How to pick stocks for short term trading in India

How to Picks Stocks for Investment in India

First of all before going to start trading in stock market, ask these questions to yourself

1. Your level of  your experience ?

2. How much capital you have available, and

3. What style of trading you are going to done.

 

Then, ask again these questions with yourself.

1. Whether you are trying to find the best stock for day trading, or

2. You prefer other styles like swing trading, position or investing,

3. Your criteria for how to pick stocks should be written down as part of a trading plan.

4. Is your trading plan dynamic ?

As your market conditions keeps on changing time to time. So, your plans should evolve as you continue to learn and uncover your strengths and weaknesses.

 

Moral of this self assessment is to consider few things before you pick stocks :

1. Understand your level of risk and decide what is adorable.

2. No Matter your personality.

3. Start by picking one stock at a time and then do self analysis of the results for past 5 years.

4. Use trading charts like Candlesticks, MACD, Stochastic, ADX to understand movement of stocks and the overall market scenario.

5. Finally, stick with your plan.

 

Choose Stocks Based on Your Personality.

What kind of personality you have plays an important role in the types of stock you trade.

For Example, If you are 18-21 year old, grew up on video games like PUBG or somewhat, have a fast and young mind and need to have a lot of action to stay focused, then short-term, aggressive trading pattern may be right for you.

On the other hand, if you are 60+ yrs old, like to think hundreds of time before making a decision, and just want to make little extra spending money each month, then maybe swing trading low volatility stocks might be more appropriate.

So, whatever the decision you prepare, make sure that you have chosen best strategy. So use tools like Beta, First information source, Social sites source, financial sites like MoneyControl, NSEindia, BSEindia etc.

Keep Room for Risk Management in Mind while selecting Stocks

So, guys this is another important elements of stock market that should be manage properly. Determine what kinds of degree of risk you can bear and afford. Focus on creating a strategy that could control risk and prevent capital from complete erase. The most important objective should be to safeguard your invested capital. Being a part of game is most important rather than quite game.

Try to minimize risk as there are lots of stocks, each with different levels of volatility, price, and volume attributes.

One of the worst mistakes new traders can makes is to “just jump in trading without using stop loss”. Think like starting or growing a business, a plan is essential to success. So, before buying stock, understand that you are not going to buy only stock of that particular company, as you are going to own the company. You will be the stakeholder in that company, so choose a business wisely rather than choosing a stock.

 

Work in quality instead of in quantity.

Keep it simple as much as you can initially. Whatever stock you pick up decide time frame in a advance like short term or long term. Try to trade in 2-3 stocks at a time. Keep watch, study and learn these stocks. Each and every stock has its own pattern, you need to understand these “pattern or trend” to anticipate the right moves. Study the charts at different time frames – intraday, daily and weekly. Over the time, add stocks in your watchlist accordingly.

Jump in stock that align with your trading plan and have grip on its behavior pattern.

Do not change your strategy during the live market session – only when market is closed. Stick with your plan. Changing a plan in the middle of live session will allow you to mentally “cheat” on your plan. This leads to loose in your confidence of discipline.

 

Finally, You Must have a well defined checklist of your does or don’t, like this

I will only trade in 3 stocks – 1 at a time until comfortable.

Price between ₹10 - ₹ 100

Medium degree of volatility.

No change in  plan during live session.

Will invest only maximum a fixed amount in each stock like ₹ 10,000.

I will study my selected 3 stocks each night at multiple time frames.

Will never jump at high value price.

Will hold my stocks until it achieves it time frame selected like short term or long term, in any situation.

 

Thanks & Regards

EduMcStark

 

Disclaimer: This content is intended to provide educational information only. This information should not be construed as individual or customized legal, financial or investment recommendation or advice. As each individual’s situation is unique and different. So, a qualified professional financial advisor should be approached before taking any decision after reading this article.