Top 3 Stocks for Novice Swing Traders

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Top 3 Stocks for Novice Swing Traders

Trading swings Purchase a stock for a few days, then sell it for a profit after the price has risen. That is, after all, the aim. If this is something that interests you, the easiest approach to learn rapidly is to start by selecting the correct stocks to purchase in the first place. Consider large-cap companies first because they have a high number of shares changing hands at any one time (called liquidity), making them simple to acquire and sell fast.

Key Takeaways

  • Swing traders aim to purchase a stock, hold it for two or three days, and then sell it for a profit.
  • Not all equities are appropriate for swing trading.
  • The top prospects have enough liquidity and consistent price movement.
  • In certain market situations, Meta (previously Facebook), Apple, and Microsoft are attractive stocks for swing trading.
  • Consider practice trading before risking real money to discover whether swing trading is right for you.

Picking Swing Stocks

When looking for a stock to swing trade, look for equities that are reasonably calm, meaning they do not display significant price movements, also known as volatility. Stocks that are going slightly up or down, with consistent price movement but not too much volatility, are ideal. The purpose of swing trading is to earn a livelihood rather than a fortune on a single deal.

The three equities listed below are notable for their liquidity and consistent price movement. Following these stocks and making paper trades before going on to live transactions with real money is beneficial. It’s critical to understand when to purchase and when to sell, but keep in mind that market circumstances change often, and a strategy that worked in the past may not work in the future.

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Keep in mind that these are only three solid instances out of dozens, if not hundreds, of potential swing trading options.

Facebook

Meta (META), previously Facebook, is an excellent company to learn how to trade trendlines with. When you look at the stock chart, you can see that the low points in the pattern all line up as the stock zigzags higher. A rough line may be drawn across these low locations. This is the downward trend line. Every time the stock crosses that line, it has the potential to rise again.

The fact that you may utilize a moving average line, such as the 50-day moving average, as the bottom trend line makes this stock very appealing to begin with. Similarly, you may draw a trendline across the stock price’s highs.

When Facebook approaches the top trend line, it tends to revert to the lower trend line. Please keep in mind that these trend lines are just estimates. Rather than relying on tight adherence to the defined trend lines, you must have the ability to recognize when the stock price is likely to flip.

In February 2022, around 28.7 million shares are purchased and traded everyday, making it simple to discover buyers and sellers. This indicates that the stock is liquid, and you can simply exit your position if the price starts to fall.

Microsoft Corp.

You may trade Microsoft (MSFT) stock in the same way that you would trade Meta. The 50-day moving average may once again be used as a rough indication for the lower trend line. The top trendline might be a little jagged, which can help you get a sense of when the stock is likely to increase and fall.

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Because market circumstances are always changing, the best stocks for swing trading may be quite different in the future.

Nonetheless, the stock is moving consistently enough that you can expect it to maintain its pattern for a long and learn to time your buy and sell opportunities on a regular basis. Draw a line across the highs to estimate the price at which you should sell. It is worth noting that the longer the trendline, the more probable the line is correct. As of February 2022, around 37.2 million shares are purchased and traded each day.

Apple Inc.

Apple Inc. (AAPL) will take a bit more subtlety than Microsoft and Facebook. Apple has a plethora of product releases and announcements that impact its stock price, which might offer a new dimension to your swing trading. Keep an eye out for such announcements and keep an eye on how the stock price reacts. You may pace your trades by watching the technical indicators on the chart and combining them with the fundamentals of the firm. As of February 2022, about 106 million shares are purchased and exchanged per day.

The Bottom Line

To get started with swing trading, choose equities that regularly display established chart patterns. Large-cap companies with ample liquidity, such as MSFT, FB, and AAPL, are usually good places to start. Next, start making predictions about the peaks and valleys on the charts, and you may find yourself in the swing trading mode.

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