In this blog, I aim to provide valuable insights and guidance, especially for newcomers, on the importance of building a strategic watchlist and avoiding common pitfalls.
The Five-Step Process for Successful Swing Trading
To demystify the complexities of swing trading, I follow a five-step process:
Identify Potential Stocks: Focus on stocks with significant market attention, often found in constituents of major indices.
Monitor Stocks: Regularly track identified stocks, staying informed about market movements, new trends, impact of volatility and the personality of the stock you have chosen
Enter Strategically: Base entry decisions on technical analysis, ensuring optimal timing. Don't let your assumptions affect your judgement. Try to remain objective as you analyse the charts and plan your trades rather than react to observations.
Trail Stop Loss: Implement a disciplined approach to trailing stop losses, protecting capital and unrealised gains
Exit Profitably: Exit trades when stop-loss levels are reached, realizing profits in your portfolio.
Creating an Effective Watchlist
The foundation of successful swing trading lies in creating a robust watchlist. I use a straightforward process to build mine, leveraging market indices to identify potential stocks which have high liquidity and then manually weed out stocks with any corporate governance issues or sketchy management or any other fundamental problems. In the Indian stock market, focusing on major indices like Nifty 50, Nifty Next 50, Nifty Midcap 150, and others helps streamline the selection process. Here's a list of indices I refer to every quarter to refresh my watchlist
BROAD MARKET INDICES | WATCH LIST RULES | LINKS |
NIFTY 50 | ALL STOCKS | |
NIFTY NEXT 50 | ALL STOCKS | |
NIFTY nMIDCAP 150 QUALITY 50 | ALL STOCKS | |
NIFTY SMALL CAP 50 | TOP 25 STOCKS ONLY | |
Strategy indices | ||
NIFTY50 VALUE 20 | ALL STOCKS | |
NIFTY100 QUALITY 30 | ALL STOCKS | |
NIFTY zDIVIDEND OPPORTUNITIES 50 | ALL STOCKS | |
NIFTY zGROWTH SECTORS 15 | ALL STOCKS | |
NIFTY200 MOMENTUM 30 | ALL STOCKS |
Efficiency in Watchlist Management
Efficiency is key in managing a watchlist. Utilizing tools like Excel sheets, charting, and trading view, I streamline the process of updating and analyzing stocks. By maintaining a disciplined approach to watchlist creation, I ensure that the stocks selected are fundamentally strong, providing liquidity and minimizing uncertainties.
I have dashboard dedicated to my watchlist creation. Every quarter, I open all the links to the indices on the NSE website and download the csv files. Then I copy paste the contents of this CSV file into my dashboard. At this point I am not concerned about the overlaps and repetitions of stocks amongst these indices, because trust me, there will be many.
Once I have copy and pasted the files, the excel has built formula to not only select the unique stocks but also present it in the right format to seamlessly copy and paste this list on different tools I use in the proceed to trade analysis and execution- Google Sheet, Tradingview and ChartInk
The Power of Screener Tools
Screener tools play a pivotal role in identifying potential entry points within the watchlist stocks. The Opportunity Screener, used in Chatink, employs specific settings to filter stocks with bullish underlying trends and buy-on-dip opportunities using the RSI filters across timeframes such as 15min, 75min and D. This tool aids in highlight stocks that align with my strategy, but its output are not be considered a blind buy. Follow up analysis and identification of the decision window are key for proper execution. This is part of planned execution.
Market Commentary and Future Outlook
Understanding the market's current state makes a significant contribution to successful trading. Analyzing market trends, volume indicators, and momentum helps in making objective decisions. You can opt to stay abreast of the daily market commentary shared in the Trade with Kavita channel. In my comments I aim to provide valuable perspectives for traders.
Conclusion
In the world of swing trading, consistency is paramount. From watchlist creation to trade execution, maintaining a disciplined approach ensures long-term success. Whether you choose to learn through training programs or prefer a more hands-on approach, remember that success in trading is a journey that requires continuous learning and adaptation.
By implementing these strategies and insights, traders can navigate the complexities of the market with greater confidence and enhance their chances of achieving sustainable success in swing trading.
For those seeking hands-on guidance and recommendations, joining programs like the Trade Together program by clicking on following link: https://t.me/tradewithkavita
or the Advanced Technical Analysis Training can be beneficial.
These programs offer live training sessions and swing trading recommendations, providing a structured approach to mastering the art of trading.
Watch past webinars for more technical analysis and swing trading knowledge sharing https://www.youtube.com/@EXP_Invest
Thank you for reading!
-Kavita Agrawal CMT CFA
