How to Find Stocks for Swing Trading: A Step-by-Step Guide

Swing trading involves buying and selling stocks over a short period, aiming to profit from their quick price moves. The key to success in swing trading is choosing the right stocks. 

In this blog, we’ll explore simple and effective ways to find stocks for swing trading that are well-suited for this kind of trading, helping you make smarter investment decisions. We’ll walk you through the essential tools and strategies needed to pick the best stocks for swing trading. We’ll cover everything from understanding market liquidity and volume to using technical analysis and stock screeners effectively. Additionally, we’ll discuss how to analyse price momentum, identify key chart patterns, and set up your trading watchlist. By the end of this guide, you’ll have a solid foundation to start finding promising stocks for swing trading.

Criteria for Selecting Swing Trading Stocks

In swing trading, selecting the right stocks is paramount because not every stock is suitable for the quick-paced nature of this trading style. Here’s what swing traders should consider to consistently identify the best candidates:

1. Liquidity: Liquidity means how quickly and easily a stock can be bought or sold in the market without impacting its price too much. For swing trading, where timing and the ability to react swiftly are key, choosing stocks with high liquidity is essential. These stocks have large volumes of shares being traded, allowing for smoother entries and exits.

2. Volatility: Swing trading profits hinge on price movements. Therefore, it’s important that a stock shows enough volatility to provide opportunities for profit. Ideally, stocks should have moderate to high volatility, which means they move enough to create substantial trading opportunities within a few days or weeks, but not so much that their price movements become unpredictable.

3. Trend Patterns: Recognizable trend patterns make stocks more predictable and easier to trade. Swing traders often favour stocks that show a consistent uptrend or downtrend, punctuated by regular swings. Various technical analysis tools can be employed to spot these patterns, making it easier to time trades effectively.

4. Trading Volume: The amount of a stock traded on a daily basis is also a crucial indicator. High trading volume usually means there is significant interest in the stock, which can be a bullish or bearish signal. For swing traders, high volume can serve as a confirmation tool; for instance, an uptrend accompanied by increasing volume can validate a potential buy signal.

5. Fundamental Health of that Stock: Though swing trading is primarily focused on technical analysis, understanding a company’s fundamental health is important to avoid potential pitfalls. Companies with stable earnings, manageable debt, and positive growth prospects are generally more reliable. This fundamental soundness makes stocks less risky for swing trading.

6. Relative Strength Index (RSI): RSI helps measure the momentum and speed of price changes, indicating whether a stock might be overbought or oversold. For swing traders, an RSI near 70 might suggest a stock is overbought and could reverse from an uptrend, while an RSI near 30 might indicate an oversold condition ripe for a rebound.

Taking the time to carefully evaluate these criteria helps swing traders pick stocks that are likely to do well over the next few days to weeks. This careful selection is key to swing trading success, as it minimises risks and boosts your chances of good returns

Understanding Market Liquidity and Volume

In swing trading, two key factors that greatly affect your ability to trade are market liquidity and volume. Let’s look at why they are important and how you can assess them effectively.

Liquidity in Swing Trading

Liquidity means how easily you can buy or sell a stock without affecting its price too much. For swing traders, who aim to profit from short-term price movements, high liquidity is critical. It allows you to enter and exit trades quickly and at prices close to the market rates. When a stock is highly liquid, it also means you’re less likely to pay a big difference between the buying and selling prices, and there’s a lower risk of getting stuck in a position because of low trading activity.

Volume and Why It Matters

Volume shows the total number of shares traded during a certain period and is a direct indicator of a stock’s liquidity. High volume means many shares are being traded, which usually leads to better price stability and easier trade execution:

Assessing Volume: You can check the volume by looking at the average number of shares traded each day over periods like the past 10 or 30 days. This is often shown as a bar chart under the stock’s price chart on most trading platforms.

Why Volume Matters: Volume confirms if there’s enough interest in the stock at its current price, which can indicate the strength of a price movement. For example, if a stock price is going up and the volume is high, it’s more likely that the price will keep rising. This high volume suggests strong buyer interest. On the other hand, if the stock price is rising but the volume is low, the price may not sustain its climb and could drop quickly.

