What's the difference between selection and entry timing?

Selection = which stocks. Entry timing = when to buy. Good stock + no good setup = watch, don't buy.

線上有位

繁中 EN 日本語 한국어

Stock Selection 5-Step Guide: Finding the Right Stocks Systematically

Q: How many stocks should I hold at once?

Under $50K, limit to 3-5 stocks to monitor each position carefully.

Q: How do I quickly learn technical analysis?

Start with KD, moving averages, and volume — these three handle most scenarios.

Stock Screening Strategy · 9 min read

Why is Stock Selection So Difficult?

With 1,700+ listed stocks in Taiwan, retail investors lack the research teams of institutions. An efficient screening process — systematically narrowing down to a focused shortlist — is the retail trader's core competitive advantage.

The 5-Step Selection Process

Step 1: Confirm Market Direction

60-70% of individual stock movements are driven by the broader market. First confirm the index is above MA60 with bullish alignment. In bear markets, reduce position sizes regardless of individual stock signals.

Step 2: Technical Screening

Quickly narrow the universe:

MA20 > MA60 (uptrend confirmed)
KD low-zone golden cross (K < 30, K crosses above D)
Volume expansion (volume ratio ≥ 1.2×)
MACD histogram turning up (momentum strengthening)

💡 線上有位's daily 17:00 deep analysis automatically screens all Taiwan stocks using these criteria, categorizing results into three pattern types.

Step 3: Position Risk Check

From screened candidates, confirm MA5 bias is in a reasonable range (−3% ~ +5%). Eliminate stocks that have already surged significantly from their MAs.

Step 4: Fundamental & Catalyst Check

Quick verification:

EPS growing or stable for the past two quarters
Clear industry or order catalyst
Institutional buying activity in recent sessions

Step 5: Calculate R/R, Build Trade Plan

Define entry price, stop-loss (below support), and target (at resistance). Calculate R/R — skip the trade if below 1.5. Execute the plan without emotional deviation during trading hours.

Common Selection Mistakes

❌ Buying only on news/catalyst, ignoring price position
❌ Chasing limit-up stocks
❌ Holding too many stocks simultaneously
❌ Trading without a plan, relying on gut feel

FAQ

How many stocks should I hold at once?

For portfolios under $50K USD, limit to 3-5 stocks. Holding too many prevents careful monitoring of each position's technical development.

What's the difference between stock selection and entry timing?

Selection identifies which stocks are worth trading. Entry timing determines when to pull the trigger. A good stock without a good entry setup is worth watching, not buying.

How do I quickly learn technical analysis?

Start with KD indicator, moving averages, and volume — these three combined already handle most screening scenarios. 線上有位's blog provides complete beginner guides.

← Back to Blog