Stock picking criteria

On 2stocksdaily,I pick stocks based on certain criteria.Only if the stock satisfies all the criteria given below,they are selected

1.Breaking strong resistance

Stocks which are selected based on break of a strong resistance area.If the stock is near a strong resistance area, it is kept in the watchlist.

2.Stocks which are trading above 200DMA

3.Trading above 50DMA

4.Having a very high Reward:Risk ratio

Usually only stocks with RR ration>3 are selected.In these trades, risk is low but benefit is high, provided you adhere to a strict stop loss price.

5.Stocks which are fundamentally good

Some times you can find some stocks breaking strong resistance area, even though their earnings and sales growth is dismal.This maybe operator play, resulting in losses.I try to avoid those stocks,even if it is very tempting to pick those stocks.

6.Stocks trading with high volume.

Volume is an indicator of interest in the stock.It means that something new and exciting has come up. Unless price action is verified by volume surge, it can result in false breakouts.The selected stocks are those which are trading with volumes of at least 150% above their previous 5 day volume

7.Nifty/NSE stocks

The stocks selected in 2stocksdaily are NSE stocks, because these stocks have more liquidity.

8.Strictly following an UP trendline

Only those stocks which are sticking to the upward trend line are selected.

9.Based on the End of day chart of the previous day

The stocks are selected on the basis of the EOD chart of the previous day, as most resistance breakouts matter, only if they hold for at least one day.

10.Only 2 stocks per day

Even though many stocks are screened, the selected stocks are only 2.This is done so that we can concentrate on only these two stocks for the day.

11.These picks are not Intraday picks

Eventhough I give 2 stocks daily, these stocks are not for intraday trading.These are positional calls, whose profit potential is tremendous. These stocks have to be held on for a few days or even for some weeks depending on the movement of the stocks after the stock is picked, the only criteria to be followed is a strict stop loss has to be followed at all times,Trailing stop loss can help in retaining the profits, without risking more capital in the trade.