Best Swing Trade Stocks

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Day trading might sound like a fun way to make a living, but it’s a hard game for new traders to break into. Not only do day traders need high-tech stock scanners to locate stocks with potential, but the Financial Industry Regulatory Authority (FINRA) has strict rules in place limiting who can day trade. Remember, you must take great pains to get certified and learn the trade before you start spending your hard-earned money.

Unless you have an account balance of $25,000, you’ll be limited to 3-day trades in a rolling 5-day period. That means if you complete 3-day trades on Monday and open a new position on Tuesday, you’ll need to hold that position overnight to avoid getting flagged with a pattern day trader (PDT) violation. But most brokers won’t even let a 4th-day trade execute — and you could be stuck holding the bag. Weigh these risks against the rewards that might be out there before making that next trade.

To avoid these FINRA restrictions, many investors use swing trading. Swing trading is still a short-term trading strategy but stocks are held overnight to avoid the PDT rules. Swing traders hold stocks for 24 hours to 2 days hoping to profit off high volume swings like short squeezes or earnings beats (misses). 

Your swing trading strategy should match your needs overall, but you need to look at what a price move is doing to your strategy today, an exit point for these investments and stocks to swing trade today.

Quick Look at the Best Swing Trade Stocks:

Overview: What Are Swing Trade Stocks?

Swing traders expose themselves to the most volatile moves by holding overnight, however, the profits can be exponentially higher, especially if using options. The best stocks for swing trading are ones with known catalysts, high volume and enough volatility to make short-term trading profitable. Remember, your trading plan should dictate what you do and you should use stop loss orders to protect yourself.

Sectors matter little when swing trading, nor do fundamentals. This is not investing for the long term, so technical signals matter more than price ratios and debt loads. A company with a mountain of long-term debt and dry cash flow can still be a perfectly profitable swing trade. At the same time, you may need to move away from that asset for a while before you try a swing trade in the future.

Successful swing traders have to be nimble with their convictions — a stock with accumulating volume ahead of earnings might be one to sell short instead of buy. Swing traders use a variety of different strategies to enhance profits, but the stocks they look for all share a few common characteristics. At the same time, good characteristics might not be enough for your portfolio. Do your research, only invest in assets you understand and construct your portfolio in a manner that matches your strategy. Don’t just go along with the crowd when there are so many stocks to choose from because you can trade stocks in your own time, use the trading system you prefer and look for price action that works best for you.

At the same time, you might circle back to certain assets over time. What does this mean? You might swing trade a stock in the next few days, and you might go back to it in a few months because it presents yet another option for you to make money. At the same time, you need to be sure that the trade you’re planning can last as long as needed so that you can make money. Some swing trades won’t work out because of the timeframe, and that’s alright.

You can find options online to help you get started swing trading. Mindful Trader provides stock picks and options picks, but it can also teach you the trading strategy behind them. The Mindful Trader approach is based on data and statistics. Sign on for support from Mindful Trader for just a flat $47 per month.

Best Online Brokers for Swing Trade Stocks

Swing trading and long-term investing are completely different animals, so you’ll need a broker that fits your needs. Swing traders should look for brokers with $0 commission or discounts on high-volume trading. Remember, not every broker is the same, and you should choose the bonuses, interface and information you prefer.

You don’t need a $25,000 account balance to swing trade, but you’ll likely need a margin account if you want to sell short or swing trade with options. Remember, margin trading comes with quite a bit of risk, but it can be profitable if managed well. And since the best swing trading stocks are often thinly-traded small caps with only a handful of shares available, make sure your broker has a wide assortment of stocks to trade. You should also make sure that the platform is so easy to use that you can make snap decisions without waiting for the broker to catch up.

Features to Look for in Swing Trade Stocks

When searching for swing trading stocks, don’t look at debt levels or price-earnings ratios. Those stats might matter for a company’s long-term prospects, but swing traders care about where a stock will be a couple of days, not a couple of years or decades. This is why swing trading tactics are so important because every trade opportunity is different, and you must seize the moment when you can.

Here’s what to look for if you want to get into swing trading.

1. Catalyst: Most swing trades begin by locating a catalyst that could trigger a powerful move in a stock. This could be a clinical trial in a pharmaceutical company, an unexpected earnings miss or beat, or even the removal of an executive or CEO. 

1. Volume: Big moves in short time frames are impossible without significant volume in the stock. Sure, lightly-traded stocks can be coerced into big moves without much volume. But in the majority of your swing trades look for stocks with more volume than usual.

1. Volatility: With great volume comes great volatility. Volatile stocks are good swing trading stocks because swing traders profit from large, short-term moves. A stock trading in a tight weekly range likely won’t produce a ton of opportunities for profit. But if 5% moves are occurring daily, you’ll find plenty of chances for swing trades.
2. Information: You need information on these stocks if you plan to swing trade. Remember, if you can’t pull up the information, you might not want to swing trade. If you cannot properly research an asset, why would you invest in it? For more data, you can check out Benzinga every day as there’s always new news, current events and figures for investors to review.

Swing Trading for Short-Term Profits

Swing trading is not a long-term investing strategy. In fact, it’s not even really investing at all. The stock market is an accounting system for long-term financial prospects and investors use it to get a piece of those (eventual) profits. But swing traders look at the market differently. By using technical trading signals in volatile markets, swing traders can make great profits in short time periods. Swing trading requires precision and quickness, but you also need a short memory.

You will have a trade blow-up when swing trading; how you react determines how successful you can be as a swing trader in the long run. Remember, you can adjust your portfolio at any time, and you can use these stocks to your advantage. If they don’t seem to offer the performance or results that you desire, you can move on to other assets.

You cannot swing trade everything, and you cannot build diversity in your portfolio if you don’t plan to hold some items and sell others. That’s the nature of investing. Nothing is perfect, nothing can be thought of as sacred and there are times when you simply need to move on. You could, however, come back to these assets in the future if they suit you once more.

Want to learn more? Check out Benzinga’s guides to the best swing trading courses, best online brokerages, free stock trading and best stocks under $5. You can learn more about market conditions, resistance levels, trendlines and more.

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