How to Select Stocks for Weekly Trading

2 strategies for stock selection (with example) →

Hey there 👋🏼

Today in less than 5 minutes:

1) What (most) pro traders don’t teach
2) Weekly Trading Stock Selection - Method #1
3) Weekly Trading Stock Selection - Method #2

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What (most) pro traders don’t teach

If you’re a Bollywood fanatic like us, you must remember Rancho from the movie ‘3 Idiots’. Among many lessons that the movie has left us with, there’s one scene that talks about why it was impossible for Sachin Tendulkar to be successful as a singer or Lata Mangeshkar to be a fast bowler because they were not ‘made for it’.

This logic applies to choosing stocks for trading as well…

Entering and exiting a trade at the right time is very crucial to solid gains, but you need to be good at selecting the right stocks in the first place.

Choosing the right stocks means fewer fake signals, fewer stop losses, and better accuracy.

So today, we’ll be talking about 2 stock selection methods that will help you filter stocks for weekly trading. Want to learn how to look for intraday stocks? Reply to this email saying “INTRADAY”, and we’ll release a guide soon!

Let’s dive into the 2 stock selection methods now ↓

Method 1: Riding Momentum

Profitable trading requires one to get into or out of a stock that is showing rising or falling momentum. If we can identify stocks showing such momentum, half our job is done.

One such way is to look at stocks that have recently made new highs or lows. The logic is:
- Fresh positive or negative market sentiment often triggers an 'overreaction,' likely persisting for several trading sessions
- The establishment of a new 52-week high or low typically breaches a crucial resistance or support level, aligning with technical analysis fundamentals.

Steps to shortlist high/low momentum stocks using NSE

1) Get a list of securities trading at their 52-week high or low. You can get this on NSE or TradingView’s screener.

2) TradingView enables the use of more filters to ensure liquidity - like a minimum market capitalization, volume, or sticking to stocks that form part of a particular index. Here’s what it can look like:

3) You can now add these stocks to your watchlist and scan through them for buy/signals based on candlesticks, indicators, or a combination of both. By the way, you can learn several profitable trading strategies from India’s top instructors here.

We scanned for 52-week high stocks from the NSE500 universe having unusually high volume and sorted them to see the ones having the highest traded value. As of 5th Feb 2024, we shortlisted the following:

- NHPC
- TATAMOTORS
- SJVN
- SAIL
- IOC

Fun fact: SJVN was the ‘Stock in Spotlight’ in last week’s newsletter issue.

This was just one momentum trading strategy. One of our instructors, Mr. Khagesh Agarwal, who is a full-time trader with 13+ years of experience, has taught 7 momentum strategies in his Momentum Trading Course. You can use ‘STOCK10‘ for a 10% discount at checkout & get the course for just 359.

Ask us anything!

Have any doubts about filtering stocks? Or want to learn something else? Hit us up!

Method 2: Sector Bets

Another set of trending stocks can be found in the heavyweights of top-performing sectoral indices.

Typically, the top 2-3 stocks of an index lead the majority of an index’s performance, which forms the logic of this method.

Here are the top 3 NIFTY sectoral indices that gained the most last week with their top 3 constituents as of 5th Feb 2024:

NIFTY PSU BANK

SBIN
BANKBARODA
PNB

NIFTY OIL & GAS

RELIANCE
ONGC
IOC

NIFTY PHARMA

SUNPHARMA
DRREDDY
CIPLA

Learn to select the right stocks for trading & trade them profitably in Ms. Jyoti Budhia’s comprehensive Technical Analysis Course. Use ‘STOCK10‘ for a 10% discount & get the course for just 359.

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