One question that haunts almost every beginner investor when they open their stock market app is: Which stocks are more suited for long-term investment, and which are more suited for intraday? This is also a very probable reason behind more and more people not opting to invest in stocks, just because they cannot seem to understand if their choice of stock is ideal for their financial goals or not. If you also find yourself wondering which is the best stock to buy for long term investment or for intraday, then this guide is made exactly for you!

A beginner who is on the lookout to invest in stocks for long-term investment must play by the following rules:

1. Understand The Business Of The Company:

Before looking at the numbers blindly, look for answers to questions such as:

• What does the company sell?

• Will that product/service be needed 10-20 years from now?

• Is the company’s business easy to understand?

2. Check Revenue And Profit Growth:

Once you understand the business of the company, you can now look at the past numbers of the same in order to figure out if it is the best stock for long term investment. Look at the last five to ten years of the company’s financials. Keep an eye out for:

• Consistent growth in revenue

• Consistent growth in profits (Profit growth should either be stable or increasing)

3. Check Return Ratios:

Return ratios usually show how well the company uses its money. Always focus on ROE (Return on Equity) and ROCE (Return on Capital Employed). The higher and consistent ROE and ROCE are, the stronger the company’s management.

4. Competitive Advantage:

When you understand the nature of business, you also understand how easily it can be copied by competitors. Thoroughly look into whether the company has a strong branding, cost advantage, and monopoly or leadership in the market.

Intraday trading is completely different from long-term investing. Just search for ‘best stocks for intraday today’ on the internet, and you will have multiple options to choose from. But, even amongst so many options, beginners might still face a lot of confusion. Hence, here are some pointers that you must keep in mind before deciding on an intraday stock:

1. High Liquidity:

You should only engage in intraday trading with stocks that have a very high volume, have a tight bid-ask spread, and move smoothly without any sudden spikes.  Never trade when the volume is low, even when the charts are looking very good.

2. Volatility:

Intraday stocks must have daily movement. In order to confirm this, you must look for the ATR and prefer stocks that move 1-3% every day.

3. Consider Best Timings:

Many might not know, but the best time limit for intraday trading is often between 9:20 – 10:30 AM (high momentum) and 2:15 – 3:15 PM (trend continuation).

4. Check The Index:

Always follow the trend that the index is following. Check the movement of the Nifty 50 and the Bank Nifty. If the index is strong, then opt for long trades, and if the index is weak, then opt for shorter trades.

Once you keep the above pointers in mind while analysing stocks before purchasing, you will be able to make a much better decision. Whether you want to look for the best stocks to buy tomorrow or today, keep these attributes in mind before making the purchase, and you will never end up regretting the same.