Swing traders should look for stocks that are not only highly liquid but also show consistent high volume. This makes it easier to enter and exit trades and ensures price movements are reliable and not just flukes. Monitoring how volume changes can also help you understand market trends better, helping you make smarter trading decisions.

Utilising Stock Screeners and Watchlists

Stock screeners are indispensable tools for traders, allowing them to filter stocks based on specific, user-defined metrics such as volume, EMA crossovers, and other critical indicators. These tools scan the entire stock market to identify stocks that match precise trading criteria related to volume, price levels, industry sectors, and various technical indicators. 

For swing traders, the ability to quickly pinpoint stocks that meet exact trading criteria is crucial for spotting potential swing trading opportunities efficiently. 

For example, if you’re interested in trading Apple stock when it takes support on the 200 EMA, stock screeners can be incredibly useful. You can set up a filter or alert in the screener to notify you via email or a direct notification when Apple’s stock price approaches or touches the 200 EMA. This setup ensures you’re informed in real-time and can make timely trading decisions based on accurate, up-to-date information. 

Such alerts and automated notifications help swing traders maintain an edge by allowing them to act quickly on potential trading opportunities without having to manually monitor stock movements all day. By leveraging these features, you can focus more on refining your strategies and less on the mechanics of finding trades, which enhances your efficiency and effectiveness in the market. 

How Stock Screeners Find Swing Trading Stocks

To find stocks suitable for swing trading, you need to set specific filters in your stock screener. Here’s how you can configure these filters:

  • Price Volatility: Since swing trading profits off of volatility, setting a filter for stocks that show a certain percentage of price movement within a specific timeframe is crucial. For instance, filtering for stocks that have moved more than 3% per week can help identify potential candidates. 
  • Trading Volume: Volume is an important indicator in swing trading as it confirms the strength of a price trend. A filter for high volume compared to the average volume over the last 10 to 20 days can help find stocks that are gaining traction.
  • Technical Indicators: Many swing traders use technical indicators to find stocks. Setting filters for stocks experiencing a breakout or stocks that are trading above their moving averages (such as the 50-day or 200-day moving average) can be useful. Additionally, incorporating filters for Relative Strength Index (RSI) values can help find stocks that are not overbought or oversold. 
  • Support and Resistance Levels: Filters can also be set to identify stocks that are approaching or bouncing off known support or resistance levels. Stocks nearing these levels may indicate a potential swing as they rebound or retreat from these price points.

Using Watchlists to Shortlist Stocks

Once you’ve pinpointed potential stocks with a stock screener, adding them to a watchlist helps you keep an eye on them over time. A watchlist is essentially a personalised list of stocks that seem promising according to your criteria but need more observation before you make any trading moves. Here’s how you can make the most out of your watchlist:

  • Daily Monitoring: It’s important to regularly check your watchlist to see how the stocks are doing. Update it based on the latest market activities. Pay attention to daily closing prices and any major changes that could affect the stocks. This helps you stay on top of any developments and make timely decisions.
  • Alerts Setup: Most trading platforms offer a feature to set up alerts for specific events like when a stock’s price reaches a particular point, when there are notable changes in volume, or if the stock hits new highs or lows. These alerts can help you react quickly to changes and take advantage of swing trading opportunities as they arise.
  • Performance Tracking: Watch how the stocks on your list perform over time. This can give you valuable feedback on how well your screening criteria are working. If you notice that the stocks you’ve chosen consistently meet or exceed your expectations, it means your strategy is effective. But if they don’t, it might be time to revisit and adjust your criteria.

By effectively using a watchlist, you can not only stay organised but also enhance your ability to make informed and timely trading decisions. This tool is essential for any trader who wants to keep a close eye on their potential investments and optimise their trading strategy over time.

Technical Analysis in Swing Trading 

Swing trading relies heavily on spotting the right moments to enter and exit trades, which is where technical analysis comes in. It gives you a toolkit for reading market trends and movements, helping you decide when to buy and sell. Let’s break down some of the key tools that can help you get the timing right:

Moving Averages

Moving averages smooth out price data to create a single flowing line, making it easier to identify the direction of the trend. Swing traders often use:

  • Simple Moving Average (SMA): This is your straightforward average that smooths out price data, helping you see the trend beyond the day-to-day fluctuations. It’s great for spotting potential support or resistance areas.
  • Exponential Moving Average (EMA): The EMA is a bit sharper than the SMA. It gives more weight to recent prices, which means it reacts faster to price changes. Using EMAs can help you catch trends early. For example, if a short-term EMA crosses above a long-term EMA, it might be time to consider buying.

