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A Strategic Approach to Stock Analysis in Swing Trading

In this blog, I will delve into the nitty gritties of stock analysis for swing trading purposes. Swing trading requires a deep understanding of price action, and in this blog, I'll explain the methodology behind creating a successful swing trading strategy.


Work smart, not hard

For the purpose of swing trading, every stock has a unique way of unfolding into price action. Even minor variabilities like RSI of of any time frame touching, hovering over or breaching the level of 30 during various stages of trend's correction within various wave lengths can make or break your swing trading success story.


Isolating these individualities necessitates sharp attention to price action of each stock in your watchlist. I emphasize the importance of working with a limited watchlist for this purpose. This selective approach allows for in-dept analysis, building insights and much better decision-making. Cover less ground but be more thorough.


Understanding Price Action Analysis

For swing trading, price action analysis is paramount. However, analysis without a system is not very useful. In order to take the full advantage of your analysis, it is important to incorporate a system which will allow for precise execution.


The Four-Color Watchlist Strategy

My strategy involves a dynamic watchlist of approximately 200 stocks, which is shared on the following link https://in.tradingview.com/watchlists/61558431/ I like to categorize this into four distinct groups, each marked by a color code reflecting a status:

  1. Red Category: These are the inactive stocks, ones that are not in a primary bull trend. To swing trade, it is beneficial to trade in the direction of the trend. Stocks in the watchlist can go into downward or sideways trends. Rather than eliminating such stocks from my watchlist, I prefer to mark then red so that in case my screen picks up on them (which it is bound to) I don't have to waste time in reassessing these stocks again. Stock which make it to the red list have qualifying price based or indicator based alerts to keep a check them for potential bottom reversal.

  2. Orange Category: Stocks flagged orange have been identified by my screening process as showing potential for swing trade entry. This category is fluid, with stocks moving in and out based on ongoing analysis. This is the first step in identifying a potential entry in a stock.

  3. Pink Category: The stocks in pink are those under active monitoring, on the cusp of meeting all criteria for entry. When a stock in orange category proves worthy of my capital based on volume indicator and price action analysis, it is promoted to the pink list. They exhibit signs such as RSI positive divergence on 15min and/or 75min timeframe, volume pick up wit price pick up, strong underlying trend on higher time frames, among other things, all of which indicate an imminent opportunity for making money.

  4. Green Category: Finally, stocks that have met all conditions and are actively part of my trading portfolio are marked green. These are the stocks currently engaged in swing trades.



Advanced Technical Analysis: The Bedrock of Decision Making

At the heart of this watchlist strategy lies advanced technical analysis, a skill I impart through my training bootcamp. This analysis involves a deep dive into the stock's price history, employing tools such as trend lines, Fibonacci Ratios, and indicators such as the Relative Strength Index (RSI), MACD for vol and various EMAs to gauge momentum and identify potential entry and exit points.

A critical step in stock analysis is the drawing of trend lines and support resistance zones. These aide in mapping out the stock's price trajectory. By identifying major peaks and troughs, one can discern the stock's forward looking general direction and pivotal moments of resistance and support.

The RSI, with my customized settings for different time frames, plays a crucial role in determining the stock's momentum. By marking periods when the RSI touches certain thresholds, it is possible catch stocks very close to their potential bottoms.


Conclusion

Swing trading is not merely a set of mechanical steps but an art that requires an in-depth understanding of market's pulse and the ability to anticipate movements in prices before they happen. The methodology discussed here is designed to equip traders with the tools and knowledge to navigate the complexities of the market. This article barely touches upon the wealth of insight I have uncovered about effective swing trading over the last 12 years, let alone the system I have developed for churning my capital to generate alpha.



If you wish to be part of my Trade Together Program ad benefit from my analysis, consider exploring the swing trading recommendation plans


If you wish to become an swing trader then my Advanced Swing Trade Training can be beneficial for you. This program consists of live training.


Watch my past webinars for more technical analysis and swing trading knowledge for free https://www.youtube.com/@EXP_Invest 


Thank you for reading!


-Kavita Agrawal CMT CFA

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