Swing Trading

Screening Filters

1. Market Cap ≥ $1,000,000,000

   • Purpose: Focus on larger, more established companies.
   • Rationale:
     • Swing traders generally benefit from stocks that move cleanly and are less prone to erratic, news-driven spikes or crashes.
     • Mid- to large-caps tend to have more predictable price action and tighter spreads than tiny speculative names, making technical patterns more reliable.

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

   • Purpose: Ensure sufficient liquidity for entering and exiting swing trades efficiently.
   • Rationale:
     • Dollar volume (price × volume) is a direct measure of how much money trades in and out daily.
     • High dollar volume reduces slippage and makes it easier to place stop-loss and take-profit orders without moving the market, which is crucial for short- to medium-term swing trades.

3. RSI Category: “Moderate”

   • Purpose: Avoid stocks that are extremely overbought or oversold.
   • Rationale:
     • Swing trading often targets “mean reversion” or continuation moves from a balanced state rather than chasing extremes.
     • A “moderate” RSI suggests price isn’t at a blow-off top (very overbought) or in a panic bottom (very oversold), giving room for a controlled swing either upward (trend continuation) or from a mild pullback.

4. Moving Average Relationship: PriceAboveMA20 & PriceAboveMA200

   • Purpose: Focus on stocks in a clear uptrend, both short-term and long-term.
   • Rationale:
     • PriceAboveMA200: The 200-day MA is a classic long-term trend filter. Price above it means the stock is in a longer-term uptrend—this aligns with the swing trading principle of “trade in the direction of the dominant trend.”
     • PriceAboveMA20: The 20-day MA is a short-term trend gauge. Price above it suggests recent momentum is also bullish, which increases odds that pullbacks are buyable and breakouts can follow through.
     • Together, they screen for stocks where swing trades are more likely to be “riding the trend” instead of fighting it.

5. 1-Week Price Change % between -8% and +2%

   • Purpose: Find stocks in or near a pullback/consolidation—not ones that have just made huge, extended moves.
   • Rationale:
     • A mild decline (down up to ~8%) or flat-ish move over the last week often represents a pullback in an uptrend or a tight consolidation, both classic swing trade setups.
     • Excluding big weekly gains avoids chasing stocks that may already be extended and vulnerable to a near-term reversal.
     • Allowing modest downside captures “buy-the-dip” opportunities within an existing uptrend.

Why Results Match the User’s Swing-Trading Focus

• The filters collectively target liquid, established stocks where technical analysis and risk management tactics (core to swing trading strategies) are more dependable.
• They enforce alignment with a bullish trend (price above both 20- and 200-day MAs), which is a key swing trading tip: trade in the direction of the main trend.
• The RSI and weekly price change constraints intentionally avoid extremes and focus on healthy pullbacks or consolidations, exactly the types of situations many swing strategies aim to exploit for 3–10 day moves.
• By emphasizing liquidity and trend alignment, these filters operationalize several best-practice swing trading “tips” into concrete, screenable criteria.