Swing Trading Strategies and Stock Selection Techniques

Are you looking to maximize your returns with short-term investment strategies? Swing trading is an excellent choice for those who want to capitalize on price movements within a short period. In this article, we will explore the details of swing trading, discuss popular screeners, and share a comprehensive approach to selecting stocks for swing trading.

Popular Screeners for Swing Trading

When it comes to swing trading, there are numerous screeners available to assist traders in identifying potential stocks with high potential. Two popular options are:

Chartinc

Chartinc is a free, customizable tool that offers several filters and a basic chart that is not fully interactive. However, it provides users with the flexibility to set up notifications for any chart breakouts. This makes it a valuable tool for traders who prefer a no-frills, straightforward approach.

TradingView

TradingView is a more robust platform that includes interactive charts and a multitude of tools. It offers all the functionalities of Chartinc, but with the added advantage of a multi-screen setup on a single screen. While TradingView offers more features, it comes with a price tag. However, its advanced tools can significantly enhance your trading experience.

My Swing Trading Process

My approach to swing trading involves a detailed and methodical process. Here's a step-by-step guide on how I select stocks:

Initial Screening

Visit the filter section, mark for stocks trading at or near 52-week and 3-, 1-month, weekly, daily, and all-time highs. Set a range for market capitalization. Place the last traded price (LTP) and sort it from high to low. Within the sorted results, select stocks with higher LTP and star-mark some names based on my years of experience. Adjust the LTP according to your budget, keeping in mind that higher market-priced stocks may move slower, while lower-priced stocks may move faster due to computer-based mutual fund software.

Due Diligence

Choose stocks with high trading volumes and start reading the business model, including its target market and revenue streams. Review the company's balance sheet and profit and loss (PnL) statements for at least the past two years, ensuring all figures are positive despite the impact of the coronavirus. Keep these stocks in your watchlist and unmark other stocks. Mark the week's lows and highs on the chart when there is significant trading volume. Convert the chart to a daily view and understand price action by analyzing resistance and support levels.

Final Selection and Execution

Select 4 stocks whose prices are near the marked lines. Follow these stocks for a few days to understand the trading pattern and potential breakouts. Trade after a breakout, having a predefined stop-loss. Trade only 2 stocks at a time, as they are at all-time highs with no resistance. Manage risk effectively, expecting high volume during favorable news. Set up a predefined stop-loss, and if you lose 5 units, exit the trade. If you gain 5 units, hold until it shows a 5-unit downside.

Summary and Conclusion

Swing trading requires a combination of technical analysis, understanding of stock fundamentals, and risk management. By using the right tools and following a structured process, you can increase your chances of success in the short-term market. Remember, LTP refers to the last traded price, a crucial factor in swing trading.

Do you have any questions or need further guidance on swing trading strategies? Feel free to keep the conversation going!

Key Takeaways:

Utilize screeners like Chartinc and TradingView for stock selection. Conduct due diligence, including analyzing market capitalization, trading volumes, and company performance. Manage risk with predefined stop-losses and trade 2 stocks at a time.

Thank you for exploring swing trading with us!