How To Find Good Stocks To Swing Trade

market conditions

Every trader has his/her own way of trading, and you cannot say that one necessarily is better than the other. However, the methods laid out in the article outline methods that some swing traders are very likely to use. The best stocks for swing trading might be a lot different in the future, as market conditions are always changing.

moving average

Some complex strategies can be too overwhelming and confusing. Using a simple swing strategy can be all it takes to succeed in this business. Albert Einstein, the greatest scientist of all time once said that “everything should be made as simple as possible, but not simpler.” You can also read how to make money trading.

Short sell ZOOM, profiting from the expected correction when the market catches on. Swing traders tend to look for profit opportunities, not companies they believe in. Is a process of buying and selling stocks for short durations, usually a few days to a couple of weeks. Now, let’s move forward to the most important part of this article, the trading rules of the swing trading strategy that works.

Utilising tools such as our pattern recognition scanner, you can spot trend reversals and other price signals to help inform your swing trading efforts. Another very important parameter to consider is how volatile the price of the stock is. In other words, what’s the size each swing in price and how long does a swing take to complete? Keep in mind that the strategies and examples laid out in this article are not the one and only answer.

swing trading strategies

Swing trading is still a short-term trading strategy but stocks are held overnight to avoid the PDT rules. Swing traders hold stocks for 24 hours to 2 days hoping to profit off high volume swings like short squeezes or earnings beats . This swing trading strategy requires that you identify a stock that’s displaying a strong trend and is trading within a channel. If you have plotted a channel around a bearish trend on a stock chart, you would consider opening a sell position when the price bounces down off the top line of the channel. Both swing trading and day trading are active investing styles. They often buy and sell the same stock within minutes or hours.

Swing Trading and CAN SLIM

Examine your account and manage any profits made with caution. Consider investing some of your returns into other markets or instruments, such as options or futures. With solid revenue growth and a proven track record of success, Caterpillar is a great choice for those looking to participate in swing trading. Its wide range of products and services make it a safe bet, and its strong financials ensure that investors will be able to enjoy consistent returns. If a specific trade is behaving as you expected, consider a trailing stop loss. This method can keep you moving toward profit while keeping the loss percentage the same as the general market moves in your favor.

That said, swing traders are limited in what they can trade and how much risk they can take on. Plus, they’re up against professional investors with deep pockets. Market makers act as a sort of clearinghouse, holding inventories of stocks to facilitate transactions and increase liquidity. They are compensated by a small holding cost per share, which is the difference between a stock’s bid and ask price. Swing traders prefer trading in stocks that are held by at least several market makers, and the more, the better. Market makers leave clues for you to follow and also direct large fund flows that can affect a stock’s momentum, resulting in trends that you can identify and trade on.


Here is the current Strong Trading Stocks List on Finviz. So you can always see updated charts, I have uploaded the ticker symbols to a list on Finviz. You can save the list, sort it, and filter it further if you wish.

Basically, I’m looking to enter on a lower high within an established long to in trend and ride it back up for a few days. Sometimes these trades will turn into runaway trends, lasting weeks to months, but the majority are quick 2-3 day-long trades. I prefer my orders to account for much less than 1% of the stock’s daily trading volume. So if you’re taking a $10,000 position, you should look for stocks that are trading at least $1,000,000 in average daily dollar volume. In comparison to day trading, swing trading definitely has its pros and cons. At the very least, having the tools to make the occasional swing trade allows you to pull the trigger when the odds are in your favor.

Quick Tips for Managing Your Swing Trading Stock Picks After Buying

And since the best swing trading stocks are often thinly-traded small caps with only a handful of shares available, make sure your broker has a wide assortment of stocks to trade. You should also make sure that the platform is so easy to use that you can make snap decisions without waiting for the broker to catch up. All of these strategies can be applied to your future trades to help you identify swing trading opportunities in the markets you’re most interested in. We’ve summarised five swing trade strategies below that you can use to identify trading opportunities and manage your trades from start to finish. Apply these swing trading techniques to the stocks you’re most interested in to look for possible trade entry points. You can also use tools such as CMC Markets’ pattern recognition scanner to help you identify stocks that are showing potential technical trading signals.

