Thread by @YMehta_

This would be a learning thread as I am going to share the process or step that I use to find out stocks for short term trading (swing or positional).

This is done to find out very few good trades out of 5000+ listed stocks.

So do like and retweet for wider reach.

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Step 1: Multi time frame analysis.

Filter stocks that are bullish in higher time frames as well.
Like if I am seeing a breakout on daily chart then first see weekly/monthly chart and then go for daily chart.

This is basically Top Down Analysis in Technical Analysis.

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Common Strategy I use to find out strong stock in higher time frame are:

~ Stock is trading above 200 EMA
~ RSI above 50
~ Stock trading at near all time high levels

I use only one of this but more than one can be used.

This gives me watchlist of stocks.

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Step 2: Check basic fundamentals of the company.

~ Debt to equity is less
~ Promoters pledging is nill or very less
~ Company is profitable
~ Most importantly stock is not in news/media and is not a hot stock

Almost 70% of the company will be eliminated here.

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Step 3: Checking chart in the actual time frame of the setup

~ Checkout stocks that are just giving breakout, retesting/retracment or trading near support
~ Check Risk and Reward (by calculating target and defining stoploss)
~ Positioning sizing based on risk

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I prefer to look out for the setup that are giving less risk and high reward opportunity as it was seen in IEX.
Even if a trader has 50% winning probability then too trader is profitable in long run.
In general probability of winning in a game is 50%.

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