When swing trading stocks with momentum the lowest risk entry is on first valid swing trading setup after momentum is established.
REN above is an example of a anticipation setup that is more risky as of now.
In order to find momentum in above example of REN we are using Stockbee Trend Intensity Indicator TI 65 ( which gives you momentum for a quarter). The green zone indicates TI65 values above 1.05 and that confirms stocks has established above average momentum or is in Intensely trending period.
Once TI 65 is above 1.05 the first or second swing trading setup that develops due to pullback or sideways consolidation is the ideal buy setup. It is a trend continuation setup. In case of REN that successful setup was on August 4th. Earlier breakout on July 22 failed to follow through.
As you can see in the chart below that day it appeared in STIB ( Stockbee trend intensity breakout scan ) signalling swing entry. In next 14 days stock went up 162%. Subsequent breakout had much smaller 30% follow through.
Now it is again setting up , but now it is a risky setup as the trend has progressed for many days and chances of reversal or range bound action are more.
If you want to hold stocks for longer term swing moves then getting in to momentum stock early is key. Early entry allows you to hold it for longer duration as against 3 to 5 day hold for normal swing.
As momentum phase progresses stock can setup multiple times and offer swing trade opportunities , but risk increases as trend matures.
If you are looking for longer duration position swing trades or trend tardes then focus on “Young momentum Candidates”
Look for stocks that have just entered momentum phase and are now having their first consolidation or pullback.
Here are some of the“Young momentum Candidates” setting up for possible breakouts:
If you want to make money swing trading focus on “Young momentum Candidates”