Are you looking to know how to select stocks for swing trading? If yes then this article is the best article about it because in this article I share my 12 rules for selecting swing trading stocks. After reading this article my rules become yours and you can select your stocks yourself for swing trading. I am a share market trader for 5 years and I made many successful trades using these rules so let’s start.
12 Important Rules For Selecting Swing Trading Stocks
How To Select/Choose Stock For Swing Trading 2022: If you are a short-term trader or you do swing trading then this post is for you. In this post, we will talk about some of the ways that we will be able to find some of the best stocks from our hundreds of stock lists, in which we will do swing trading.
This method is going to be the best price action, in this way we are not going to use any type of indicator, because you will also know that all the indicators are all based on the price, so if we price action If we use the method, we will be able to buy in stock at the right time and also get out of it at the right time.
12 Important Rules For Selecting Swing Trading Stocks
- Analyze On Good Chart Platform
- You Must Have a Watchlist Of Hundreds Of Stocks
- Know About Trend
- Observe Breakout/Breakdown Of Trend
- Know About Continuation Patterns
- Observe Continuation Patterns
- Know About Reversal Patterns
- Observe Reversal Patterns
- Know About Candelastic Patterns
- Observe Candelastic Patterns
- Use Multiple Time Frame
- Final Selection Of Stocks
Rule-1. Analyze On Good Chart Platform
If you want to do a technical analysis of stocks for swing trading then for this you need a good chart presentation platform, where you will not face any problems in viewing the chart. You can see the chart in a very clear way, there is no problem with applying your rules, there you will get a lot of features. Only then can you do technical analysis in any stock.
Rule-2. You Must Have a Watchlist Of Hundreds Of Stocks
If you want to select stocks for swing trading, then your watchlist should have hundreds of stocks. By analyzing which, you will be able to select some of that stock.
If you do not have a lot of stock on your watch list and you do not even know where to bring the list of so many stocks, then you can use the official website of NSE for this. Where you will get a list of thousands of stocks in thousands and you will be able to add them to your watchlist.
Rule-3. Know About Trend
When you open your watch list and start looking at the stock chart from one side to select the stock for swing trading, the first and most important thing is to see which trend the stock is in. You will find the address of the train according to the big time frames such as Monthly Weekly and Daily Timeframe.
When you are able to confirm which trend a stock is in, then find an opportunity to buy or sell in the same trend in that stock so that even if your analysis goes wrong, you will not suffer much because the stock will remain the lifetime trend. Will follow that trend and even after your analysis is wrong, that stock will return to the same trend after a few days, which will not make you a big loss.
Rule-4. Observe Breakout/Breakdown Of Trend
According to the third rule, when you know the trend of a stock, then you should see that if a stock is in the uptrend, as soon as the breakout of that uptrend is found or if a stock is in the downtrend, as soon as the breakdown in that stock If found, you can enter it,
Keep in mind that if a stock is in an uptrend and it has a breakdown, if the stock breaks downwards, then only if there is a breakdown with a lot of volumes, then take the entry. Otherwise, avoid such trade if you are new in the stock market, and similarly if a stock is in a downtrend and the breakout comes upwards and with breakout volume, then only you enter it otherwise avoid it.
Rule-5. Know About Continuation Patterns
Continuation is a part of the pattern in which if a stock is trading in a trend, then after the continuation pattern is formed, that stock shows the possibility of giving a good target in the same trend.
If we know more about the continuation pattern, then it usually consists of triangular and flag, and pole patterns.
The chart of the stock in the triangular pattern begins to trade making a triangular pattern, after which the chart of that stock gives that triangular pattern a breakout or breakdown in the same trend. After which we make our position in it.
If we talk about flagon and pole pattern, then this is the time of consolidation after the sudden boom, after that when the chart trades in a flag-like pattern and when that flag gives a breakout, then how much of that pole do we Take your chances in the target and make your position in it.
Rule-6. Observe Continuation Patterns
Now that you have come to know about the continuation pattern, the main example of which is the triangular and flag and pole pattern, when you look at the stock chart, try to find the trigonal and flag and pole pattern in it. If you get it, then after the trend and volume are confirmed, make your position in it.
