A stock having no movement is useless for the traders, there should be a momentum to bet on such stocks to gain the opportunity of booking the profits. For intraday trading, momentum is one of the key factors that encourage traders to trade in such stocks.

Even momentum stock for intraday trading could be one of the promising opportunities for day trading. The reason behind the momentum in stock could be anything but it gives a chance to take advantage of such movement and wait for the profits. The momentum can push the price further in the same direction suitable for day trading.

Also Read: How to Do Intraday Trading: Best Stocks, Charts & Strategies

However, finding momentum stocks for intraday trading is difficult, especially if you don't have the experience and resources to find such stocks for trading. Here we are going to discuss about how you can find momentum stocks for intraday trading.

Things to Consider While Finding the Momentum Stocks for Intraday

While looking for the momentum stocks for the intraday trading there are various factors that should be considered so that you can find the suitable stock. Below you can find a few considerable factors that you should keep in mind while finding the momentum stock.

Volatility: Stocks with high volatility have a strong movement when there is momentum in such stocks. However, trading in a highly volatile stock could be risky but intraday trading is suitable with the possibility to show a strong movement.

Also Read: How to Use Implied Volatility in Options Trading: Strategies

Volume: The momentum would be substantial and sustainable when there is a significant volume of trade in such stocks. Check the average daily volume and compare the volume at the time momentum, if there is enough volume it can be considered for intraday trading.

Also Read: Best Volume Indicators for Day Trading & How to Use for Intraday

Timeframe: The momentum could be for many days, hours or the day only. Hence momentum at least for the day is suitable for the day trading. Always consider the timeframe of momentum that lasts for a few hours, as it is suitable for day trading.

How to Find Momentum Stocks for Intraday?

To find the best suitable stocks for intraday trading you can consider the above listed factors. But there are other parameters too, that you can use to find the stocks for the day trading. The momentum in the stocks could be temporary or give a false signal, hence you need to verify or confirm the same, and for that, you have to use various techniques.

Also Read: How to Find Trending Stocks for Intraday Trading: Ten Rules

1.Sudden Change in Price

A stock with no movement for many days got the interest of traders have momentum when aggressive buying and selling starts in such stocks. A movement with sudden price change is also an indication of momentum in the stock that you can pick the intraday trading.

The reason behind the sudden price change could be anything a news event in the company, corporate actions, financial results begging of huge orders etc. As the momentum starts, it will continue allowing you to buy it for intraday trading.

2. Surge in Trading Volume

This is one of the biggest reasons behind the momentum in the stock, yes when there is a huge volume or more than the usual average daily volume, it means the momentum is significant. The traders are aggressively active in buying and selling such stocks that increase the trading volume resulting in the stock price moving as per the buying or selling pressure.

Also Read: Importance of Volume in Technical Analysis: Use & Role in Trading

For intraday trading a stock with a significant volume is necessary and when there is significant volume it has the potential to move in the same direction. The surge in price could be upward or downward as per the trend in the stock. Depending on the up or down side movement you can choose to go long or short in the intraday trading.

3. Use the RSI Indicator

Using technical indicators like oscillators is one of the best ways to find the momentum stocks for intraday trading. RSI or Relative Strength Index is also a type of momentum indicator used to measure the strength of the momentum in the stock price.  A 14-day RSI will tell you the overbought and oversold zone of the stock price based on a certain period.

Also Read: How to Add & Use RSI Indicator in TradingView: RSI Settings & Strategy

When RSI moves above the 80, it means the trailing in the oversold zone and when trading below the 20, it indicates the oversold zone. You can consider the movement around these levels as the momentum in the stock price to consider for the day trading.

4. Check the MACD Crossover

Another useful tool or indicator to find the momentum stock is Moving Average Convergence Divergence (MACD) which is the difference between the 12 and 26-day exponential moving average price indicating the trend of the stock.

Also Read: How To Use Best Moving Averages for Intraday or Day Trading

MACD can be also used to find the short-term momentum in the stock price. When the shorter days MACD line crosses the longer days MACD line, it means there is momentum in the stock. You can use the upward or downward momentum as per the MACD crossover between these two lines to see momentum and enter into the intraday trade positions.

Also Read: How to Use Moving Averages in Trading & Convergence Divergence

5. Gap Opening from Previous Close

The gap up or gap down opening of the stock price is another useful indicator to see the strong momentum in the stock price. For the gap up or gap down opening you can use the candlestick chart patterns in which the latest candle open price is much higher than the previous day’s closing price. It shows there is upside momentum visible in the stock price.

On the downside, when the latest candle opens much below the previous day's closing price with a gap between the two candles, it shows momentum with the gap-down opening of the stock. An upside momentum creates the opportunity to go long in the stock, while downside momentum shows the selling opportunity for the traders.

6. Use the Average Directional Index

To find the momentum stocks for day trading you can also use the Average Directional Index (ADX) which measures the strength and weakness of the trend in the market or individual stock. The ADX value is considered as 14 days and its range is between 0 to 100.

When ADX goes below the 20 levels, it shows a weak signal, while ADX above the 50 it means the price has picked up momentum in one direction. Rather than indicating the bullish or bearish trend, ADX measures the strength of the current trend.

7. Breakout or Breakdown in Stock Price

When a stock price breaks the trading range, it means there is strong momentum in the stock price. There could be breaking news, events or corporate actions that bring momentum to the stock price. Such news encourages the traders to take trade positions giving enough strength to stock come out from the trading range or breaking a barrier with momentum.

A breakout momentum gives the opportunity to for long position in the stock, while a breakdown in the price means there is downside momentum in the stock that traders can sue for short-selling. This kind of momentum comes when there is significant trading volume in the trading giving enough strength to price come out from the trading range.

8. Candlestick Chart Patterns

Apart from these indicators and tools, the best way to find the momentum stocks for intraday trading is by identifying the candlestick chart patterns showing the momentum in price. You can recognize Bull Flag Chart Pattern formation in the candlestick, if such patterns are visible, it is an indication of the momentum in the stock price and suitable for intraday trading.

Also Read: How to Read, Analyse& Use Candlestick Chart Patterns for Trading

However, finding such patterns is not easy, you should have knowledge and experience to identify and analyse the various types of candlestick chart patterns. To easily draw read and analyse the candlestick chart patterns use the Trading View with various customised functions and technical indicators that will help you to confirm the trend and momentum in such stocks.

Also Read: Best Candlestick Patterns for Day Trading and Option Trading

Wrapping-up

Finding the momentum stocks for intradaybecomes easier if you consider a few things in mind like screening only the highly volatile stocks with significant volume and within the right time frame. Moreover, you can also use technical indicators like RSI, MACD and other momentum oscillators to identify the momentum stocks for the day trading.

Also Read: How to Select Best Stock for Option Trading: Points to Consider

You can add a list of your favourite stocks to your watch list and keep an eye on such stocks for trading. And when there is any significant momentum in the stock and giving a positive indication of further move, you can consider the same intraday trading. You can need a resourceful trading system like live feeds of market data and candlestick chart patterns to confirm the momentum and make the right decision or buying or selling the stock.

Also Read: How to Manage or Do Risk Management in Options Trading