How To Screen For Stocks To Swing Trade
So you're getting into swing trading, and you want to know the best way to screen for stocks to swing trade? You have come to the right place. Swing trading is one of my favorite stock trading techniques. For me personally, I feel that swing trading is way safer then day trading, and also provides quicker returns then value investing. I do not follow the book when it comes to swing trading, I like to use my own style that has proved successful for me, time and time again. Its actually very basic and easy, but you need to have a passion for swing trading in order to be successful. I will bring you through some of the things I look for when I screen for stocks to swing trade.
# 1 Look for Solid Stocks That are Popular
This is the first thing I look for when I screen for stocks to swing trade. You want to make sure the stock your investing in has a solid reputation and a future, because the last thing you want is the stock to plummet right after you buy. I like to look for big name stocks, that have had recent bad news, that could have been poised for a rebound at anytime. You should also keep in mind the price of the stock. I've had my best fast returns on stocks that are in the $ 8 to $ 20 range. Stay away from penny stocks when swing trading, they are way to unpredictable.
# 2 Look Very Closely at the History of the Stock Chart
The chart is the second thing I look at when screening for stocks to swing trade. Believe it or not, I like to see volatility in the stock chart. What you should be looking for is drastic waves of up and down. You want to catch the stock when its down, and ride the wave up, and then sell! What you also want to do with the chart is match these swings with the news. As yourself; why did this stock swing this way? If you find out its because of a product release, or maybe an earnings report, you will have an idea of which way the stock is going to swing next.
How I Screened The Blackberry BB: CN Stock and Made $ 1500 in 5 days
This is just a little example of what I did before I bought the Blackberry stock, and made a very fast return. I was having dinner, and my father said. "hey, did you know Blackberry is coming out with a new smartphone?" I said no, but then remembered how beat up the stock was currently all from the negative news. I had been kind of following the Blackberry stock, but not really, I did know that it was very undervalued because of all the bad news of them losing market share in the mobile industry.
The next thing I did, literally 5 minutes later, was looked at the stock chart. Big down trend with a lot of volatility is what I saw. I then checked the news, and noticed the very first signs of them announcing the new product launch (keep in mind this was a Sunday). I knew this Blackberry stock was in big trouble, but this news could seriously rebound the stock for the short term.
This is a perfect swing trade opportunity. Ride the hype, and get out. I bought that Monday morning, and the stock gained almost 150% in 5 days. Right when I felt the peak of the hyper was just about over, I sold. Doubts about the new product being a success started to leak back into the news, and the stock went down the day after I sold it. I escaped with $ 1500 untaxed profit (I do my swings from a TFSA).
Swing trades wont always be this simple, but if you follow the same principles I've been here you can be successful with it. Remember to screen your stocks to swing trade them, and follow your gut.