To select the best stocks for swing trading, focus on high liquidity, moderate volatility, clear price trends, and upcoming market events. In India, swing traders usually prefer NSE and BSE-listed stocks that can be bought and sold easily with strong daily trading volumes.
Swing trading involves holding stocks for a few days to a few weeks to profit from short-term price swings. Good swing trading stocks are identified using technical indicators (Moving Averages, RSI, MACD), sector strength, and news triggers like earnings or government policy updates. In this guide, we explain the step-by-step process to pick stocks for swing trading in India, along with tools, strategies, and FAQs to help you trade smarter.
What is Swing Trading
Swing trading is a trading style where investors hold stocks for a few days to weeks to profit from short-term price swings. Unlike intraday trading, positions are not closed the same day, giving traders more flexibility.
In India, swing traders usually focus on NSE and BSE-listed large-cap and mid-cap stocks with high liquidity and clear price patterns. Swing trading relies on analysing charts, technical indicators, and market trends to buy stocks at lower levels and sell them at higher levels without constantly monitoring markets.
Understanding Swing Trading Stock Selection
Choosing the right stocks is crucial for swing trading success. Here’s what you need to consider:
- Liquidity: Ensure that the stocks you choose have high liquidity. The Share can easily be bought and sold without causing significant changes in price. Stocks that constitute high trading volumes are more liquid.
- Volatility: Look for stocks that show significant price movements. High volatility will present more opportunities to buy at low and sell at high. However, return expectations rise proportionately with increasing risk.
- Market Trends: Analyze overall market trends and sector performance. The stocks belonging to trending sectors generally offer better swing trading opportunities. For instance, technology or healthcare sectors may be more active in Terms of trading as compared to other sectors.
- Technical Indicators: Moving Averages, RSI, and MACD are examples of technical indicators. These help in the inference of future price movements from past data
- News and Events: Keep up to date with the latest news regarding your stocks at hand. Earnings reports, product launches, and other noteworthy events cause fluctuations in the prices of stock.
Understanding Swing Trading Stock Selection
To select the best stocks for swing trading in India, focus on these 5 key factors:
- High Liquidity – Pick NSE/BSE-listed stocks with large daily trading volumes. For example, Reliance Industries, Infosys, and HDFC Bank are highly liquid and easy to buy or sell.
- Moderate Volatility – Choose stocks with an Average True Range (ATR) of around 2–5%. This ensures there are enough price movements to capture profits without extreme risk.
- Market Trends – Look for stocks in strong-performing sectors like IT, Pharma, or Banking. Sector momentum often improves swing trading success.
- Technical Indicators – Use Moving Averages, RSI, and MACD to identify entry and exit points. These tools help you track price momentum and trend reversals.
- News & Events – Keep track of company earnings, RBI policies, and government announcements. Such events often create short-term opportunities for swing trades.
How to Choose Stocks for Swing Trading
Finding the best stocks for swing trading in India requires a systematic step-by-step process. Below are the 7 key steps to select swing trading stocks that work well on NSE and BSE.
1. Screen for Liquidity & Volume
Always start by checking if the stock has high trading volumes. A liquid stock ensures you can easily enter and exit positions without major price slippage.
- NSE and BSE large-cap and mid-cap stocks like Reliance Industries, Infosys, HDFC Bank, TCS are highly liquid.
- Avoid penny stocks with low volume, as they may not give consistent swing opportunities.
2. Check Stock’s Volatility (ATR 2–5%)
Swing trading works best in stocks with moderate volatility. Too low volatility means fewer opportunities; too high makes it risky.
- Use the Average True Range (ATR) indicator – ideally between 2% to 5% of stock price.
- Example: A ₹100 stock with ATR of ₹3 (3%) is a good candidate.
3. Do Technical Analysis
Technical analysis helps identify entry and exit points. The main tools are:
- Moving Averages (MA): Show trend direction. For example, if a stock trades above its 50-day MA, it indicates bullish momentum.
- Relative Strength Index (RSI): Helps see if a stock is overbought (above 70) or oversold (below 30).
- MACD (Moving Average Convergence Divergence): Signals momentum changes and potential buy/sell points.
- Example: If Infosys RSI shows 35 and it bounces from the 50-day MA, it may be a good swing entry.
4. Review Fundamentals
Even in swing trading, a stock’s financial strength matters. Look at:
- Quarterly earnings reports (strong profit growth attracts buyers).
- Balance sheet strength (low debt, stable cash flows).
- News releases (partnerships, product launches, or leadership changes).
Example: If HDFC Bank posts strong earnings, it can trigger a short-term uptrend suitable for swing trades.
5. Analyse Sector Strength
Sectors move in trends. Swing traders gain better results by following strong-performing industries.
- In India, IT, Pharma, and Banking often lead in momentum phases.
- If the Nifty Pharma index is showing strength, stocks like Sun Pharma or Dr. Reddy’s may give better swing setups.
6. Consider Market Sentiment & News
Market mood (sentiment) often drives short-term price moves. Watch for:
- Union Budget announcements (impact on infra, PSU, or banking stocks).
- RBI policy updates (influence banking and financial stocks).
- FII inflows/outflows (foreign investors buying boosts large-caps like Reliance, Infosys).
- Social media and expert commentary can also spark short-term momentum.
7. Use Multiple Timeframes
To confirm swing trades, always check more than one chart timeframe:
- Daily chart: For overall trend (bullish/bearish).
- 4-hour or 1-hour chart: For precise entry and exit points.
- Example: If TCS shows an uptrend on the daily chart and a pullback on the 4-hour chart, it could be a strong buy setup.
- Finviz: A powerful stock screener that helps you find stocks based on various filters.
- StockFetcher: Another great tool for screening stocks using custom criteria.
