I have used this strategy for few months and it seems to have at least 70-80% strike rate. As we know markets these days are extremely sensitive, no matter how fast you think of a reason to buy/sell a stock, you would be too late. So how does an individual investor make money risk-free? Use these tips (make sure your stock matches these qualities) :
- Should be a profit making company (Consistent profit in minimum 1 year)
- Should have excellent book value.
- Should be trading at low volumes. Considering all other active stocks , this stock should have low volume, not extremely low(around 200,000 by end of day)
- This is the most important point to be noted, THERE SHOULD BE NO NEWS regarding this stock anywhere. By saying this, I mean there should be no activeness, because once there's momentum, you're too late to put money in.
- Stock should be at 5 day low.
If these qualities are matched, there is a high chance next day the stock's price will increase, 2-5%. If there are no external factors like bad market,political news affecting the market etc.
Consider this for intra day or for 2-3 days holding period. Not more than that.