Stocks fluctuate in price on a daily basis. A high degree of risk is involved in stock trading. You must assess the risk associated with a stock. Past results are not indicative of future returns. You cannot buy a stock on someone's advice. To be a profitable trader than just a lucky one, you need some potential shares and monitor them. And analyse - do the potential profits justify it's consisting risk or not.
You have chosen potential shares that you are going to analyse. Now you need access to their current prices and earnings reports for the coming quarter. Let us discuss some strategies that will help you to pick stocks with high-profit probability and helps in online share trading. But before it, have some words about intraday trading.
If you are wondering what is intraday trading, then you must know it is also known as day trading. It involves the buying and selling of financial securities within the same trading session. There is no change in ownership of stocks even after placing an intraday trade. The intraday trader has to squared-off all positions before the market closing time of the stock market, otherwise, it will be squared off automatically at the closing price of the stock.
Intraday trading requires an advanced trading platform that is secured enough. Bajaj Financial Securities Limited Demat account offers one such advanced trading platform backed by a low-cost brokerage model.
How to choose high-profit stocks
1- Higher Correlation Stock
For intraday, choose a stock that has a higher correlation with major industries and indexes to increase your returns. So that whenever the index or the sector moves upward, the share price will also increase. During the high volatile market, stocks tend to become more correlated. However, it is a risky step also. If you are more concerned about risk than profits and a long term investor, better to choose assets with low correlation with each other.
2- Follow the market trend while choosing stocks
Go with the stock that moves with the market trend only. You must have a sense of know-how behind the trading trend analysis that involves a lot of data. Analysts take this data and try to predict the moving direction of the market. The long-lasting trend is greater in the weightage.
3- Choose the stock you are confident about after research
First of all select a sector to start analysing. Do not take it as one of the intraday tips. It is a mandatory task for day traders. Unfortunately, most traders avoid research and as a result, there are loses. Determine a sector as per your interest. Make a list of good stocks in this sector. Identify stocks that are liquid to earn profit through small fluctuations.
Some of the strategies that will help you determine the right time to pick the high-profit stocks:
1- Earnings Season
The time around the starting of every financial quarter is called the earning season because it is the time when companies release their earnings reports for the previous quarter. You must have seen the rise in the stock market after an announcement of quarter earnings by a company. It is one of the perfect strategies to pick a stock with high-profit probability.
2- Advantage of occurrence
Take advantage of a known occurrence. It is also known as the straddle strategy but for options trading. If you have an idea of an occurrence that has a high probability to move stocks by 10% to 15%, regardless of direction, take advantage of it. Though it is not an ideal strategy for each stock earnings well, still it helps. You will need to do your homework.
3- Look at analyst price
There are chances that you are only looking at the earnings estimates. Instead, pay attention to what analysts found for the stock worth and where they have set the highest price targets for it.
The best strategy involves you to understand the trends in the market and track various sectors with few stocks.