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How to Find Stocks to Swing Trade

10 Aug 2023


Swing trade is a trading strategy that takes advantage of price hikes of a stock during a specific period ranging from a day to several months. The question is, how do you get started with a swing trade?

The simple and most obvious answer is to pick stocks that you think will escalate in price. But that’s hard to do given the volatility of the stock market. Read on for some tips that seasoned traders use.

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What is the best way to find stocks for a swing trade?

Every trader follows their own strategy for trading. These strategies are easy to master if you follow the basic guiding principles for swing trading. Here’s how most experienced traders identify stocks for swing trading.

Rule #1 Sense the Market Sentiment

Following market mood indicators like the put/call ratio and VIX. Watch out for news and events that are pertinent and could affect the stock you are contemplating. Then review the historical prices of that stock within the timeframe you want to trade to identify trends. For instance, if you plan to hold for a month, look at the stock's price for the last six months.

Rule #2 Liquid Stocks are a Safe Bet

Liquid stocks are those stocks that experience little price fluctuations. It is easy to buy and sell them on most stock exchanges. You can measure the liquidity of the stock by tracking the daily traded volume. As a general rule, the higher the daily trade volume of a stock, the more its liquidity and the higher the chance of swinging a profit.

Rule #3 Check the Performance

Another way to identify a stock for the swing trade is to check the performance of the stock against other similar stocks. Select the top performers within a specific industry for swing trade. High-performing stocks are usually a safe bet.

Rule #4 Identify the Chart Patterns

Experienced traders identify trends to select stock. Some traders play safe, selecting stocks that clearly indicate an upward trend. Others look for technical indicators like head-and-shoulders and double tops. These patterns or trends indicate opportunities for swing trades. If the economic landscape remains relatively unchanged, the trend is likely to continue.

Summing Up

Seasoned swing traders plan entry when a stock hits the lowest point on the trading range. They exit at the highest point, making a neat profit. Following a definite methodology helps identify high-potential stocks. It’s better to play safe if you are new to trading. Gradually, you can develop your own unique identification and trading strategy.


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