Have you struggled to pick up the best stocks for swing trade? Have you wondered when would be the best timing to get in and get out? Today I would like to introduce 5 factors to look when picking out the potential ticker to swing trade, hope these would provide values to you!
- Market Cap
I usually choose from large ($10–200 billion) or middle market cap ($2–10 billion) stocks because those companies are solid and the stock price is difficult manipulated by institutional investors. If you choose micro ($50–300 mill) or nano market cap (< $50 mil), some institutional investors may use as less as 5 million to creat price increase or decrease and thus lure the retail customers into the market. Those institutional investors can then make reverse operations to take advantage of these individual investors.
2. Average Volume
Choosing relatively volatile stocks can help you get in and out of the market fast, because there are so many traders trading these stocks, you can easily execute your trades. I choose “Average Volume” instead of “Current Volume” because the average volume reflects the long-term volatility and you would not be mislead by some short-term numbers. As mentioned previously, short-term volatility can also be made on purpose by those institutional investors who have larger asset size.
3. EPS Growth
EPS growth in the past 5 years may show the profitability of the company. According to an article on Seeking Alpha, when EPS has continuous growth for the past 3 quarters, the momentum has formed and thus the stock price is likely to going up. You may wonder whether the hiughter the EPS the better. In fact, a lot of high growth tech companies spend a lot on R&D every year, or they would do some M&A with smaller companies, so these larger expenses will affect the EPS temporarily. So I think set EPS>o would be enough to filter out growth companies without missing those who have invested in short-term for more growth long-term (like Amazon).
4. P/E Ratio
P/E ratio is how many times of the value you would like to pay for the stock, and it reflects whether the stock is cheap or expensive. I usually look at the stocks with PE ration<20, as what I’ve learned from Warren Buffett “buy a great company at an appropriate price”. But in the current situation when the Fed print trillions of cash and inflation is probably happening, I will choose “PE<25” as one of the stock screener filter. I think the $100 invested now will be less valuable than the $100 invested a year ago…
5. Industry
The final criteria is to pick up the industry you think would be bullish or the industries you have done more research. Since there would not be many choices I didn’t include this factor in my scanner today. Usually, I like to pick “software” or “food” industries, one for growth one for stable return.
Here are the stocks I got from the stock scanner today:
After that I would sort the stocks by volume and go one by one to decide which one I will swing trade for the day. I would probably picked up the stocks that I have done fundamental analysis before like $GOLD, $ET, $CVS, $KR etc.
Hope the swing trade scanner setup steps would be helpful and I would like to hear what criteria you guys use for your screener setup!
Check out the awesome stock screener App:
Apple Version https://apps.apple.com/us/app/smart-stock-screener/id1501485233
Android Version
https://play.google.com/store/apps/details?id=com.hithink.stockscreener
Check out the Penny Stock Screener App: https://apps.apple.com/us/app/penny-stocks-screener-map/id1505985895
Live Stock Market Simulator
https://apps.apple.com/us/app/live-stock-market-simulator/id1515283695
Investing Courses-Learn Stocks
https://apps.apple.com/us/app/investing-courses-learn-stocks/id1518997730
