How To Choose Stocks For Swing Trading

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Swing Trading
Choosing Stocks For Swing Trading Best Practices

The goal of trading of all types and sorts (i.e Swing Trading, Day Trading, etc.) is to, basically, maximize revenue while minimizing risk. Most of the time, however, traders are caught up with investing in risky stocks that could potentially lead them to loses due to, of course, lack of information and knowledge in dealing with market cycles.

In this video, we will tackle the ways on how to choose stocks for Swing Trading that would maximize your trading.

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Swing Trading

I am going to share with you three primary ways to choose stocks, to pick stocks for swing trading; being defined as basically short-term trading but not day trading. So we are definitely holding overnight, often two, three days, sometimes even a week or more, but not getting into long-term investing. So here are the three different approaches that are most commonly used for choosing stocks for swing trading. Number one is just choosing a few stocks that you really like. This is very popular with some people where they say, you know what, I’m going to just really learn maybe three to five different stocks, and those are the only ones going to trade. And one of the things you’ll often hear them say is I’m going to get to learn their personalities and that way I’ll get used to them and how they move.

Because with a lot of repetition of trading, I will understand those particular stocks, their personalities in air quotes. I can’t say that it isn’t a possibility to do because I’ve seen it done, but my problem with it primarily is that a lot of markets, a lot of stocks, especially equities, they move in cycles like all markets move in some type of cycle. So, for example, they’ll trend and then they’ll go into a non-trending cycle which is going to consolidation and be directionless for a while or they’ll go through a high volatility period and then a low volatility period. So if you’re just trading stocks that are part of a major index such as the Dow or the S&P 500, the Nasdaq, quite often they’re going to be moving in a similar way. Therefore I find that I just don’t get as many opportunities that way.

Swing Trading Strategies

Then number two is one that I do engage in and that is ‘having a basket of non-correlated markets’. So, the key to this is that the markets are non-correlated so you can have even bring-up a long list here. Here’s actually the list that I will send you and I’ll send it to you in text format if you’re interested in it for free, no opt-in or anything, just request it and I’ll include it in a text format so you can cut and paste because the symbols may be different than on your targeting platform. And I also include what that symbol means. So if you have trouble finding the exact symbol, then you can at least know what it means and find out from your data provider what that symbol is.

So see, we’ve got cash indexes. These are our basic indexes here. Then we’ll get some leveraged ones and then I go down to currencies. Well, those are futures there, but today, since we’re talking about stocks, you can trade currencies that are exchange-traded funds and so here they are all right. And then we got our heavily traded ones or are more lately traded ones and then we go to other countries and these are again, basically, most of them are iShares. And we can trade, well what’s going on in different countries like Australia, Canada, Sweden, Germany, Hong Kong, the UK, when markets might be taking off another one in another country depending on its economy and its stock market may not be doing a very well.

Swing Trading Signals

These are primarily different sectors and industries. So you’ll see here we’ve got biotech, agriculture, Base metals and we’ve got China mixed in their gold. I always throw in Google healthcare, internet broker-dealers, et cetera, and that’s what this is – to find different sectors and industry. So the bottom line with this approach, the logic of this approach is now, you’ve got a lot more markets to watch, and some are correlated but a lot of them are not. You’re going to get more opportunities for trading because while one market might be in a non-trending cycle, then there’s another one that is trending like crazy or one that’s very low volatility and just not really moving and another one is moving and just going like gangbusters and blown the doors off the market.

So the idea here is, I’ve often quoted where it says, there’s always a bull market somewhere and a bear market somewhere, or say Jim Cramer even says there’s a raging bull market somewhere and there’s always a raging bear market somewhere. So you look through these various non-correlated market. This is something I always do. I always have this watch list up and when I’m swing trading, I personally, I do day trading. So I don’t really do any swing trading during the day. I just look at the end of the day after my day trading is done, I’ll take a break, then I’ll usually get some lunch and maybe it could work out and then I come back and I’ll look at the daily charts and I’ll compare these various markets. So it’s a little bit manual.

Swing Trading Methods

The downside of this is that you got a lot to look at. Of course, you don’t have to look at all of these markets. You can shorten this list. But let me show you one that’s a little trickier. So what I do is I have put the various markets than looking at it. It’s called the market analyzer here, but the more traditional term for it is a quote sheet. And let me pull this down for you here a little bit, here you go so you can see it. But that’s just the Ninja trader term for the market analyzer. Anyway, it’s kind of like a quote window and various trading platforms have various functionalities for these. But one cool thing is I’m going to have to squeeze this over so it’s going to look really weird now, scrunched up.