  • To offset this, day traders are often offered the “opportunity” to leverage their portfolios with more margin, four times the buying power rather than double.
  • You can also open a demo account if you would like to practice the above swing trading strategies in a risk-free environment.
  • Maybe it’s an undervalued stock with great upside potential.
  • If we want to go swing trade on the long-side, we want to find stocks that have been advancing and vice versa.
  • A swing trading plan will work in all markets starting from stocks, commodities, Forex currencies, and much more.

Personally I chose only one company and studied it a lot so I could comprehend better its daily fluctuations rather than choosing multiple stocks. Get Started Learn how you can make more money with IBD’s investing tools, top-performing stock lists, and educational content. Get actionable tips and updates on swing trading every week in IBD’s Swing Trading column. Smaller gains can only produce growth in your portfolio if losses are kept small. Rather than the normal 7% to 8% stop loss, take losses quicker at a maximum of 3% to 4%.

Why Learning How to Find Stocks for Swing Trading is So Important

You should place the ones that don’t yet have a buy setup in the “watch list for buy” and regularly monitor each of them until a valid buy setup forms. When looking for interesting stocks to swing trade, the first thing to look for is the commitment of the company to getting the public aware of what they are doing. That is, looking for companies that always release reliable information about their operations through press releases and timely reports. What makes this stock especially good to start with is that you can use a moving average line, such as the50-day moving average, as the bottom trend line. Similarly, you can draw a trendline across the highs that the stock price hits. Swing and day trading is for experienced traders who understand and accept the risks involved.

You can also read about budgeting in Forex for better trading. Yes, swing trading can be profitable if you have a deep understanding of the market and develop a solid strategy. Because it’s risky, it has potential for great gains — but also great losses.

periods of time

The higher the number the stronger the recent performance relative to S&P 500. I look through the whole list for stocks that are setting up based on my strategies. Unless you have an account balance of $25,000, you’ll be limited to 3-day trades in a rolling 5-day period.

The Mindful Trader approach is based on data and statistics. Sign on for support from Mindful Trader for just a flat $47 per month. One parameter that checks the volatility of a stock is “Beta”. The beta value of a stock is a measure of the stock’s volatility compared to that of the market index.

Standard deviation is a commonly used volatility metric to set expectations for how far a stock’s price might move. This set of swing trading rules were first adopted and developed by the author of “The Master Swing Trader,” Alan Farley. The reason why we take profit here is quite easy to understand.

You’ll learn how swing trading differs from day trading and position trading, and how swing trading could help you reach your specific goals rather than the other two. You’ll also read about how to choose a broker, trade both stocks and options, and identify trends on charts. Not sure that day trading is the best strategy unless you are an avid aglo/bot expert. I tried this and was totally unsuccessful…lots of “learning opportunities”!.

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Any and all information discussed is for educational and informational purposes only and should not be considered tax, legal or investment advice. A referral to a stock or commodity is not an indication to buy or sell that stock or commodity. By the way, when I refer to relative strength, I’m not referring to the Relative Strength Index , I’m referring to the strength of a security’s price movement relative to another.

We’ve put together some great lists of stock picks that are constantly being refreshed and updated to reflect the current market conditions. You’re not worried about the long-term potential of stock – your goal is to capitalize on those short-term swings in a stock’s price. You may find your greatest opportunities in a stock that is slowly headed towards the bottom – as you can get in and out on the little pumps on the way down, earning modest profits each time. When there are higher low points along with stable high points, this suggests to traders that it is undergoing a period of consolidation.

Now, creating screeners is just the first step – but getting this step right is incredibly important. If you miss the mark, you’ll bring in low-quality candidates. With that said, though, you’ll want to start evaluating what a “good opportunity” looks like for you. Maybe it’s an undervalued stock with great upside potential.

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