Top down approach to Stock Selection

• The very first step before you pick stock from market is obviously to look at the market indices. As the index is supposed to be a cross section of the market as a whole

• The key parameters you need focus during your technical market analysis are 1) price action and candlestick patterns , 2) trend ,3) momentum,4) Volume, 5) volatility and the 6) support and crucial support and resistance levels.

• There are numerous indicators available for each of these parameters mentioned above that need our attention where you need  to experiment and figure out on your own which of them suits your trading style. Indicators are lagging and therefore price comes first and foremost but same time indicators as long as you are not overdoing it and not distracting you it gives you what it is supposed to and alternatively ignoring some of these parameters could fail to frame a proper market view.

• Another key thing to make note is to analyse the chart for multiple timeframes that helps frame a view for short term/medium term  and long term.Taking a view only on single timeframe could fail to give you the true picture. The general rule is that as long as higher  timeframes are bullish or bearish the lower timeframes would follow same.

• Analysing each of the different industry sectors similarly on the charts would be step two as markets are cyclical in nature and money keeps moving across various sectors  during to various fundamental reasons and it is not necessary that all sectors perform all the time. Identifying the  strongest two or three sectors is the next step.

• Once you know which few sectors are performing the next task is to analyse and find out the strongest stock in the sector.

• As long as you are sticking to only futures segment listed stocks that is more likely to have better liquidity , there are hardy less than 250 stocks in all to look at , and if you are trying to

• Figure out which is strong in the two or three sectors performing there could be only fewer number stocks for you to  analyse on.

• Make note that you analyse all the chart  all step using the same 6 parameters we initially talked about.

• Chart reading is pure practice  and it cannot be mastered merely by reading about them  or analysis them for few days and understanding them.The more charts you see each day the more your eyed are trained to notice all the patterns easily and eventually you could reach a leave where chart would start shouting  to you loud when the entire steps mentioned can be completed in matters of an hour or so maximum.

• Also limit your stocks to just 5 stocks to help focus better using above steps every day before the trading and your homework is  mostly done.

• The last thing would be to frame your trade plan for each of the final stocks  where you reconfirm the entry /exit price, targets, stop loss, position size ,risk reward etc and you are ready with them added to your watchlist ready to execute.