So let’s say that I want to go through this list and I want to see the charts for them. So a lot of trading platforms have this by the way, not just Ninja trader where you can link the windows together. And so you’ll click on here and see all these different colors. I’ve got them red. That means if I go over here and let’s say I want to look at Disney now. It’s Ebay over here, right? So I say I don’t wanna look at Ebay. When I look at Disney I just click on that and it brings up Disney and that’s because I have the two windows linked together with the same color. Thus, I can actually go right down the list and just check them one by one and it pulls them up one by one, as you can see that’s actually an apple.

Swing Trading Guide

And then just click all the way down through them. And that helps me save a lot of time rather than manually typing in each symbol. Another thing I’ll point out here too is, again, some trading platforms have this and some don’t. But on ninja trader they’ve got a nice thing with market analyzer here where you can create these columns. And you can actually put indicators in there so that I don’t have to go through the whole list now and again, that’s a time-saver. So I can say, OK, a trend. Well, I’ve got the way I measure trend and what is the trend, is it up or down? If I’m looking for up trends and what wave are we? So, here we’re in, which wave I’m in, I’ve got all these other parameters in there for that I use specifically for my trading methodology.

So then I can just look at certain things to know the words and I don’t have to look at every single one. I know I’ve got my cycles in there. Let me pull this back for you. Cycles are a big issue for me because cycles tell you when to get in, when to get out, and the optimal time so you don’t get stopped out. So this is very important. And now the cycle indicator here, it’s an up and I’m looking for hookups. So again that’s more than I can explain in this video. It’s not really on topic, but if you’d like my cycle indicator, I do have a webinar where I give that away for free. The cycle indicator not only works on Ninja trader, it actually will work on any charting platform I’ve ever seen.

Swing Trading Analysis

Anyway, don’t want to believe at that point again. So last one way. This video is lasting a long time, but that’s OK. Want to share a lot of good stuff with you. So the third option is to scan. We’ve kind of gone into half of the scanning here with this, right? So this is a little bit of scanning but it’s not really, I’m technically scanning. It’s kind of a hybrid between having our basket of stocks or our watch list and putting certain indicators in there.

But then you can get even more specific with scanning. So let’s talk about that real quick. The third type of choosing stocks for swing trading, we’re going to use a scanner or sometimes it is called a screener. And what’s cool about this is you can put in very, very specific parameters. Now, this is just a general one here – by the way, this is a thinkorswim, so all this is just like a simple, not chewing on complex number, but the basic thing I’m looking for is right here. So we’re just looking at this, and this is the primary thing I’m looking for. We’re only looking for stocks where the price is above the upper band of the Bollinger band. So it says that the upper band is less than the close. That means that the market closed above the upper band of the Bollinger bands.

Swing Trading Technical Analysis

So it’s showing a lot of strength to the upside. Now, I also included a few other parameters here and different timeframes as well. That’s the cool thing about this is that, uh, you can put this on different timeframes and not just on one timeframe. So this is a pretty good one. I’ve got out of the scans that I like better, but the point is when you’re using a screening or scanning, then you can really narrow down. So let’s say, for example, that you have certain trade setups that have a list of rules, you can enter all those rules into your screener or your scanner and only bring up a stocks that meet those rules. So while, let me just bring up another one here. And the Nice thing about this is it’s pretty fast. So what did we do there?

This one’s good. So let’s see, this is where momentum is. Now, I got to click this scan button here and as you can see, I’ve got more parameters at this time. And so this one is where the market is, has a bearish momentum on three different timeframes all at the same time. So that is what’s valuable about this is that we’re using multiple timeframes in that the. And so we got one, two, three, four, five, about 10 of them that showed up. So it scans through like 10,000 markets or you can start with whatever, you know, you can say, well, you don’t want to have all stocks. Maybe you want to do what I have. All that’s optional because I don’t, I like to read the options and it goes through all 10,000 and it just gives you a little list.

Swing Trading Tools

Then you’d pop these up and we can look at them on the charts as well. So, the first thing I would do, if you want to do this, it’s probably the shortcut up, the fast way to find good setups and based on whatever trading method you’re using, whatever rules for your trade setups. And I would first go to your trading platform software provider, whether it’s thinkorswim more trade station has this function available to and some others. So some do and some don’t. Finviz, I’ve heard it is pretty good. I’ve never used it. A stockcharts.com, again, it’s a good platform but I’ve never used it for scanning and uh, the one that I would use.

And then I often do use is called stockfetcher.com and that’s totally separate. So even if you don’t have it on your trading platform, that’s like an $8 a month or something, the last time I looked, it’ll look at parameters on multiple timeframes concurrently. Also, it calculates everything really, really fast and you can put in all kinds of parameters so flexible. By the way, I have no financial interest in any of these, so just look them up, Google them, go there, not an affiliate link or anything that I’m giving you here. So I’m going, OK, so that’s a little longer video today, but those are the three primary ways that I have found that I’ve heard other people using for choosing stocks for swing trading.

Rubber Band Trade Strategy

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BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

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