Both types are used to determine support and resistance levels and can indicate a potential reversal in the market. For instance, a common strategy is to look for when a short-term moving average crosses above a long-term moving average as a signal to buy, and vice versa for a sell signal.

Relative Strength Index (RSI)

RSI is a momentum oscillator that measures the speed and change of price movements on a scale of 0 to 100. Typically:

  • An RSI above 70 indicates that a stock may be overbought and could be heading for a downturn.
  • An RSI below 30 suggests a stock may be oversold and could be poised for an upward trajectory.

Swing traders use RSI to gauge the strength of a stock’s recent price performance and to predict possible reversal points.

Moving Average Convergence Divergence (MACD)

The Moving Average Convergence Divergence (MACD) helps you see where the trend might be heading by showing the relationship between two moving averages. It includes two lines: the MACD line and the signal line. A crossover of these two can be a powerful buy or sell signal. For instance, if the MACD line crosses above the signal line, it might be a good time to buy.

Chart Patterns

Chart patterns are essential for understanding market behaviour and predicting future movements. They can show whether a stock is likely to continue its current trend or reverse direction. Here’s how some of the common patterns work:

Triangles: These patterns signal what might come after a price consolidation. They come in three forms:

  • Ascending Triangles: These are generally seen as bullish and are formed by a flat resistance line and an ascending support line. They suggest that buyers are more aggressive than sellers as the price continues to make higher lows.
  • Descending Triangles: Typically bearish, these are characterised by a flat support line and a descending resistance line, indicating that sellers are more aggressive as the price makes lower highs.
  • Symmetrical Triangles: These occur when the price consolidates within converging support and resistance lines, leading to a breakout that could move in either direction depending on market sentiment and other influencing factors.

Channels: Channels help traders identify the potential upper and lower boundaries of price movements and are categorised as:

  • Upward Channels (Bullish): Formed by two parallel upward-sloping lines, these suggest a steady climb in prices with both highs and lows increasing.
  • Downward Channels (Bearish): Created by two parallel downward-sloping lines, indicating that both the highs and lows are decreasing.
  • Sideways Channels (Range-bound): These channels occur when the price moves within a horizontal range, indicating no significant overall trend in the short term.

Understanding these patterns can provide valuable insights into potential future price movements. 

For instance, a breakout from a symmetrical triangle could signal the continuation of the prior trend or a new trend beginning, depending on the direction of the breakout and accompanying volume.

Support and Resistance Levels

Support and resistance levels are fundamental concepts in technical analysis:

  • Support Level: This is the price level at which a stock repeatedly stops falling, suggesting that demand (buying interest) exceeds supply.
  • Resistance Level: This is the price level at which a stock stops rising, indicating that supply (selling pressure) exceeds demand.

Identifying these levels can help swing traders make better predictions about where prices are likely to change direction.

Looking at the chart for Microsoft Corp (MSFT), you can see how the stock price finds support at about $400 and hits resistance around $420. These levels are crucial for traders because they show where the stock price tends to stop falling or climbing.

When setting up your swing trading strategy, these price levels can be really useful. You could look for signs that the stock might rise from the $400 level, like an increase in trading volume or a positive signal from a momentum indicator like RSI. This could be a good time to think about buying. On the other hand, if the stock approaches the $420 mark and starts showing signs of slowing down, like less trading volume or a negative signal from RSI, it might be time to sell or short-sell.

Using support and resistance like this helps you make smarter decisions based on where the stock price has struggled or paused before. Just make sure to combine this with a look at the overall market and stick to your trading rules to improve your chances of success.

By getting good at using these technical analysis tools, swing traders can really sharpen their skills in spotting good trade opportunities. These tools are great not just for figuring out where the market might go, but also for setting clear markers for when to take profits or cut losses. This makes managing your trades simpler and helps keep your trading strategy on track.

