Not all stocks are suitable for swing trading. Some move too slowly. Others are too volatile. Some lack the liquidity you need to enter and exit positions efficiently. In this guide, we cover the criteria for selecting stocks that are ideal for swing trading.
What Makes a Good Swing Trading Stock?
The best swing trading stocks share several characteristics that make them predictable enough to trade but volatile enough to generate profits.
The ideal swing trading stock: Has enough volatility to make meaningful moves, enough liquidity to enter and exit easily, respects technical levels, and is not subject to extreme unpredictable events.
Essential Screening Criteria
1. Liquidity (Volume)
Liquidity is crucial. You need to be able to get in and out of positions without moving the price against yourself. Low volume stocks have wide bid-ask spreads and can trap you in positions.
- Minimum daily volume: 500,000 shares per day
- Better: 1 million+ shares per day
- Average dollar volume: At least $10 million per day
2. Price Range
Stock price affects how much capital you need and how the stock moves. Very cheap stocks can be manipulated, while very expensive stocks require more capital.
- Minimum price: $10 (avoid penny stocks)
- Sweet spot: $20 to $150
- Maximum price: Depends on your account size
3. Volatility
You need stocks that move. A stock that only moves 1% per week will not generate meaningful swing trading profits. Look for stocks with moderate volatility.
- Average True Range (ATR): At least 2-5% of stock price
- Beta: Between 1.0 and 2.0 (moves more than the market but not excessively)
- Avoid: Extremely high beta stocks (above 3.0) unless you are experienced
Volatility Screening Example
You are screening for swing trading candidates:
- Stock A: Price $50, ATR $1.00 (2% daily range) - Good
- Stock B: Price $50, ATR $0.25 (0.5% daily range) - Too slow
- Stock C: Price $50, ATR $5.00 (10% daily range) - Too volatile for beginners
Stock A is the ideal candidate. It moves enough to profit but not so much that it is unpredictable.
4. Clear Trend or Pattern
The best swing trading stocks show clear technical structure. They trend well, respect support and resistance, and form recognizable patterns.
- Price respects moving averages (bounces off 20 or 50 MA)
- Clear swing highs and swing lows
- Identifiable chart patterns (flags, triangles, double bottoms)
- Avoid choppy, erratic price action
Sectors That Work Well for Swing Trading
Some sectors tend to produce better swing trading opportunities than others:
Technology
Tech stocks often have good volatility and volume. They trend well and attract a lot of trader interest. Major tech stocks like AAPL, MSFT, NVDA, and META are popular swing trading vehicles.
Consumer Discretionary
Retail and consumer stocks often move on earnings and economic data. They can provide good swing opportunities around these events.
Financial Services
Bank stocks and financial services companies often trend well and respond to economic cycles. They tend to have high liquidity.
Sectors to Approach Carefully
- Biotech: Can have extreme moves on FDA decisions - high risk
- Utilities: Often too slow-moving for swing trading
- Small-cap speculative stocks: Can be manipulated and may lack liquidity
Where to Find Swing Trading Candidates
Stock Screeners
Use a stock screener to filter stocks based on your criteria. Most brokers offer screening tools, and there are many free options available online.
Basic Swing Trading Screen
Set up a screener with these filters:
- Average volume > 500,000
- Price between $20 and $150
- Price above 50-day moving average (uptrend)
- RSI between 40 and 60 (not overbought or oversold)
- ATR percent > 2%
This screen will give you liquid, trending stocks with reasonable volatility that are not extended.
Relative Strength Lists
Look for stocks that are outperforming the market. These tend to continue outperforming and offer good long opportunities.
52-Week High/Low Lists
Stocks making new highs are showing strength. Stocks near lows that are starting to turn can offer reversal opportunities.
Sector ETFs
Look at which sector ETFs are trending. Then dig into the top holdings of those ETFs to find individual stock opportunities.
Building a Watchlist
You do not need to trade hundreds of stocks. Focus on a manageable watchlist of 20-30 stocks that you know well.
Watchlist Management Tips
- Know your stocks: Understand how each stock on your list typically behaves
- Regular review: Update your watchlist weekly to remove stocks that no longer meet criteria and add new candidates
- Diversify by sector: Have representation from multiple sectors
- Include different volatility levels: Have some steadier stocks and some more volatile ones
Stocks to Avoid
Some stocks are not suitable for swing trading:
- Penny stocks (under $5): Easily manipulated, wide spreads, unreliable technicals
- Low volume stocks: Difficult to enter and exit, price can be moved by small orders
- Stocks with pending binary events: FDA decisions, merger votes, legal rulings - too unpredictable
- Heavily shorted meme stocks: Prone to squeezes and extreme volatility
- Stocks in bankruptcy or restructuring: Fundamentally unstable
Remember: Boring is often better. You do not need to find the next big mover. Consistent profits from predictable stocks add up over time.
Timing: When to Trade Which Stocks
Different market conditions favor different stocks:
- Bull market: Focus on growth stocks, high-beta names, momentum plays
- Bear market: Focus on defensive sectors, short opportunities, or stay in cash
- Choppy market: Focus on range-bound trading opportunities, reduce position sizes
- Earnings season: Be cautious with stocks about to report; opportunities exist after earnings when the dust settles
Track Your Stock Selection Performance
Pro Trader Dashboard shows you which stocks you trade profitably and which ones give you trouble. Use data to improve your stock selection over time.
Your Stock Selection Checklist
Before adding a stock to your watchlist, ask:
- Does it have at least 500,000 average daily volume?
- Is the price between $10 and your maximum position size comfort level?
- Does it have enough volatility to make meaningful moves (ATR > 2%)?
- Is there a clear trend or pattern on the chart?
- Does it respect technical levels (support, resistance, moving averages)?
- Is there any pending binary event that could cause unpredictable moves?
Summary
Selecting the right stocks is fundamental to swing trading success. Focus on liquid stocks with at least 500,000 average daily volume. Choose stocks priced between $10 and $150 with moderate volatility. Look for clear technical structure and avoid speculative penny stocks. Build a focused watchlist of 20-30 stocks you know well. The best swing trading stocks are predictable enough to analyze but volatile enough to generate profits.
Continue your education with our guides on swing trading ETFs and swing trading futures.