Swing Trading

Screening Filters

1. Price: 10–80

   • Purpose: Focus on reasonably priced, active stocks that are practical for swing trading position sizing.
   • Rationale:
     • Very low-priced stocks (under ~$10) can be illiquid, easily manipulated, and subject to random spikes rather than technical patterns—less ideal for systematic swing trading.
     • Very high-priced stocks (well above $80) can make it harder to build flexible position sizes or scale in/out (especially for smaller accounts) and may move more slowly in percentage terms.
     • The $10–$80 range is often a “sweet spot” for swing traders: enough volatility and liquidity, but not penny-stock–type risk.

2. Beta: HighRisk (high beta)

   • Purpose: Target stocks that move more than the overall market, creating larger swings that traders can profit from over days to weeks.
   • Rationale:
     • Swing trading relies on price movement; high-beta stocks typically exhibit stronger trends and swings.
     • Higher beta means the stock tends to amplify market moves—helping generate the kind of 5–20% swings many traders look for.
     • While riskier, this is aligned with the needs of swing trading strategies, where controlled risk (via stops and position sizing) is central.

3. RSI Category: Moderate

   • Purpose: Avoid stocks that are extremely overbought or oversold, and instead target names that still have room to move in the direction of the trend.
   • Rationale:
     • Extreme RSI (very high or very low) often signals that a short-term move may be exhausted or due for a pullback or bounce; that can be trickier timing for newer swing traders.
     • A “moderate” RSI suggests ongoing momentum, but not yet at an extreme where mean-reversion risk is highest.
     • This fits a common swing strategy: enter during a healthy trend or after a mild pullback, rather than chasing the very end of a move.

4. 1-Month Price Change %: 15–60%

   • Purpose: Focus on stocks with established recent momentum, but filter out those that have gone parabolic.
   • Rationale:
     • Swing traders often prefer stocks already “in motion,” because trends tend to persist over short to medium timeframes. A gain of 15–60% in a month indicates strong interest and momentum.
     • Below ~15% in a month often means the stock may be too slow for attractive swing returns.
     • Above ~60% in a month can imply a blow-off move where risk of sharp reversals is high—harder to manage with typical swing-trading risk controls.
     • This range helps find names that move well but are not necessarily in a late-stage, unsustainable spike.

Why Results Match Swing Trading Goals

• Sufficient volatility for meaningful swings: High beta and 15–60% monthly moves ensure the stocks have enough price action for typical swing-trade profit targets.
• Momentum, not mania: The monthly price change and moderate RSI together favor stocks in strong, but not exhausted, trends—ideal for trend-following or breakout/pullback swing strategies.
• Practical for position sizing and risk management: The $10–$80 price range makes it easier to size positions, place stops, and scale in/out—key components of most swing-trading plans.
• Balance of opportunity and control: Combined, these filters select stocks that are active and volatile (good for opportunity) but avoid the most extreme, unstable setups (which can be more like gambling than structured swing trading).