Using Market Sentiment and News in Swing Trading 

Swing trading relies a lot on understanding the market’s mood and staying updated with key news. These factors have a strong impact on stock prices, and getting a handle on them can significantly boost your trading success.

How to Use Market Sentiment to Your Advantage

Think of market sentiment as the overall mood or vibe of the stock market or a particular stock. It shows if investors are feeling good (bullish) or wary (bearish) about the future. Here’s how you can use this to your benefit:

  • Sentiment Indicators: Simple tools like the Bull/Bear Ratio, Fear & Greed Index, or the Volatility Index (VIX) can clue you in on investor feelings. For example, a high VIX generally means people are scared, and the market might drop soon. This could be your cue to either sell or wait before buying.
  • Checking Out Social Media and News: Places like Twitter and financial news sites can show you what people are talking about. Lots of positive chatter or good news stories usually mean investors are feeling confident. But a flood of bad news might mean trouble, and prices could fall.
  • Going Against the Grain: Sometimes, it pays to do the opposite of everyone else. If everyone’s scared and selling (prices are low), it might be a good time to buy. If everyone’s overly excited and buying (prices are high), prices might soon drop.

How News and Economic Events Impact Stock Prices

News and big economic events can quickly change stock prices. Here’s why keeping an eye on the news is key:

  • Economic Reports: Things like job reports or new economic figures can make the whole market or specific stocks jump up or down. For instance, if reports show more jobs are being created, stocks might rise because people think the economy is doing well.
  • Company Earnings: When companies share their earnings, if they’ve made more money than expected, their stock price usually jumps. But if they haven’t done as well as hoped, their stock price can drop sharply.
  • Big World Events: Things like new trade deals or political unrest can also make the market move. These kinds of news need careful watching because they can open up trading opportunities or present risks.

Making News Part of Your Trading Strategy

  • Stay Updated: Use apps or services that give you news as it happens. This way, you can react quickly to anything that might affect stock prices.
  • Keep a Calendar: Economic calendars tell you when big reports or earnings announcements are coming. These are often times when prices move the most.
  • After News Drops: Take a moment to see how stocks are reacting to the news. This can tell you a lot about whether the news might keep affecting prices.

Keeping a close eye on market sentiment and the latest news can really help you decide the best times to buy or sell. It’s all about grabbing the right opportunities and dodging potential pitfalls. This approach will make your swing trading smoother and could lead to better results.

Practical Strategies for Identifying Swing Trading Opportunities

Swing trading is all about catching short-term price movements in the stock market. To do this effectively, traders use a mix of strategies that help spot the best chances for making a profit. Let’s break down some of these strategies into simpler terms, including following trends, spotting reversals, and using Fibonacci levels to decide when to buy and sell.

Trend Following Strategies

This approach focuses on riding the momentum of existing trends, whether they’re going up or down.

  • Moving Averages: This tool helps you see the trend by averaging out price data over a certain period. For example, if a stock’s price stays above its 50-day moving average, it’s likely in an uptrend.
  • MACD (Moving Average Convergence Divergence): This indicator shows whether the short-term momentum of a stock is up or down compared to its long-term momentum, helping confirm the strength of a trend.
  • ADX (Average Directional Index): This index measures how strong a trend is. A reading above 25 usually means the trend is strong enough to keep following.

Reversal Trading Techniques

This strategy is about spotting when a trend is about to change direction, letting you get in right at the start of a new trend.

  • RSI (Relative Strength Index): This tool helps find moments when a stock might have moved too far, too fast, and might be ready to swing back. For instance, an RSI above 70 might mean a stock is overbought and could start dropping soon.
  • Candlestick Patterns: These patterns on a stock chart can show potential turning points. Dojis, hammers, and engulfing candles are key patterns that hint at upcoming reversals, especially when they happen at known support or resistance levels.
  • Head and Shoulders Patterns: This pattern looks like a head between two shoulders and often signals a reversal is coming. It shows up when a trend is ending and a new opposite trend might start.

Using Fibonacci Retracement Levels for Entry and Exit Points

Fibonacci retracement levels help identify where a stock price might pause or reverse after a significant move.

