Full Swing: 7 Tips for Picking the Right Swing Trade Stocks

When you’re on the pursuit to gain a passive income opportunity, there are so many opportunities for you to choose from these days. You don’t have to limit yourself only to just your ordinary savings account. One of the most lucrative, as you may have heard by now, has to do with trading stocks. But, this isn’t absolute. You have to learn how to play the game right as well. Else, you might just end up on the losing end of your investments.

It’s been said that the stock market spends roughly 80% of its time figuring out where to go and 20% of its time getting there. However, when you’re dealing with swing trade stocks, you may need to move even faster than that.

Whether you’re new to trading or are simply looking for a new method, swing trading is a smart way to tap into major profit potential. This has to be done, however, with the right practice. You can begin by learning more about it and then moving on to the best swing trading tips that you can apply.  

Much has yet to be learned about this, so read on to learn more about mastering the art of swing trading.

What Are Swing Trade Stocks?

Swing trading is a form of stock trading that requires fast-paced and short-term thinking. Swing trading holds the stocks for an average of two to six days before releasing them to the market. In this kind of swing trading, therefore, you don’t have to be as fearful of the future as you would with all the other types. Because you’re investing in the short-term, this gives you a higher sense of security than it would any other type of investment. If you can’t afford to lose so much money, this is also a better choice for you to go for. 

This process of stock trading requires the ability to recognize key trends and utilize technical analytics to make the best move. It is a high risk but also high reward way of trading, which is the energy some stock traders love.

What Are the Benefits of Swing Trade Stocks?

There are a number of benefits that come along with swing trading that makes it so popular among traders. Here are some of the key benefits you’ll find with swing trading:

  • The opportunity for self-employment
  • Doesn’t require extensive education in trading
  • A fast-paced and exciting environment
  • High returns (even when compared to standard trading)
  • Losses aren’t typically too large, making it easy to gain back your losses

It’s important to remember that these benefits come with time. But once you’ve found your unique stock picking strategy, you’ll enjoy the many perks swing stocks have to offer.

Who Should Look into Swing Trading Stocks

Swing trading is one of those methods that people either love or hate, with their own personality tending to be the deciding factor. That’s because the demands of swing trading require a very specific personality type.

Those who are looking to get into swing trading should be able to keep up with a fast-moving environment without becoming overwhelmed. They should be able to take a loss without getting discouraged. It also helps to be relatively new in this area, as “classical training” in stocks tends to get in the way of developing the techniques required for swing trading.

Tips on How to Pick Swing Trade Stocks

While it helps to be new, you don’t want to go into the market blind. We suggest speaking with a trusted friend or family member with some experience on swing trading who can shed some light for what works for them.

In the meantime, we have gathered seven helpful tips to get you started on the right track.

1. Keep It Simple

The most important part of creating a swing stock picking system is to try and keep it simple. Remember, swing trading is a fast-paced trade method, which means you won’t have time to implement too many rules in one go.

Narrow down your strategies to a few essential steps that can be utilized at any time. Remember, the more steps you incorporate into your method, the higher the chance of mistakes happening.

2. Focus on Volatility

The term “swing” in swing trading is there for a reason. These stocks tend to make sharp shifts up and down, which is why many long-term traders tend not to touch them. The good news about these spikes and dips is that if you’re a short term trader, you’ll find ample opportunities.

Look for high volatility stocks when picking your initial stocks so there’s less stress over missing your “window”.

3. Pay Attention to Market Trends

Market trends will be the biggest influencing factor on how your stock performs. That’s why it’s essential to have your ear to the market in order to create a higher success rate.

Once you’ve studied specific trends in the market you’ll be able to implement these trends into your overall strategy. It may even help to use stock screening software as a tool to filter stocks that match your preferences.

We suggest taking the time to find out more about your potential stocks before purchasing to enhance your rate of success.

4. Play by the Rules

When in doubt, stick to rules-based trading. This means learning and adhering to known trading rules that allow you to buy and sell virtually on autopilot.

The great thing about these rules is that they can be tried and tested against the history of stock performance to see how accurate they are. Sticking to 3-4 rules in your strategy is often more than enough for swing trading.

5. Utilize Data

A good strategy can be switched up at any time. However, it can be difficult to determine when something is working and when it isn’t. This is where the right data and analytics come into play to recognize when it’s time to pivot.

Try using market indicators and data charts to track which methods are yielding the best results. Not only will this tell you which of your methods may need replacing, but it will also help you identify strong stock options.

6. Test and Test Again

Testing your strategy is a solid way to reduce your losses. However, it’s important to remember to re-test your strategy any time you make a change to it.

This means testing out the change on one stock cycle before purchasing a number of them assuming that things will perform as usual. Like chemistry, changing one variable of your stock strategy can completely shift the final result.

7. Get Creative

Finally, remember to get creative and let your own personality shine through your stock buying method. The most successful swing traders develop their own strategy as they go along. Swing traders may seem like a very serious endeavor, but it helps also if you put your personality in it. In so doing, not only do you enjoy the process of being a trader more, but you’re also inherently better versed about the intricacies of the stocks that you’re trading.  

For instance, if you’re in your twenties now, then you might be of the more aggressive type as a swing trader, simply because you grew up on video games. You can swing and trade well on stocks that may be riskier, and need more focus. If you’re older, such as in your fifties, it’s understood that you’re also a lot less of a risk-taker. Here, you might do better with stocks that are less volatile to the market that it’s moving around in.

As long as you’re paying attention to your pace, trends, and data, you should be able to better determine what works for you and what doesn’t. This also means not getting too discouraged if you’ve followed someone else’s strategy to a T and didn’t yield the same results.

Practice Makes Perfect

Whether you are attempting to master swing trade stocks or any other kind of trading method, it’s important to understand the learning curve.

The more you read and practice your trading skills the better your rate of success will be, and soon, trading will become second nature. Yes, this is a good investment opportunity for you to put your hard-earned money in. But, this doesn’t mean that it’s absolutely guaranteed. The effort has to come from your end, too, to ensure that you don’t just end up losing.

If you’re interested in finding more ways to earn cash, we suggest checking out our guide to the ultimate side gigs. You might find one that’s right for you.

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