How to identify stocks for swing trading

technical indicators for swing trading
How to Start Swing Trading in the Indian Stock Market

Investing in the stock market is a tedious task and could also be a little daunting without the knowledge of trading. The trader requires adequate knowledge and the desired tools to be a successful trader. It is mandatory to understand the different types of stocks, especially the positional calls Indian stock market to make informed decisions while trading. Let us discuss how to identify the most appropriate stocks for swing trading.

Main trading strategies:

There are several trading strategies that we have to consider; technical analysis is based on the price patterns in the stock market and helps in determining the best stocks to sell. The following strategy is the fundamental analysis that relies on factors such as economic outlook, political events, company earnings, etc. Market timing is also an important strategy focusing on predicting what will happen and selling the trading stocks accordingly.

What is swing trading?

Swing trading is a trading style that helps traders to capture short to medium terms gains in any of the stock or financial instruments for a period of a few weeks. Swing traders should use the most appropriate technical analysis tools to pick the right stock for swing trading. Apart from having the proper knowledge of how the markets react and move, it is also mandatory to ascertain the risk analysis strategies. Traders should also stay updated with industry news and other macroeconomic trends to reap great success in the stock market.

Difference between swing trading and day trading:

Swing trading is different from day trading. The main difference between the two types of trading is the holding time. The stock positions in day trading are closed within the day, whereas the positions in swing trading can be carried forward and held for a few weeks to months. Swing traders would generally buy a stock, hold it for two or three days, and then sell it at a profit. Traders with sufficient liquidity and who trade at a regular price will indulge in swing trading.

How to pick stocks for swing trading?

The stock market is one of the most exciting and lucrative industries in the world, but it is also a very tricky and tough call to break into. Though trading strategies have been evolving, few trading techniques bring sure success for traders when performed appropriately. One such trading technique is swing trading. Let us discuss in detail about this technique here.

Swing Trading Stocks for Positional Trading

Choosing positional calls for swing trading should be done with utmost caution. While selecting these trades, it is easy to find relatively calm stocks that don’t exhibit high volatility. It is best to select stocks that trend up and down slightly with a steady price action. The ultimate goal of swing trading is to sustain the trade without killing it. It is also helpful to follow these stocks and to make appropriate paper trades before moving to live trades, using real money. Swing traders should, however, learn the trick of how to identify the most appropriate time to buy and sell the stocks, as the market conditions change frequently.

Tips that help to pick the most appropriate stocks for swing trading:

The most important tip in performing swing trading is choosing the right stocks that show the winning chart patterns consistently. Choose stocks with large cap names and sufficient liquidity. Traders should also start their predictions with respect to the valleys and the peaks on the chart, to get into the depth of swing trading. Other positional stock tips to excel in swing trading are as follows.

stock tips for positional trading

1. Trade breakouts:
Swing trading is one of the expert trading techniques that allows traders to trade with a trend. Some technical tools that swing traders should pay close attention are chart patterns, support and resistance zones, breakout from a range, etc. The swing traders should look for breakouts, before entering the position.

2. The volume of the stock:
A volume is also an essential tool for swing traders, and it helps them to ascertain the trade trend’s strength. Stocks with a high volume will be much stronger than the ones with a fragile volume.

3. Trade liquidity:
One of the primary and most essential rules for swing trading is that the traders should be trading only on liquid stocks, though the daily minimum they choose would be arbitrary. This is because the person can quickly exit stocks with very high liquidity. The traders should also make it a point that identifying a bad trade could be a potential trade loss and is also one of the critical aspects of swing trading. Thus, this shows that those who indulge in swing trading should exit from the trade when the stocks they are trading on are liquid.

4. Relative strength:
Traders, who involve themselves in swing trading, should involve themselves in stocks that are stronger than the index, meant for swing trading. This will help them isolate the strongest and the weakest of all the securities of any class asset within the financial market. It has to be kept in mind that the stocks capable of displaying solid or soft relative strength over a fixed period will continue to grow steadily and move forward.

5. Volatility:
Volatility is an essential factor that selects the stocks for swing trading. It is one of the most critical factors that help us to measure and understand how much the stock price would move. Traders can use these volatility indicators to understand the strength of the volatility of the stock.

Bottom Line:
After understanding how positional stock tips in India for swing trading and how to perform swing trade in real-time, it is also mandatory to note that this type of trading incurs a lot of risk than that of day trading, as its holding period is also extended. Thus, it also helps traders who play with exceptional strategy spot potential red flags in the trade. Also, traders should find a design that suits their trading style to succeed in the swing trading techniques.


1)  It’s advisable not to enter/exit beyond the recommended range.
2)  Strictly follow the StopLoss as mentioned. Honour it.
3)  Use trailing StopLoss to retain profits.
4)  Diversify trading capital into our other technical recommendations.
5)  Risk only the money what you can afford to lose. Hedge accordingly.


The research analysis is prepared by Arijit Banerjee, CMT, CFTe. He is a veteran trader and an active investor having in-depth knowledge in financial market research, advanced technical analysis, market cycle, algorithmic trading and portfolio management. Arijit is a Chartered Market Technician (CMT) accredited by CMT Association USA, the leading global authority of Technical Analysis and has been honoured by Certified Financial Technician (CFTe) from the International Federation of Technical Analysts, USA. SEBI, the regulatory body of Indian financial market also recognizes him as a Research Analyst (INH300006582).


The views expressed herein are based solely on information available publicly/internal data/other sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to accuracy. The recommendations provided herein is solely for informational purposes and are not intended to be and must not be taken alone as the basis for an investment/trading decision. Trading and investing are subject to market risk and the securities discussed and opinions expressed herein may not be suitable for all investors. To read the full disclosure, please click here.

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