How I select stock for trading?
I used to spend 30-45 minutes daily on screening stocks to trade next day a few years ago. Until. One day I stumbled upon a wonderful website which provides free charts and technical data. Now my screening time for stock selection has reduced to only 5 minutes maximum.
Icharts has got a good EOD screener which can be used for selecting stocks for investing / trading. This screener shows various metrics like % gain from 1 week to one year, SMA / EMA values and other technical parameters.
Stock selection of strong stocks can be a good idea as it is known that outperformers keep outperforming until they don’t. The % gain in the above screener can be used as your first filter. You can download the screener and then see the % gain in various time frames. Stocks which have gained more than 50% to 75% in one year can be a good filter. Below is a screenshot where the stocks are arranged according to their 1 year % gain:
Below they are arranged according to their 3 month % gain:
The idea here is to track a stock on 1 year – 3 month – 1 month – 1-week frames. The highest time frame takes precedence.
Your second filter is liquidity. You need a stock selection with good volume. A daily volume of 50,000 to 100,000 shares is a good yardstick. Your next two filters are the 50 day and the 200-day moving averages. You need stocks which are trading above these averages.
Below is a flowchart for this process:
Edit – I picked up the following stocks according to the above flowchart. You can come up with your own list like this.
Below is a daily chart of Tata Global.
You can also you Screener Lite on Icharts If you have your fixed criteria and want to find stocks as per those.
Do let your friends know about this wonderful stock screener by sharing this post.