If you are into trading or at least interested to get involved in it, then perhaps you already know what swing trading is but there’s also a slight chance that you don’t know about it at all and that is where we are going to help you with.

Starting from what is swing trading, its strategies, and how to select stocks for swing trading, we are going to give you cover for all the probable questions that are going on in your mind. But to know it all, you need to stay with us and read it till the end.

What is Swing Trading?

To define the meaning of swing trading in simple words, it is a kind of exchange where it takes longer than a single day or several days to cause movement in the price that can eventually lead to profit. This fundamental exchange is basically the fine line between trend and day exchanging.

Traders involved in swing exchanging take the help of different technical analyses to find out the opportunities in an attempt to get the maximum short to medium-term gains. Here, traders hold a stock anywhere between a few days to several weeks.

Swing Trading Strategies

The main strategy behind traders getting involved in swing trading is to cut losses faster and target profits of 5 to 10% in short-term trends. Though the gains are smaller, as it is done consistently, it actually brings a good amount of annual return over time.

The percentage of the profits made through this fundamental exchange is not something very lucrative but this is where the time game takes place. On average, traders hold a stock for a period starting from 5 days to 12 days, making a way for many small wins that comes out to be almost a 5 to 10% gain every week.

But while we are talking about profits, we must not ignore the loss factor completely, as where there is a chance of profit, the loss will eventually take place. In this type of exchange, traders tend to get affected by a maximum of 3 to 4% of losses than a normal 6 to 8% loss, helping in bringing the profit-to-loss ratio to 3:1.

How to Select Stocks for Swing Trading?

It’s time to talk about the elephant in the room now, that’s – how to select stocks for swing trading? Well if you have read the article till this then you already know that the strategy of swing trading is to gain consistent profit over short timeframes which stands somewhere between day trade and trend exchanging.

Depending on the profitability, the stocks for swing trading are held generally for a period of 5 days to a few weeks, sometimes. But the concern here is that not all the stocks are suitable for swing trading and that is where the question triggers in – how do you select the right stocks for swing trading? Let’s find out.

Guide to Pick the Right Stock for Swing Trading

Stocks that are less likely to change rapidly and unpredictably, especially for the worse, and are comparatively calm in behavior, are the right pick for swing trading. Traders look for stocks that are showing steady price movement and trending slightly up or down without giving any sudden shock.

Triangle, moving average crossovers, head and shoulders patterns, flags and cup-and-handle patterns are some of the multi-day chart patterns which are looked upon by professional traders. To get an edge, traders chalk out different plans and strategies and take the help of various analytic tools to pick up the right stocks for swing trading.

The Bottom Line

At the beginning of your exchange journey, go for stocks that show established chart patterns over a considerable period of time. The ideal stocks to go with are those large-cap names having sufficient liquidity.

Gradually as you overcome the initial phase of picking stocks for swing trading going by the multiple analytic tools available nowadays, start making your predictions. Look out for the valleys and peaks on the charts and enjoy the swing of exchanging.