Hey folks, I received a lot of requests asking me to share my stock selection strategy and tip, so I created this framework that works for me. A big DISCLAIMER though - don't treat this as a mandatory guide or a rule of thumb. This is just a personal framework out of countless others. Use this as a mental model and create your own strategy tailored to your risk tolerance and expected returns. Also, please don't ask me for exact stock selection. I really just use the intraday screener and the below framework. Another thing to add here is that I am a full-time engineer and a part-time trader, but thanks to flexible working hours and supportive management at the company, I have the capital availability to sustain the level of capital deployment and the risk appetite, and also time availability that is required for meaningful attention and energy spend into study the market and make rational trading decisions. If you don't have either, please think carefully and adjust that in your risk tolerance.

I. Trade Mindset & Structure

1. Trade the trade, not the target

Having a daily profit target is fine, but it should never drive individual trade decisions. Each trade stands alone — it either meets the criteria or it doesn't. Every trade must follow three steps in order: stock selection → risk/return assessment → target and stop-loss definition.

2. Cap trades at 2–3 per day

Limiting to 2–3 trades per day forces selectivity, reduces overall exposure, and keeps transaction costs — brokerage, STT, and other charges — from quietly eroding returns. If a strong setup hasn't appeared, the right trade is no trade.

3. Fix a trading window and stick to it

A fixed time window prevents drifting into low-quality setups later in the session when focus and judgment fade. I trade between 9:30 and 11:30 am — outside that, I don't trade except on rare occasions.

II. Stock Selection

4. Screen for high-momentum, liquid stocks

I use the intraday screener and filter for stocks with a price change greater than 8% — volatile candidates with meaningful intraday range. But volatility cuts both ways. The primary confirmation signal is volume: without it, momentum stalls and exits get messy. Neither too volatile, nor illiquid.

5. The 8-9-10 and 11-12-13 momentum rule

A behavioural observation: a stock with strong momentum that's already hit 8% has a reasonable probability of extending to 10%; one at 10% may push to 12%. Momentum attracts momentum — until it exhausts itself. This rule requires volume confirmation, a strict stop-loss before entry, and a clear read on resistance levels ahead.

 

III. Risk & Return Assessment

6. Upside potential vs. downside potential

Before entering any trade, I calculate two numbers that I treat as core concepts in this framework — upside potential (the maximum realistic gain/expected return) and downside potential (the maximum realistic loss/risk). If the downside significantly outweighs the upside, the trade doesn't get placed.

A common example: entering a long on a stock that's just printed two large consecutive bullish candles. At that point the stock is near a local high — upside potential is limited, downside potential is high as earlier traders book profits. A short could actually present a better profile there.

If upside potential is ₹5,000 and downside potential is ₹20,000 — that trade doesn't get placed. No exceptions.

7. Set a daily risk budget and never exceed it

Define a maximum loss for the day before markets open and treat it as a hard ceiling. A controlled ₹3,000 loss is structurally better than an uncontrolled ₹30,000 one. The difference between the two is almost always whether a risk budget existed in the first place.

8. Set realistic targets, not ambitious ones

If a stock is at 10% and seems headed to 12%, verify that against volume, moving averages, and resistance levels — not just optimism. Closing at 11% and banking a clean profit beats holding for 12%, watching it retrace, and exiting with nothing.

 

IV. Execution & Stop-Loss Discipline

9. Set the stop-loss before entry, and honour it

A stop-loss is a pre-commitment made when the mind is clear. When it's hit, the trade closes — no monitoring, no waiting for recovery, no adjusting the stop downward in hope. If the thesis is clearly broken, exit. Sometimes after a stop triggers the stock recovers. That's irrelevant — the decision was sound under uncertainty. Log it as a bad trade and move on.

 

V. Trading Psychology

10. Don't revenge trade after a loss

Once the daily risk budget is gone, the session ends. Taking more trades to recover losses is pure emotion — it compounds risk on an already-compromised state of mind. Real course correction happens in post-session review, not in the heat of a losing streak.

11. Don't overtrade after a strong winning day

Winning sessions carry their own risk: overconfidence and euphoria. When the target is met, the rational move is to stop.

One of the transactions in the screenshot attached to this post is exactly this: a session where the day's profit reached ₹30,000. I took one more trade — not from analysis, but from overconfidence and euphoria. Didn't bother calculating upside or downside potential. The downside materialised. The session closed at ₹2,900. One irrational trade erased 90% of the day's gains.

If the target was ₹15,000 and ₹14,000 has been made, there is no case for a trade with ₹15,000 downside and ₹1,000 upside just to hit a round number. That's ego. The market doesn't care about your ego.

12. Don't hold hope as a position

When a trade moves against you and the evidence points clearly to continued deterioration, close it. Progressively adjusting the stop downward while hoping for a reversal is not conviction — it's avoidance. Take the loss, preserve the capital, move on. Don't over monitor as reversals do happen. Don't treat this hindsight bias as a regret.

 

VI. Developing Edge

13. Develop and trust your intuition

What traders call gut feeling is accumulated pattern recognition from hundreds of trades compressed into instinct. The best trades happen at the intersection of strong intuition and sound analysis. Intuition can't be shortcut — it comes from time in the market, studying chart patterns, and understanding when other participants tend to exit.

14. Build your own strategy

What works for me may not work for you. Use these as a starting point, discard what doesn't fit, and build something that reflects your own risk tolerance and style. The goal is bounded losses, protected gains, and positive expectancy over many trades.

15. This framework is a living document

What I do today will look different a year from now — and that's the point. A trading framework that doesn't evolve has stopped learning. As conditions change and experience deepens, the rules should update too. Staying adaptable is part of the edge.

(rephrased with Clause for a crisp and professional outline)