I don’t trade the way most people picture trading. There’s no staring at five screens, no chasing every red and green candle, no reacting to breaking news. What I do is more like investing with a trader’s discipline: I find a company that’s fundamentally sound, I wait for the chart to tell me the timing is right, and then I take a position I’m willing to hold for weeks or months.
This is the first article in a series where I’m walking through my entire position trading process, step by step, exactly the way I actually do it. And Step 1 is the one most people skip or overthink: starting with the right stock.
Why Position Trading Is Really an Investing Decision
Before considering entries, stop-losses, or breakouts, I need to identify a company that is worth holding. A mediocre business can survive a short-term trade if the timing is right. I might be holding this stock for months, so the company represented by the chart must truly deserve the time that a position trade requires.
This is the mindset shift that separates position trading from typical intraday or swing trading: I’m not betting on a candle pattern; I’m backing a business and then using price action to decide when to back it.
Step 1: The Preliminary AI-Powered Stock Inquiry
That’s where most retail traders burn weeks, reading annual reports, cross-checking peer ratios, and following news on dozens of companies just to get a short list of five or six worth looking at. I used to process the data manually as well. Now I let AI handle the work, and it takes minutes, not days.
I go straight to an AI tool and ask it to compile a shortlist of NSE stocks using a very specific set of filters. This isn’t a vague “give me good stocks” prompt; it’s built to reflect exactly what I look for before I’ll even glance at a price chart.
The Exact Prompt I Use
“Please compile a list of 10 NSE stocks that are suitable for investment based on the following criteria:
- The companies must have strong fundamentals.
- There should be no risk of the shares being classified in the ‘BE’ (Trade-to-Trade) category.
- The stock must have experienced a price correction for at least 2–3 months in the recent past, characterized by consistently making ‘lower lows’ and leading to the stock being currently undervalued.
- Divergence in oscillators like MACD, RSI, or similar indicators should be seen on the daily chart during the correction phase.
- The stock price must have been moving higher over the last 5 to 7 trading days and must be trading at a higher high than it was before.”
That’s the whole first move. One prompt, and I receive a working shortlist instead of a blank spreadsheet.
Breaking Down Why Each Filter Matters
I didn’t choose these five conditions randomly; each one serves a specific purpose in filtering out unsuitable candidates before I commit any significant time or resources.
- Strong fundamentals: This criterion serves as the non-negotiable filter. I’m not going to look at a company with bad earnings, too much debt, or bad management, regardless of what the chart looks like.
- No ‘BE’ (trade-to-trade) category: Stocks in this category settle differently and carry added regulatory friction. I stay away from them entirely for position trades.
- A recent correction with lower lows: I want the stock to have gone through real weakness, not just a flat consolidation. Undervaluation usually comes from an actual pullback, not from a stock quietly drifting sideways.
- Oscillator divergence in the correction: If price is declining but momentum indicators such as MACD or RSI are quietly gaining, it is often an early indication that the selling pressure is running out even though the price has not yet turned.
- Higher highs forming now: This is the confirmation piece. I don’t want a stock that’s merely “cheap”; I want one that’s already showing the first signs of a genuine reversal in price behavior.
How AI Changed This Part of My Process
A few years ago, filtering for all five of these conditions at once meant manually screening hundreds of stocks, checking balance sheets one at a time, and eyeballing dozens of charts for divergence patterns. It was slow, and honestly, it was the main reason position trading felt inaccessible unless you had serious market experience.
AI blew up that timeline. I can tell you in plain text the exact combination of fundamental strength and technical setup I am looking for and get back a working list that I can start verifying right away. I still don’t bypass due diligence. I don’t start at zero any more.
Stocks I Avoid Before I Go Any Further
What I’m looking for is just as important as what gets a candidate crossed off my list immediately:
- Companies with bad fundamentals or inconsistent earnings, no matter how appealing the chart looks.
- Anything sitting in the ‘BE‘ (Trade-to-Trade) category.
- Stocks that are cheap for a reason; a slow, structural decline rather than a genuine correction.
- Charts are still making fresh lower lows, with no sign yet of a higher high.
- Illiquid names: I want to build a position over several breakouts. I cannot fill a position cleanly in illiquid stocks, which hinders my ability to establish a position effectively across multiple breakouts.
If a stock trips any of these, it doesn’t matter how compelling the story around it sounds. It’s off the list before Step 2 even begins.
Final Thought
This preliminary AI-generated shortlist is only the starting point. In the next article in this series I will walk through Step 2 and how I take this list and check to see if the broader industry is confirming the same strength before a single stock earns a place on my watchlist.
If you’re building out your position-trading process, start here: have AI do the initial pass on fundamentals and technical setup, then overlay your judgment on everything that follows.
Find out here: Why I Never Buy a Stock Without Checking Its Industry First
Disclaimer: This column reflects the author’s personal trading experience and analysis. It is not financial advice. Please consult a registered advisor before making any investment decisions.
Satyajit Baidya
An option writer who came to the markets through curiosity and stayed through conviction. He studies price action through the lens of Elliott Wave theory and draws his trading philosophy from Jesse Livermore—the belief that discipline, timing, and patience matter more than predictions do. A student of history by training, he sees the market as just another chapter in a very long story: the details change, the patterns don’t.
