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How to Swing Trade Stocks | A Step-by-Step Guide

Analyst Team trader
Updated 24 May 2024



stocks for swing trading

Some people hold stocks for an extended period of time, while others buy and sell quickly. This variation in stock investing is what distinguishes the various types of investors in the market. Day traders, swing traders, scalpers, and position traders are the four most common types of traders. In this article, we will talk about swing trade stocks and trading strategies for a successful trading journey.

What is Swing Trading?

Swing trading is a trading strategy that requires the trader to hold a position for more than a day and can last up to weeks. The main goal of swing trading is to capitalise on the opportunity to profit when there is a price increase, no matter how small.

Traders will look for opportunities on other stocks after a swing ends, or they will wait for the same opportunities to reappear on the same stock.

In the chart, there are two types of swings: swing up for ascending price movement and swing down for descending price movement. It can be found in any timeframe, including the hourly and weekly charts.

To be proficient in this technique, traders must be familiar with technical analysis in order to identify and forecast future stock price movements. Furthermore, technical analysis can assist traders in determining the target price and stop loss.

Traders can use indicators such as Japanese candlesticks, moving averages, and continuation and reversal chart patterns to forecast stock price movements. Traders can position themselves in the market faster and profit more by using a combination of indicators.

Stop loss management is important in this swing trading technique, as it is in other trading techniques. Stop losses are important for preventing large losses for traders or stock investors when faced with a false breakout or when decisions are made that are less accurate.

This method is ideal for traders who have a limited amount of time to monitor their portfolios. Traders who use this method do not need to spend a lot of time in front of a computer.

How Does Swing Trading Differ From Day Trading?

  Swing Trading Day Trading
Average number of trades in a month 2 – 3 times a month 15 – 20 times a month
Rsk Moderate High
Frequency of chart viewing Several times a month All day
Analysis Technical & Fundamental Analysis Technical Analysis
Duration of each trade 1 – 6 month 1 day

How to Swing Trade Stocks – Basic Strategies

how to trade stocks for swing trading

Swing stock trading, like other investments, is not without risk. Let's go back to the fundamental principle of investing: the higher the benefits you want to pursue, the higher the risk that must be faced.

That's why it's critical to practise the best risk management possible, so you can be ready when you get results that meet your expectations and those that don't. There are several techniques you can use to manage risk when swing trading, such as the ones listed below:

Entry Strategy

Entry strategy is a stock investment strategy in which you enter the market and buy stocks that are trending upward. The direction of the trend of stock price movement over a specific time period is referred to as the trend. There are three types of trends: uptrends, downtrends, and sideways trends.

By reading trends as best you can, you can determine when the most appropriate entry, including exit or stop loss placement, can provide better risk/reward potential. Long-term trading success will be determined by measurable and efficient entry methods.

Creating an entry checklist is one way to improve your entry technique and make it more accurate. Criteria such as important support or resistance levels, trading signals with a high probability, estimated entry levels, risk/reward ratio, and others. A checklist is required to make identifying the movement characteristics of the stock you are trading easier.

Exit Strategy

Exit technique refers to a strategy for exiting the market at the appropriate time. This exit strategy is critical for reaping the benefits of stocks in the best position. This exit technique is used when you have reached the desired price or when the stock price has reached the lowest limit value that you have set.

The exit technique prevents traders from falling asleep during a rise in stock prices, but it is extremely risky, and it also does not require traders to bear excessive losses during a significant decline in stock prices.

As a result, swing traders must understand how to determine the exit point. Don't forget to use the Trailing Stop feature to maximise profits.

How to Find the Right Stocks to Swing Trade

swing trading stocks

Swing trading stocks requires careful asset selection, as poor market selection can be a major weakness in your trading strategy. Use these suggestions to improve your market selection efforts.

1.  Utilise Chart Patterns

Maintain a close eye on stock charts and patterns. The better you understand the movement and pattern of a stock chart, the better you can predict price movement.

2.  Monitor Economic Situation

Keep an eye on the economic situation, which can help you determine a country's economic health as well as potential trading opportunities or risks in the future.

3.  Keep an Eye on Payday

Make a note of when the next payday is. Earnings calendars will assist you in incorporating unexpected price movements into your swing trading strategies.

4.  Be Cautious with Penny Stocks

Penny stocks are highly speculative investments, so trade with caution. Although the volatility of the penny stock markets provides high-growth trading opportunities, it also brings with it greater risks.

Pros and Cons of Swing Trading


  • Larger target. Swing traders are not looking for small profits because they want to make one good trade and avoid the risk of overtrading.
  • More time is required. Many swing traders typically work for one to two hours per day or week.
  • There is no need to check the market frequently. Swing traders only check the market a few times per day, if at all.
  • Reduce your risk. When you open fewer positions, you expose yourself to less risk.


  • More time is wasted waiting for a profit. It may take days, weeks, or even months to reach the target and close position.
  • The risk of remaining. Cost, leave your position open overnight. Also, if you keep positions open overnight, your broker may charge you a fee.
  • Risks posed by current events. Natural disasters, economic and political events can all wipe out a large portion of your profits.
make money via swing trading stocks

It is hoped that you will learn a little about swing trading, the pros and cons, effective swing trading strategies, and why you should try to trade using this technique from this article. Remember that in trading, there will always be times when you make a profit and times when you lose. So, trade wisely  to ensure a profitable trading journey.


The best candidates have sufficient liquidity and steady price action. Meta (formerly Facebook), Apple, and Microsoft are suitable stocks for swing trading in certain market conditions.

The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.