCG and IT companies are defensive stocks that move against the market trend or trade in defensive mode.
Here you need to shortlist the high beta stocks or have a beta of more than 1, that can move along with or faster than the main index. Such stocks move like suppose, the market is up by 1%, then the high beta stock moves by 2% or 3% or higher than other stocks. These types of stocks can be one of the best options when selecting trending stocks for trading.
#3 High Volume Trading Stocks
When there is a large number of trades taking place in a particular stock, it also becomes a trending stock in the market. Traders pick such stock for intraday as there is a huge volume of trades taking place making it highly liquid stock for that particular day.
A large number of trades take place in such stocks when any fund house, FIIs and institution investors start accumulating the stock to add to their portfolio. You can check the trade volume of that day and compare the average daily volume, if a large number of trades take place or the volume is much higher compared to the daily volume then it will also move.
However, while picking the high volume trading stock you need to be very careful while creating your trade position. If you looking to create a long position in the stock, then make sure along with high-volume trades, the stock is also moving in the upward direction.
Similarly, if you are finding the intraday stock for short-selling, make sure the high-volume trading stock is falling, as there could be block deals and the stock is likely to move further in the same direction. High-volume trading stocks can be the best-trending stocks you can choose for intraday trading with the potential to get returns on the same day.
#4 Top Stocks from the Trending Sector
When there is a certain kind of news in a specific sector you will notice the stocks of industry players move first and keep trending during the trading session. Even the sector index moves because of the top stocks included in that sector index.
This is because when any kind of favourable policy by the government is announced, then the top companies in the market are likely to the maximum benefits from such policies. Similarly, when most of the stocks of any industry become active due to any news or positive financial results declared by the industry players, then other stocks also move.
Apart from the top industry players stock for such industries, you can pick the second top best companies in the same industry. However, again you have to keep yourself updated with such news that affects any industry and pick the right trending stocks for the trading. Banking, IT, Infra, Cement and Pharma are such sectors that are usually trending in the market.
#5 Stocks Touching 52-week High/Low
This can be either side movement in any stock that keeps moving in a particular direction and approaching to touch down its 52-week high or low. Such stocks are also one of the best-trending stocks you can pick for intraday trading. There could be positive or negative news that influences the traders to continuously buy or sell the stock for days.
And the trend is likely to continue or the stock can touch its 52-week high or low depending on the types of news or its fundamental conditions. The stock approaching towards its 52-week mark creates further room for traders to bet on such trending stocks. Before picking such stocks make sure the is enough room or the stock can give some return or not.
At such points there is a chance of trend reversal in the stock, hence always use other technical indicators to make sure the stock will further in the same direction or not. For intraday trading, you can create long positions in the stock approaching towards 52-week high, while picking the stock for short-selling that is heading towards its 52-week low point.
#6 Open Interest Build up in the Stocks
To apply this strategy while finding the trending stocks for intraday trading, you have to scan the stock from the derivatives or future and options (F&O) segment. Yes, open interest is created only in the socks traded under the F&O category. Here the trading volume is counted in terms of a number of contracts that are represented through open interest.
When any stock is trending in the F&O segment, then there is a significant change in the open interest and because of that stock becomes highly active among the traders. The change in the open interest or number of contracts along with price change in the same stock makes such stocks highly active during the coming trading sessions or likely to move.
You have to scan such stocks from the derivatives segment that started moving in a particular direction and open interest in such stocks are building up either with the increase in the price or decrease in the price. Such stocks become trending picks for traders looking for the stocks for day trading or investing till the date of the expiry of the F&O contracts.
#7 Stocks Touching the Circuit Breaker
To control the abnormal movement of stocks in the market, stock exchanges have created the limit of the circuit as per the stock category. If the stock moves beyond that limit or touches the circuit breakers then trading is halted for a few hours or maybe for the entire day depending on the conditions and number of times the stock touches the upper or lower circuit.
When there is a huge volume of trade takes place in such stocks, then it can break the upper or lower circuit. Such stocks become trending in the market with a large number of bids done with high or lower prices resulting in the stock touching the circuit limits. Usually, a 5%, 10% and 20% circuit limit is set for most of the stocks trading in the market.
However, the stocks included in the F&O category or derivatives segment are kept out of the circuit breaker limits. However, the stocks included in the F&O segment are one the highest trending stocks, as they move faster than other stocks and can go beyond 20% during the trading sessions. Hence, you can choose the trending stock hitting the circuits or can pick from the shares from the derivatives segment trading at very high or low changes in the price.
#8 Breakout or Breakdown of the Trading Range
There are many stocks that keep trading in a range for many trading sessions, and when there is huge movement due to large volume it comes out from the trading range. The stock can either break or break down from its range-bound trajectory creating the opportunity for the traders to make positions and earn profits with the further movement of stocks.
A stock breakout or breakdown when traders keep an eye on such stocks and start making positions when they come out from their trading range. When the stock breakdown or breakdown and comes out from its trading range it becomes a trending stock, and you can also pick such stocks for intraday trading as per the direction of the movement of stock.
#9 Most Visited or Searched Stocks
Apart from all the above-listed criteria to find the trending stocks, you can also pick the stocks that are most visited during the day. The reason behind most visiting such stocks could be anything from corporate actions to news and any other fundamental or technical aspects making the stock favourable among the traders on that particular day.
You can pick the top ten stocks the users visited during the day for intraday trading. The most active and top gainers or losers stocks are also mostly visited by the traders on such days. While screening the most visited stocks make sure to filter the list from different indexes and sectors, as such stocks are listed from various segments like stocks from the main index (Nifty or Sensex), mid-cap, small-cap, banking index, IT index and stocks from the F&O segments.
#10 Stocks from the Market Heat Map
This is also one of the very useful techniques to find trending stocks for day trading. Yes, you can use the market heat map as a stock screener. A market heatmap in the stock market is simply a table showing the stock market data in a two-dimensional graphical visual representation. Here the top rising and falling stocks are shown in green and red zones respectively. And the intensity of colours defines the percentage of advance and decline in the top stocks.
To create the positions you can check the heatmap with the stocks in the green table, while for short-selling you can filter the losing stocks from the table in red. The darker the shade of green or red in the heatmap means the higher stock rose or fell with a shade of colour becoming the light shade as the stocks moved in either of direction.
You can use the above-mentioned techniques and suggestions to find out the best-trending stocks for intraday or day trading. The basic criteria for picking trending stocks should be traded with high volume or more than its daily average volume or there is any kind of news spread in the market that can affect the price of stock for a few trading sessions.
Apart from the above-listed criteria, you can also use the technical indicators to shortlist the top trending stocks for intraday trading. You can use the Candlesticks Chart Patterns, Support and Resistance, Moving Averages, RSI, Bollinger Bands, Volume Indicators and Long Unwinding in the stock market to find out the best-trending stocks for the day trading.
However, to apply these technical indicators you need advanced trading software like TradingView with full-fledged knowledge and experience of performing the technical analysis. And if you don’t have such technical know-how, you can choose a broker for the share market who has such facility to perform the fundamental analysis and technical analysis.
Moneysukh is one of the best discount brokers in India offering trading and investing solutions for traders and investors looking to trade or invest in the equity, commodity and forex markets. Here the team of market experts using advanced tools and techniques can easily find out the most trending stocks for intraday trading or can analyse the companies suitable for long-term investment.
And you will also get tips and recommendations with research reports to select the right stocks for intraday trading or for long-term investment. Apart from the expert's view, you can also use the algo-trading software at Moneysukh to take advantage of high-frequency trading in the stock market with the most popular & profitable algo trading strategies.
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