Swing trade

Screening Filters

1. Price: 10–100

   • Purpose: Focus on reasonably priced, actively traded stocks that are practical for swing trading.
   • Rationale:
     • Very low-priced stocks (under $10) can be illiquid, more easily manipulated, and extremely volatile in a random way—not ideal for disciplined swing setups.
     • Very high-priced stocks (over $100) can require larger capital per position and may limit flexibility for position sizing and scaling in/out.
     • The $10–$100 range tends to capture a broad universe of mid‑cap and large‑cap names that still move enough to make swing trades worthwhile, but are generally more stable and institutional-quality.

2. Monthly Average Dollar Volume: ≥ $1,500,000

   • Purpose: Ensure strong liquidity so swing traders can enter and exit positions with minimal slippage.
   • Rationale:
     • Swing trading often requires holding positions for days to weeks and reacting quickly to technical signals; poor liquidity can make it hard to execute without moving the price.
     • A minimum dollar volume filter helps avoid thinly traded names where bid/ask spreads are wide and charts are “choppy” or unreliable technically.
     • Higher dollar volume increases the probability that price moves are driven by real institutional activity rather than random noise.

3. RSI Category: Moderate

   • Purpose: Find stocks with momentum, but not in extreme overbought or oversold territory.
   • Rationale:
     • Swing traders often want names that are moving but not yet stretched to extremes where a sharp reversal is likely.
     • A “moderate” RSI (typically somewhere in the middle range, not below ~30 or above ~70) suggests the trend may still have room to continue and offers more balanced risk/reward.
     • This avoids chasing exhausted moves (very high RSI) or catching falling knives (very low RSI), both of which can be problematic for short‑ to medium‑term trades.

4. Moving Average Relationship: PriceAboveMA20 and PriceAboveMA200

   • Purpose: Focus on stocks in an established uptrend with short‑term strength aligned with long‑term trend.
   • Rationale:
     • PriceAboveMA200:
       • The 200‑day moving average is a classic long-term trend gauge. Price above the 200‑day suggests the stock is in a primary uptrend, which is generally more forgiving for swing traders (pullbacks often get bought).
       • Swing trades in the direction of the major trend tend to have higher probability than counter‑trend trades.
     • PriceAboveMA20:
       • The 20‑day moving average approximates a 1‑month trend and is often used for swing trading.
       • Price above the 20‑day shows recent strength and can signal either a continuation swing (riding the trend) or a breakout that is starting to gain traction.
     • Together, these filters target stocks where the short‑term and long‑term trends agree to the upside, offering cleaner swing setups.

5. New High/Low: 52‑Week High

   • Purpose: Identify stocks breaking out to new yearly highs—common swing‑trading candidates.
   • Rationale:
     • 52‑week highs often indicate strong momentum and institutional buying. These breakouts can lead to multi‑day or multi‑week continuation moves, ideal for swing trades.
     • Stocks at new highs have less overhead resistance (fewer trapped sellers), which can reduce selling pressure and allow trends to extend.
     • Swing traders frequently build strategies around buying breakouts or pullbacks near prior breakout levels; limiting to recent 52‑week highs pre‑filters for that style.

Why Results Match Swing Trading Needs

• The trend filters (PriceAboveMA20 & PriceAboveMA200 + 52‑week high) target stocks already in clear uptrends with strong momentum—prime candidates for swing trades in the direction of strength.
• The RSI “moderate” constraint helps avoid extremes, aiming for setups where momentum is present but not yet overextended, improving the probability of a sustained move rather than immediate mean reversion.
• The liquidity and price filters (Price between $10–$100 and monthly average dollar volume ≥ $1.5M) screen for tradable, institutionally followed names where technical patterns are more reliable and execution costs are lower.

Together, these filters narrow the universe to liquid, trending, technically constructive stocks that are well‑suited for common swing‑trading strategies like trend continuation, breakout trades, and buying short‑term pullbacks in established uptrends.