  • Identifying Levels: After a big price move, like if a stock goes from $10 to $20, it often pulls back a bit before continuing the trend. You can use Fibonacci levels to guess where the pullback might stop.
  • Setting Entry and Exit Points: If the stock from our example pulls back to $15 (a 50% retracement) and seems to stabilise, that might be a good place to buy if other signs agree.
  • Combining with Other Indicators: For better accuracy, use Fibonacci levels with other indicators like RSI or MACD to confirm when a reversal is likely.

In the chart, you can see how Ethereum (ETH) has found support at the golden zone. This is a key area on the chart where traders often see a lot of buying activity, helping to prevent the price from falling further. For Ethereum, reaching this zone and not breaking below it suggests that there might be a strong interest in buying at these levels, which could indicate a potential upward move soon.

These strategies, when used together, can give you a well-rounded view of the market and 

improve your chances of successful swing trading.They help clarify when to enter and exit trades, aiming to maximize profits and minimize risks. Remember, the key to swing trading is not just knowing what to do but also when to do it.

Risk Management in Swing Trading 

Good risk management is key to successful swing trading. It helps keep potential losses small and locks in profits before the market changes. Here’s how you can manage risk effectively:

Setting Stop-Loss and Take-Profit Orders

Stop-loss and take-profit orders are tools that automatically close your trades at set price levels to protect your investments and secure your gains.

  • Stop-Loss Orders: These limit your losses. For example, if you buy a stock at $50, you might set a stop-loss order at $45. If the stock price drops to $45, the order triggers, and the stock is sold to stop further loss. This is crucial in swing trading, where prices can change fast.
  • Take-Profit Orders: These ensure you capture profits at your target price. If you buy a stock at $50 and think it will rise, you might set a take-profit order at $60. When the stock hits $60, the order triggers, and the stock is sold automatically, locking in your profit.

Determining Risk-to-Reward Ratios

The risk-to-reward ratio helps you weigh the potential profit of a trade against the risk. This ratio is important to determine if a trade is worth taking.

Example of Risk-to-Reward Ratio: Imagine you’re looking at a stock priced at $100. You think it could go up to $120, but there’s a risk it could fall to $85. You set a stop-loss at $85 and a take-profit at $120. Your risk is $15 ($100 – $85), and your potential reward is $20 ($120 – $100). The risk-to-reward ratio here is 1.33 ($20/$15). Ideally, many traders aim for a ratio of 1:2, meaning they want to gain at least two dollars for every dollar they risk.

Integrating Risk Management into Your Swing Trading Strategy

To integrate risk management into your trading, you need to apply these tools consistently and review them regularly. For example, if a stock becomes more volatile, you might need to adjust your stop-loss and take-profit levels.

Good risk management doesn’t just protect your money; it also keeps you mentally in the game by reducing stress and helping you make decisions based on logic, not emotion. This structured approach to balancing potential losses and gains is what sets experienced traders apart from beginners.

Common Mistakes to Avoid When Selecting Stocks for Swing Trading

Choosing the right stocks is critical for swing trading success, yet traders often fall into 

common traps. Being aware of these pitfalls can help you make better decisions and refine your trading strategy.

1. Chasing Performance

A frequent error is pursuing stocks that have already seen significant price increases, often driven by the fear of missing out (FOMO). This can result in buying at the peak, which carries a high risk of losses if the stock corrects or reverses.

Example: Suppose a stock jumps 30% in a short period due to a popular news item, without any real improvement in the company’s fundamentals. This stock may be due for a price correction. Instead of blindly following the uptrend, it’s smarter to assess if the rise is backed by solid reasons.

2. Ignoring Market Conditions

Stocks are influenced by the overall market environment. Ignoring this can lead to poor performance, even if the stock itself has strong fundamentals.

Example: In a generally bearish market, a fundamentally strong stock might still underperform if the entire market is trending downwards. It’s important to align your stock picks with broader market trends.

3. Overlooking Company Fundamentals

Focusing solely on technical analysis without considering the company’s fundamentals is risky. Fundamental analysis helps ensure the company is stable and not heading for financial trouble.

