Many traders are focused on swing trading but often fail to pick the right stocks and then work out suitable strategies. Moreover, it would be vital to know who will benefit from swing trading the most according to the financial goals, risk tolerance, and availability of time.
We will show you how to choose stocks that are swing-trading-friendly using criteria such as volatility, liquidity, and market trends. Then we’ll outline various swing trading strategies, including technical analysis, chart patterns, and momentum trading. We will also cover the kind of traders who’ll find swing trading most appropriate: those seeking moderate risk, flexibility in terms of trade duration, and a balance between active and passive trading approaches.
Learn to pick the right swing trading stocks and use tested strategies to improve your trades for consistent profits. Knowing who should swing trade will guide you in deciding whether this is a strategy that fits your trading style and your financial goals, hence able to make the right decisions towards maximizing your effort at trading.
How To Select Swing Trading Stocks?
The first thing that you have to see before selecting a stock is that there should be volatility in stock. That is, the price of that stock is going up and down, apart from this, the second thing that you should have in the stock that you are selecting is that there should be liquidity in that stock.
Some of the best swing trading stocks in India include:
- DMART: Retail
- BALKRISIND: Tire Manufacturing
- SUNTV: Media
- HDFCBANK: Banking & Finance
- TATA MOTORS: Automobiles
That is, you should be able to buy and sell that stock anytime. So, always consider large-cap stocks for this. If you want, you can also consider a mid-cap stock. But don’t take this risk in small-cap stocks.
Now, these two are quality but after this, there are thousands of stocks. So, which stock is best for swing trading? How will you select this? So, for this, whatever analysis you do for options trading or for intraday trading, you have to do the same analysis here too, but in intraday trading, we use 5 minutes, 10 minutes, and 15-minute time frames.
Here, it is possible that you do your analysis for 1 hour, 2 hours, or for a day’s candle. Apart from this, because in swing trading, you will hold that stock for a few days. Here you will also have an overnight risk. So, that’s why you have to keep yourself updated with the news. You have to avoid such stocks in which news can suddenly cause volatility so, see all these things before selecting a stock.
Best Swing Trading Strategies
So, the first and simplest strategy that works perfectly here is Moving Average Crossovers. In the recent video, we told you about the Moving Average. We explained it in detail. So, in that video, we told you about Golden Crossover and Death Crossover.
So, that strategy doesn’t work as accurately in intraday trading or options trading. But if you are doing swing trading, then because your time frame is increased there, then this can work well for you in that case. Here we are going to use
- Golden Crossover
- Death Crossover
Golden Crossover
So, the first Golden Crossover happened in the ITC chart in a 1-hour candle here we keep in mind that we are using the Moving Average of 50-period and 200-period. So, that crossover happened on 25th January. That is, on this day, you buy it for Rs. 336.60. After this, you hold it and hold it till the Death Crossover happens. So, that Death Crossover happened on 4th August. So, you sell it for Rs. 455.85. That is, if you calculate it, then you get more than 35% returns.
Now, on the basis of this, you buy the next trade for Rs. 450.45 and you sell it for Rs, that is, here you have a loss of 0.63%. After this, on the basis of this, you get the third trade for Rs. 447.40 and you sell it for Rs. So, you get a loss of minus 2.35%. So, on the basis of this strategy, you get 3 trades in the ITC chart. In which, you get a loss in 2, but you get a profit in 1 and that profit was of 35%. So, if you average this, then you earn a profit of about 32%. Whereas, if you think about it, in FD, you get only 6-8% returns.
Who Should Do Swing Trading?
Suppose, you have a regular source of income. You pay all your bills easily. You have enough money in savings. And you have a liquid cash, through which you want to generate additional income. Then you put that money at risk and do swing trading. That is, you have to do swing trading with the same money on which you can take a risk.
Because you know that whatever it is, it is still trading. And whenever trading comes, there will be a risk. And in that risk, either money will be made or it will be lost. So, you have to be ready for both situations. You don’t have to think only positive-positive. Along with this, suppose you don’t want to take too much risk. You can’t work hard in research still, don’t go for swing trading or any other type of trading it is best to invest for the long term.
