How to Find Stocks to Swing Trade?

So, you have learnt about swing trading, but don’t know where to begin. Learning how to find stock swing trading is the first step towards building a successful swing trading strategy.  Traders involved in swing trading are careful to pick stocks with high potential to perform in the future, allowing them to capture a much larger piece of the market. But how do they do that? Let’s try to discover the secrets of swing trading.

Swing trading allows you to benefit from market movement, say in days, or weeks. Like day trading, it creates profit opportunities for traders as the market move in their favour. Learning to pick the right stocks is the foundation stone on which your trading strategy will base. And, just like in day trading, you would need to pick stocks with high liquidity and potential for strong price and volume shift. Keeping that in mind, let’s figure out how to find stocks to swing trade.

The Thumb Rules Of Picking Stocks For Swing Trading

There are some general rules that every swing trader will swear by. Of course, you can develop and follow a strategy of your own, but having one or two of these strategies in your arsenal is a good start.

Market direction

While trading, traders follow a rule which suggests that if a stock is rising in value under the current market condition, it will continue to rise if market parameters remain unchanged.

There are several ways to find the best-performing stocks like browsing through company news, chasing the top stocks in the exchange, or following stock indices.

Direction bias

Swing traders look for potential buy or sell signals to spot opportunities. They combine fundamental data with technical analysis to identify sectors and stocks, which are outperforming indexes for the better part of the trading period. They sift through stocks to park their expectations with stocks that reflect volatility with volume. This process is called screening stocks, which involves the following.

Liquidity: Liquidity is a key measure for swing traders. The daily traded volume of a stock is an indication of demand in the market. Liquidity is a measure of how frequently a stock is trading in the exchange. A stock with high daily trading volume is considered liquid enough for swing trading. Highly traded stocks exhibit lower risk exposure.

Performance: It is a comparative analysis of stocks against the performance of other stocks from the same sector. The logic is to find the strongest stocks from the sector that have outperformed sector indices.

Repetitive trading pattern: Swing traders look for stocks that show a repetitive pattern in the market. They consider a repetitive trend more reliable. Experience traders will wait for the stock to break the trading range to plan entry, and while on it, they may make several small profit trading towards the trend.

Clear uptrend: Some swing traders will prefer stocks that are less jumpy. They avoid stocks that are susceptible to violent pullback and frenzied selling. Instead, they would stick to stocks that have small price movements without gaps in the price line.

Correlation and volatility: When a stock that moves outside market trend may look attractive, most swing traders will steer clear of those. The logic is to avoid erratic stocks for those that move with major market indices. Digging into the historical performance of the stock will help in understanding why a stock is behaving the way it is.

Another crucial component is volatility. Volatility is a measurement of how much the stock price will move; if the target and stops are reasonable or whether the risk parameters are acceptable for the period the trader wants to stay in the trade.


Having answered the question of how to swing trade stocks, let’s also understand that swing trading involves more risk than day trading since the holding period is extended. So, you need a robust strategy to spot both trading opportunities and potential red flags.

While picking up stocks for swing trading, traders need to keep in mind that the strategies explained in this article aren’t the only answers. Every trader must find a strategy that suits his personality.

Whether you choose to swing trade or not, developing a fair understanding of how to find stocks to swing trade will go a long way in stock trading. You can apply this knowledge in building winning trading strategies and understand stock price movement better.