How to Select Stocks for Swing Trading?

  • Swing trading is a way of trading which helps to capitalise on short-term price movements.

  • The trade positions remain open for a few days to one week.

  • Traders use technical analysis for making decisions.

  • Stock screeners are used to filter the stocks for trading. 

  • Technical range breakout in stocks is good for swing trading

How to Select Stocks for Swing Trading?  

Swing trading is a very famous way of trading in which traders and investors try to take advantage of short-term trading opportunities to make profits. Swing trading positions usually remain open for a few days to one week.

Mostly, traders use technical analysis to identify scrip for trading. To grab the opportunities, the traders must act fast to increase their chances of making a profit in the short term.
  
Swing traders aim to capitalise on buying and selling stocks' recent lows and highs within a larger overall trend. They are subjected to the unpredictability of overnight risks that may result in big price movements. They can check their positions periodically and take action when critical points are reached. 

Swing Trading, Swing Trading Positions, Short Term Trading, short-term price movements, scrip for trading

Top 3 Ways to Select Stocks for Swing Trading 

Technical Box Breakout 

In this process, traders try to filter out many stocks with the help of a stock screener. Stocks consolidating in a narrow or wide range get filtered out, and a few of them are added to the watchlist. Later, traders try to identify the sector with positive momentum. The most buzzing sector gets the preference when shortlisting stocks for swing trading. After shortlisting three to five stocks, traders wait for the confirmation of range breakout using bullish candlesticks. If the breakout looks sustainable, traders take the entry and ride the upward momentum for a few days and weeks. However, if the trade doesn’t work, traders exit the trade at a certain point according to the risk management.

 

52-Week High Breakout 

In this approach, traders filter out the shares hitting a new 52-week high or nearing important swing highs. Technical traders generally believe that if a stock is nearing a 52-week high, then it may remain bullish for a few more days. To grab this opportunity, traders bet on the most highly positive momentum stocks that show strong buying volume. 

 

EMA Mean Reversal 

In the mean reversal approach, traders look to identify the beaten-down stocks which are trading near to the 20 DAY, 50 DAY, 200 DAY EMA. The trader's mindset is to play the mean reversal trades for short-term gains. The stocks which are talking support near the EMA and forming a bullish reversal pattern will get shortlisted for the execution of the trade. 


Conclusion

Swing trading can be a good approach to participating in the market for generating short-term gains. Traders need to identify stocks based on certain parameters and follow risk management techniques to be profitable in the long run.



Also Read: 

Online share trading app

Download Bigul Trading App!

Supercharge your trading on the go with the Bigul Trading App! Download now for instant access to cutting-edge features, real-time insights, and unparalleled convenience.

Subscribe now to get
latest market updates

Close

Let's Open Free Demat Account