Rule-7. Know About Reversal Patterns
The reversal pattern is also the second part of the chart pattern in which if a stock is in the uptrend then it becomes a downtrend after the reversal pattern is formed and if a stock is in a downtrend then the trend reverses after the reversal pattern is formed.
The reversal pattern is primarily an indication of the reversal of trends in stocks. It expresses the possibilities of the trend change coming in the stock. If seen, the patterns that come mainly in the reversal pattern are a head and shoulder pattern, an inverse head and shoulder pattern, double top and double bottom pattern.
The head and shoulder pattern mainly reflects a slowdown. It is always formed on the upper side of the latch, and the head and shoulder pattern expresses the possibility of a downward target from the neckline to the head after the neckline breaks. . This chart pattern is a very strong chart pattern and it is most likely to succeed.
Inverse Head and shoulder pattern is another form of head and shoulder pattern, the only difference is that it is formed at the bottom of the chart and indicates the upward movement. This chart pattern is also a very strong chart pattern like the head and shoulder chart pattern. It is more likely that the trade will be successful.
The double top and double bottom pattern is also a very beautiful reversal pattern. In the double top pattern, when the price comes in the last few times, from the price, it becomes resistant and starts to trade downwards, then we call it a double top pattern. And when at the bottom of the price stock, where it has come once before, it takes support on the second time and then starts to trade up then we call it the double bottom pattern. Both patterns are very good patterns and give very good targets.
Rule-8. Observe Reversal Patterns
When we are analyzing the stock of our watchlist, at that time in the chart we should also analyze and find the reversal pattern. If we find a reversal pattern, then we take our position in it, taking care of trends and volume.
Rule-9. Know About Candelastic Patterns
Candlestick pattern is the biggest weapon of price action trading, with the help of which we can trade successfully. If you have a good knowledge of candlestick patterns, then you can make a decision of entry and exit in the shortest time. Because candlestick patterns indicate before any chart pattern or any price action mentored or indicator indicates anything.
If we talk about the types of candlestick patterns, there are about 70 to 80 types, but some of them are the main ones that we mostly use but it does not mean that the rest of the candlestick patterns are not important. It just means that the rest of the candlestick patterns are rarely seen in our chat.
If we tell you the names of some main candlestick patterns, then Doji, Morning Star, Evening Star, and Shooting Star are the main ones. If you want to know more about candlestick patterns, you can search them on Google.
Rule-10. Observe Candelastic Patterns
Whenever you analyze the chart, keep in mind the candlestick pattern in it that there is no candlestick pattern being made. Before taking any trade on the basis of candlestick patterns, take care of trends and volume, if you are all relative to each other, then only make your position.
Rule-11. Use Multiple Time Frame
Now we assume that after following all these rules, you will have selected some of the hundreds of stocks. In which you have to do swing trading but you do not have to do swing trading in all those stocks, yet you have to analyze it in multiple time frames. Analyze all stocks in Hourly, 4 Hour, Daily, Weekly, and Monthly time frames and see if there are any support and resistance. Only then send that stock to the next state for swing trading.
Rule-12. Final Selection Of Stocks
Now that you have a list of the stocks that have met all these conditions, now you have to check how is the company of the stock that you have. Whether the company is worth investing in. Is there any news related to the company recently? Are there any quarterly results or annual results? Or another type of information that is related to the company, and if that information is matching with your analysis then only you will take swing trading in it.
In this post, we have told you our complete strategy for selecting swing trading and we can say with the claim that if you work by selecting stocks based on all these rules, then your chances of loss are very less. Provided that the 12 rules we have mentioned should include all those rules in that stock. No rules are contrary to this, so if you like this information, then please share it on your social media Facebook or WhatsApp, and by commenting Do tell your opinion about this post.
I am a share market expert for the last five years. I have expertise in technical analysis, and fundamental analysis of stocks, and assets. On this website, I write content like analysis of shares, predict future targets of shares based on analysis, simplify technical analyses, and intraday trading.