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

Intraday trading is like a one-day game, either you will win or lose, or you need to be very careful while entering into the day trading positions. You screen the stock and perform some analysis like applying the technical indicators or using various other techniques.

Spending time on such activities will cause you to lose your opportunity to grab the intraday stock during early trading hours, as you need to give stock sometimes to stock move and give profit booking opportunity. Choosing the intraday stock without performing the technical analysis would be completely a blindfold game with equal risk of winning and losing.

Also Read: Is Technical Analysis Useful or Useless or Enough for Trading

To avoid spending the time on the same day or saying you want to trade intraday, you have to filter or screen your stock a day before and keep it on a watch list. It will provide you with enough opportunity and time to buy or sell the stock as soon as the market opens and take advantage of movement in the market or stock for the rest of the day.

In respect of the same, we brought here the points or factors that you can consider while selecting the stock one day before. Filtering the stocks for intraday one day before will save you time on trading day and also provide you enough time to enter and exit from your trade positions. So, let’s find out how you can find out the stocks for intraday one day before.

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

10 Tips to Select Intraday Stocks for Tomorrow:

1. Momentum Stocks

Stocks with significant moments have further opportunities to give returns if executed for trade on time. An idle stock or there is no momentum would be not suitable for intraday trading. Hence, if you notice a sudden movement in a particular stock you can keep it on a watch list for intraday trading and if the momentum continues you can bet on it.

Also Read: How to Identify Momentum Stocks for Intraday Trading: 8 Tips

2. Volatility Level

The increase in the implied volatility in the stock also can be considered for intraday trading. A highly volatile stock can be a risk to trade but at the same also gives the opportunity to see the quick momentum during the trading hours, as it can give returns.

Also Read: How to Trade in High Volatile Market: Best Trading Strategies

After filtering the highly volatile stocks you just need to identify the trend in the stock and based on the same you can make a buying or selling decision. And owing to increased volatility the stock will definitely move in a direction in a day with the possibility to book profits.

3. Trending Stocks

The stocks trending in the market or you can say, the stock price moving as per the market trend is also suitable for intraday trading. Apart from that, because of positive or negative news like corporate actions, financial performance or other company-related actions the stock also becomes in the trend grabbing the eyes of the traders to trade.

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

4. Trending Sectors

Similarly, you can find the best stocks from the trend sectors that are news because of various factors like regulatory actions, economic data, favourable environment for commencing the business or financial performance of the entire sector etc. And you can filter the best stocks from such trending sectors, and if the trend continues the next day, you can consider intraday trading.

Also Read: How to Identify Trend in Stock Market: 10 Points to Find Trend

5. Trading Volume

When there are high trading activities in a particular stock, traders and investors are activities buying and selling such stocks, resulting in the volume of trade also becoming high. The trading activities might continue for the next few days which gives a good trading opportunity for the traders.

You can also check the average daily volume of such stocks and compare the same to know if the volume is much higher, you can consider it for day trading. To check the volume levels more precisely and strategically you can use various volume indicators.

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

6. Breakout or Breakdown

When a stock comes out from a trading range and breaks the trajectory it either breaks out or breaks down. A trading range creates the support and resistance levels for a stock to keep moving within that range, but buyers or sellers dominate, it breaks or breakdown giving the trading opportunity for the traders like long or short-selling.

Also Read: What is Breakout & Breakdown How to Identify Breakout in Stocks

The breakout on the upper side, gives the option to buy the stock, while the breakdown on the lower side provides the short-selling prospect. You can find out such stocks that break breakout or break down recently on the last trading sessions, and bet for the intraday trading as per the trend and other technical factors making it worth buying.

7. Analyse the Chart Patterns

Using the candlestick chart patterns of the latest and previous trading sessions also gives the idea to buy or sell for the intraday day. You can use or recognize the formation of candlestick chart patterns like Hammer, Engulfing, Hanging Man, Shooting Stars and Morning or Evening Stars. These chart patterns can give you indication of the next day’s move in the stock.

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