- TradingView: An advanced charting platform with a strong community of traders attending.
- MetaTrader: Offers comprehensive charting and analysis tools.
- ThinkorSwim: A robust platform provided by TD Ameritrade, excellent for in-depth technical analysis.
- Seeking Alpha: Provides market news, analysis, and research tools.
- MarketWatch: Offers financial news, stock market data, and analysis.
4. Mobile Apps
ShreeVarahi (Lakshmishree): A user-friendly app for trading stocks with no annual fees.
Indicators To Identify Stocks for Swing Trading
Before selecting any stock for swing trading, traders must analyse it using technical indicators. These tools help in understanding market trends, price momentum, and possible entry or exit points. Below are the most widely used indicators for swing trading in India:
1. Moving Averages (MA)
- Definition: Moving Average shows the average price of a stock over a selected time period, helping to smooth daily price fluctuations.
- Usage: Swing traders often track when the short-term MA (20-day/50-day) crosses the long-term MA (100-day/200-day). A bullish crossover suggests an uptrend; a bearish crossover signals a downtrend.
- Example: If Reliance’s 20-day MA crosses above its 50-day MA, traders may take it as a buying opportunity.
2. Volume
- Definition: Volume measures the number of shares traded in a specific time frame and shows the strength of a price move.
- Usage: A breakout supported by high volume is more reliable than one with low volume. Without volume confirmation, price moves may be false.
- Example: If Infosys breaks above resistance with high trading volume, the breakout is considered strong.
3. Relative Strength Index (RSI)
- Definition: RSI is a momentum oscillator that ranges between 0–100. It shows if a stock is overbought (>70) or oversold (<30).
- Usage: Stocks near 30 may see upward swings (buying opportunities), while stocks above 70 may face corrections (selling opportunities).
- Example: If HDFC Bank’s RSI falls to 28, it may signal a short-term bounce.
4. Ease of Movement (EOM)
- Definition: EOM links price change with volume, showing how easily a stock’s price can move.
- Usage: A high positive EOM indicates the price can rise with less resistance; a negative EOM signals ease of downward movement.
- Example: If TCS shows positive EOM along with rising price, traders may consider it a bullish sign.
5. Support and Resistance
- Definition: Support is the price level where demand prevents further fall; resistance is where supply stops further rise.
- Usage: Traders use these levels to plan entry and exit points. Buying near support and selling near resistance is a common swing trading strategy.
- Example: If Sun Pharma consistently bounces near ₹1,000 (support) and struggles to cross ₹1,200 (resistance), traders may swing trade within this range.
Advantages Of Swing Trade
- Swing trading takes up less time than Intraday trading and can be done part-time.
- It does not tie up the capital for as long as it is for a short period.
- Swing trading is flexible as if the stock they bought is in loss after the specific time they are not bound to sell it.
- Swing Trade helps the investors earn short-term profits which helps them fulfill some of their short-term goals.
Difference Between Swing and Day Trading
Swing Trade and Day Trade are very similar in many ways. But there are some differences between them mainly regarding holding time and the number of transactions.
- Swing trading can be held for more than one day and maybe for a few weeks, while in Day trading, the position needs to be squared off before the end of the trading day.
- In Day trading, multiple trades with many transactions take place in a day, while Swing traders may do the same number of trades in a week with few transactions.
- Day trade requires constant attention, while Swing Trade can be done part-time and periodically without the hassle of checking the prices multiple times during the day.
- The gains and losses are slow in Swing trading compared to Day Trading, where they can earn or lose money in the blink of an eye.
Conclusion
Swing trading is a smart way to capture short-term price moves in NSE and BSE stocks. To succeed, traders should always pick liquid stocks with clear price trends, use both technical and fundamental analysis before entering trades, and manage risk by setting proper stop-loss levels. Unlike intraday trading, swing trading allows more time to plan and execute, making it easier for beginners to learn. However, traders must avoid entering positions just before major events like earnings announcements, RBI policy updates, or government budgets, as these can cause unexpected volatility.
Frequently Asked Questions
1. What does swing mean in the Swing Trade?
Swing is a movement of a share's price, whether upward or downward and sometimes it may bring new levels of the price of that share.
2. Which is better Swing trading or Day trading?
Both are similar in many ways other than the holding period, a trader who wants a really quick profit should go for day trading while if they want a high profit, they can go to swing trading.
3. How can swing trading be successful?
Before making any trade if a lot of technical and fundamental analysis is done and have seen the past movements of the price, they are said to be more successful.
4. What is the time frame to hold security in a swing trade?
If the trader is making a swing trade he should hold his share for at least a few weeks and book their profit when the price is high of that share.
5. How to pick a stock for swing trading?
To pick a stock for swing trading, follow these steps:
1. Look for High Liquidity: Ensure the stock trades at least 500,000 shares daily.
2. Identify Clear Trends: Select stocks with a clear upward or downward trend.
3. Check Volatility: Opt for stocks with an Average True Range (ATR) between 2% to 5%.
4. Use Technical Indicators: Analyze stocks using tools like Moving Averages (MA), Relative Strength Index (RSI), and Moving Average Convergence Divergence (MACD).
5. Monitor News and Events: Stay updated on earnings reports and other significant events.
6. What is the best strategy for swing trading?
The best strategy for swing trading involves a combination of technical and fundamental analysis. Key strategies include:
1. Trend Following: Trade in the direction of the market trend.
2. Breakout Trading: Buy stocks breaking through resistance levels.
3. Reversal Trading: Trade stocks at potential reversal points using indicators like RSI and MACD.
4. Support and Resistance Levels: Use these levels to identify entry and exit points.
Disclaimer: This article is for educational purposes only and should not be considered financial advice. Always conduct your research and consider consulting with a financial advisor before making any investment decisions.
