Swing Trading

Screening Filters

1. Price: 5–150 USD

   • Purpose: Find reasonably priced, actively tradable stocks and avoid ultra-low-quality penny stocks or extremely expensive names.
   • Rationale:
     • Swing traders often want:
       • Enough price movement to capture meaningful percentage swings.
       • Stocks that are not so cheap (e.g., under $1–$2) that they’re dominated by erratic, low-quality names.
       • Stocks that are not so expensive (e.g., $500+) that small position sizes limit flexibility or spreads become relatively large.
     • The $5–$150 range is a practical “sweet spot” where many mid-priced growth and momentum stocks live, which is suitable for swing setups.

2. Beta: HighRisk (i.e., high beta)

   • Purpose: Target stocks that move more than the overall market, offering larger swing potential.
   • Rationale:
     • Swing trading depends on price movement—without volatility, it’s hard to profit after costs and slippage.
     • High-beta stocks typically:
       • React more strongly to market moves and news.
       • Offer bigger percentage swings over days to weeks.
     • This filter deliberately looks for higher-risk, higher-volatility names, which fit the profile many swing traders seek (provided they manage risk carefully).

3. Monthly Average Dollar Volume: ≥ 1,000,000 USD

   • Purpose: Ensure liquidity so you can enter and exit trades efficiently without major slippage.
   • Rationale:
     • Liquidity is critical for swing traders who may trade in and out frequently.
     • A minimum average dollar volume:
       • Reduces the risk of getting “stuck” in thinly traded names.
       • Helps keep bid-ask spreads tighter, which lowers trading costs.
       • Makes it easier to scale positions without moving the price too much.
     • $1M per month (and typically much higher in practice for many screener results) is a baseline to filter out illiquid microcaps.

4. Moving Average Relationship: PriceAboveMA20 & PriceAboveMA200

   • Purpose: Focus on stocks in established uptrends with recent strength—ideal for many swing setups.
   • Rationale:
     • Price above 200-day MA:
       • Indicates a longer-term uptrend or at least a positive long-term bias.
       • Swing traders often prefer trading “long” in uptrending names (trend-following logic).
     • Price above 20-day MA:
       • Shows more recent short-term strength.
       • Suggests the stock is not currently in a near-term breakdown.
     • Combining both:
       • You’re looking at stocks where the big picture trend and the short-term momentum are aligned upward, which is a classic swing-trading preference (buying pullbacks within an uptrend, or breakouts in strong names).

5. RSI Category: Moderate

   • Purpose: Avoid stocks that are extremely overbought or oversold, aiming for setups with room to move.
   • Rationale:
     • RSI (Relative Strength Index) helps gauge whether a stock is stretched:
       • Very high RSI (overbought) can precede short-term pullbacks.
       • Very low RSI (oversold) can precede bounces but also signal ongoing weakness.
     • Moderate RSI:
       • Suggests the stock is neither at an exhaustion extreme nor completely washed out.
       • Often aligns with healthy trends and controlled momentum, giving swing traders flexibility:
         • You can catch a continuation of the move without buying into a climax.
         • You’re not stuck in a deeply oversold downtrend with no signs of reversal yet.

6. Is_Trending: True

   • Purpose: Focus on names currently in the spotlight and moving consistently, which tend to offer better swing opportunities.
   • Rationale:
     • “Trending” typically means:
       • Price is making directional moves (up or down), not just chopping sideways.
       • Often comes with elevated interest (news, social/media attention, sector themes).
     • For swing traders:
       • Trending stocks provide clearer patterns (breakouts, pullbacks, flags).
       • They are more likely to follow through on technical signals.
     • Selecting only “trending” stocks aligns directly with the idea of swing trading: riding a portion of an ongoing move.

Why Results Match Swing-Trading Needs

• The filters emphasize volatility and movement (high beta, trending) so there’s enough price action to make swing trades worthwhile.
• They enforce adequate liquidity (dollar volume) so trades can be executed efficiently—critical for active swing strategies.
• The trend and momentum alignment (price above 20-day and 200-day MAs + trending flag) favors classic swing setups like buying pullbacks in uptrends or trading breakouts.
• The RSI moderation helps avoid “too late” entries into overbought conditions and avoids catching knives in severely oversold downtrends.
• The price range keeps you in a practical band where many actively traded, institutionally followed stocks live, avoiding many of the structural issues of penny stocks while still allowing for meaningful percentage swings.

Together, these filters don’t guarantee success, but they systematically surface the type of stocks that typically suit swing-trading strategies: liquid, volatile, trending, and technically constructive.