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How to Screen Stocks for Swing Trade

Learn how to screen stocks to swing trade using free tools and making an informed decision on what stocks may have good potential for swing trading.

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Today we will talk about how to screen stocks to swing trade. As we have covered in earlier posts about swing trading and stock screeners – having the data alone is not enough – you must be able to apply the data you find to work with the swing trading strategy you are choosing to implement.

What is a Stock Screener?

A stock screener is a tool you can use to search for stocks based on a set of variables to find ones which meet your criteria for trading. Usually most stock screeners are a web app or software which you can install on your computer and they give you a wide variety of advanced search functions which will return results from their database of stock data.

We have covered a number of stock screeners here: Choosing the Best Stock Screener for Swing Trading, with our favorite free tool being a website called FinViz.com. FinViz does have a more advanced premium paid tool for those who are serious about stock screeners, but for most beginner traders, the free tools will work quite well until you are ready for more advanced features.

How to Screen Stocks for Swing Trading

screen-stocks-for-swing-trading

The first thing you will want to do is to determine your swing trading strategy. There are a number of technical indicators for swing trading to use for screening stocks, however unless you implement them with the right strategy, you could find yourself losing money.

For simplicity’s sake, we are going to use a very popular strategy for choosing stocks to swing trade, and that is to choose large cap stocks. Large cap stocks are companies which have a market capitalization of $10 billion dollars or more. These are mega companies that often have much activity happening in the stock and are good choices for the beginner swing trader because it is relatively easy to find them.

Step 1: Visit the FinViz Website

The first thing to do is to go to FinViz.com and click on “screener”. Here you will find at the top of the website a variety of variables from which you can pick and choose.

Step 2: Choose Your Variables

The variables I typically choose are the stock exchange (ie: NASDAQ), market cap (large, from $10billion to $200 billion) and then to narrow down the results a bit further, I choose an industry. For the purpose of today’s simple example, I am going to choose “Healthcare” as the industry because I feel this will likely be a trending industry which is going to to have a bit of action in the upcoming weeks.

Here is a screenshot of our results:

Screen Shot 2015-12-29 at 4.52.55 PM

It returned 18 stocks, which is a good place to start for narrowing down our choices.

You will notice along with market cap, it shows the industry, the country, the P/E (which means price to earnings ratio, as well as the current price, change, and volume.

All of this is great stuff to know to help us screen which stocks might be a good choice as a swing trade candidate!

Step 3: Research the Results

The way you choose to research your results will now depend on your strategy. Everyone has their own unique strategy, so it’s important you choose to use data that is useful to you.

One way to research the results is by studying the candlestick chart patterns of these stocks.

I randomly selected from the list the stock for Biogen Inc (Stock Ticker Symbol BIIB)

Looking at the 2 month candlestick chart, you can definitely see some movement.

Screen Shot 2015-12-29 at 4.59.22 PM

Now, whether this is a good investment – that is up for you to determine! I am not going to give you any advice, but am just merely sharing with you how I research stocks after discovering them through the stock screener.

The other thing worth looking at are the key statistics: (Note: the individual stocks in our stock message boards contain this data)

Screen Shot 2015-12-29 at 5.01.25 PM

Here you can see the moving day average, the 52 week high, the 52 week low, and some other data. Now…for many swing trading investors, this may not be the right type of stock to swing trade simply because the share price is out of budget. But there are some other interesting things to note.

If we look at the stock ticker symbol on the BIIB stock message board, you will see there is a section of latest news headlines.

And immediately catching my eye is the news headline which says “Biotech: Is That a Triple Top or a Double Bottom?” If you remember some of the things we’ve written about stock chart patterns, a triple top or a double bottom can be intriguing.

In our article on Trading Strategies Using Candlestick Patterns, we wrote about triple tops and double bottoms. This is definitely a pattern we take very seriously because it can cause you to lose money quite quickly if care is not exercised.

Here let’s look at a double top and triple top pattern again:

double-top-stock-chart-pattern

triple-top-pattern-stock-charts

Here you can see this could be an indicator this stock may soon see a freefall.

Using the stock screener tool, we can look at other data which may suggest other potential problems regarding the stock as well.

I probably would pass on this stock personally and take a look at the others which may have better conditions to indicate a good pick for swing trading.

Step 4: Rinse and Repeat

In this example I limited myself to healthcare – you can of course do this for a number of different industry sectors, some of which may have more favorable conditions for swing trading.

Remember with swing trading you only want to hold a stock for a few days or weeks, so there is opportunity for money to be made even when it may not be a good long term investment decision. As always, research as much as possible, only risk money you 100% can afford to lose and do your best to stay on top of the market.

Do you have any tips for how to screen stocks for swing trading? Share your thoughts in the comments below!

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