Swing trading is a trading style that focuses on asset price movements over a period of 1 day to 1 month and therefore requires a combination of technical and fundamental analysis. So you can choose the right stocks for swing trading. because if you choose wrong It might be because you picked a stock that is going up today. But tomorrow it will fall and even break through the support.
What is the procedure for screening stocks for swing trading? Here are some tips and methods:
1. Configure the indicator you want.
The first step is to determine which indicators you will use and what is the value of each indicator. It’s important to filter what type of stock you need.
for example indicator trading volume Daily. Usually, the higher the trading volume of the instrument, the higher the volume. The higher the volatility of the instrument price. Also known as the market is more difficult to predict. On the other hand, if volatility is low. The share price will be difficult to go up because no one is interested.
Filter stocks for swing trading with multiple indicators at once. Both technical indicators and fundamental indicators, of course, you don’t want to buy stocks with high volatility but short term, do you? in the appropriate configuration for each of these indicators. Of course, you need a good understanding of the story behind the numbers in each indicator.
2. Take advantage of the filter feature.
The second step should be stock swing traders is to take advantage of the filter feature in screening applications or stock trading applications. in this filter menu You can enter various criteria. For stocks you want, such as market capitalization. daily trading volume The rate of price increase over the last few weeks or months, and so on.
You can also enter certain technical indicator criteria in this filter, for example the indicator value. Relative Strength Index (RSI) or simple moving average (high school) in the last few weeks for the last indicator It is usually chosen if the short SMA crosses the long SMA line.
After selecting various criteria that you want All you have to do is click next. Then the screen of your mobile phone or laptop will show stocks that match those criteria. So you don’t need to check stocks in Indonesia stock exchange one by one. Surely it’s useless if you look at 700 stocks one by one, right?
3. Draw resistance and support
After finding several stocks that match your criteria. Now is the time to convince yourself by looking at the price movements of these stocks one by one. The main thing you can do at this stage is to Draw resistance and support stock price over time
The goal is to ensure that the overall price movement of the stock increases, so make sure that the price high of 2 > high of 1 and low of price of 1 < low of 2. Make sure that there is not. breakout Down (both true and false) within the resistance and support areas.
This is due to the real bottom breakout. A breakout (breakout of support) usually indicates that the price decline will continue in the future. Although it rebounded But it also means that the stock price will create a new support.
In this step, you can also add supporting indicators such as a simple moving average line. Relative Strength Index (RSI) or Average direction index (ADX). The goal is to let you know if a stock is overbought and oversold.
4. Perform fundamental analysis
Each stock has its own characteristics. There are stocks that seem to be rising on the daily chart. But before falling a day or two But there are also stocks with good prospects. So in the last 1 or few weeks the price has continued to rise due to them. Be diligent in paying dividends
Swing traders must be careful when dealing with these traits. for he will hold it for more than a day. Of course, swing traders don’t want to buy fried stocks, right?
The solution is to do a fundamental analysis of the company issuing the relevant stocks. You can analyze it by reading the company’s annual and quarterly reports. or by analyzing the underlying data that is prevalent in the application. stock screening or financial news pages such as Bloomberg, MarketWatch, and Yahoo Finance.
5. Don’t forget to take notes.
The last step is to remember to record each result of your analysis. This is important because swing traders tend to have limited budgets. Although the filter results in the trading software usually issuing 10 or more stocks that meet the criteria. no results yet fundamental analysis which may show different results
by taking notes You can re-filter some of these selected stocks. So you can choose one or two of the best stocks that best suit your needs.
Any form of trading This is a high-risk action. So make sure you always use cold money and install a good stop loss strategy to hedge further risks.