Example: You might find a stock with a great technical setup, but if the company is about to announce its quarterly earnings, any negative surprises could send the stock tumbling, affecting your investment.

4. Neglecting to Set a Proper Risk-Reward Ratio

It’s essential to evaluate the potential downside of a stock against the expected upside. A good risk-reward ratio ensures that potential gains justify the risks involved.

Example: Investing in a stock hoping for a 5% gain while risking a 10% loss is a strategy with a poor risk-reward ratio. Such imbalances can lead to significant losses over time.

5. Overcomplicating the Strategy

Using too many indicators or complicated strategies can lead to confusion and indecision, known as analysis paralysis.

Example: While multiple technical indicators can provide extensive data, they might also give conflicting signals. Simplifying your approach to use a few key indicators per trade can help you make clearer decisions.

6. Succumbing to Emotional Trading

Emotional trading can disrupt rational decision-making, leading to premature selling or holding onto losing stocks for too long.

Example: After a big loss, there’s a temptation to make back the lost money quickly, often prompting riskier trades. This can be avoided by sticking to a well-defined trading plan that includes predefined stop-loss and take-profit points.

By understanding and avoiding these common mistakes, you can improve your swing trading outcomes. Additionally, if you’re interested in learning more about common errors traders make, check out our blog post on the “10 Most Common Mistakes Traders Make.” It’s packed with insights that can help you avoid typical pitfalls and enhance your trading strategy.


In this blog, we’ve covered the essentials of finding the right stocks for swing trading. We’ve looked at how important it is to use tools like stock screeners, understand the significance of liquidity and volume, and interpret chart patterns. We’ve also emphasised the value of indicators like moving averages and the RSI to help identify the best entry and exit points.

Swing trading is a continuous learning process. Every session on the market offers new insights and opportunities to refine your approach. The more you engage with the market, practice your strategies, and adapt to new information, the better you’ll become at making informed trading decisions.

Remember, success in trading doesn’t happen overnight. It takes patience, persistence, and a lot of practice. So keep at it, stay committed to learning, and gradually, you’ll see your trading skills improve. Here’s to making wise trading choices and growing your proficiency in swing trading! Happy trading!

FAQ Section

What makes a stock good for swing trading?

A good stock for swing trading typically has high liquidity, which allows for easier entry and exit without impacting the price too much. It should also exhibit consistent volatility that provides enough price movement to make a profit within a short to medium time frame. Furthermore, a stock that follows predictable patterns and responds well to technical analysis is ideal for swing trading.

How often should I review my swing trading stock picks?

It’s advisable to review your swing trading stock picks regularly, ideally weekly or bi-weekly, to ensure they still align with your trading strategy and market conditions. Regular review helps you adapt to any significant market movements or changes in stock performance.

What technical setups are best for swing trading?

Effective technical setups for swing trading often include trend-following indicators like moving averages and MACD, as well as momentum indicators such as the Relative Strength Index (RSI) and Stochastics. Chart patterns like head and shoulders, flags, and triangles are also useful for identifying potential entry and exit points.

How can I minimise risks in swing trading?

To minimise risks in swing trading, establish strict risk management protocols, including 

setting stop-loss orders to limit potential losses and take-profit orders to secure gains. Utilise a favourable risk-to-reward ratio, ideally no less than 1:2, ensuring potential rewards justify the risks. Diversifying your trades across different sectors or industries can also reduce risk.

What are the best tools for swing trading analysis?

The best tools for swing trading analysis include technical analysis software that offers real-time data, charting capabilities, and a range of indicators and drawing tools. Platforms like TradingView, MetaTrader, and ThinkorSwim provide comprehensive features that help traders analyse market trends and make informed decisions.

How to pick a stock for swing trading?

Picking a stock for swing trading involves several steps:

  • Use stock screeners to filter stocks based on specific criteria such as volume, volatility, and price.
  • Analyse the stocks using technical indicators to assess trends, momentum, and potential reversal points.
  • Evaluate the stock’s recent news and its sector performance to ensure no external factors could adversely affect its price.
  • Finally, choose stocks that align with your risk tolerance and trading strategy, ensuring there are clear technical signals and systems that support potential profitable trades. 

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