最後更新日期：2023年09月08日
Swing trading has always been a favored investment strategy among investors, as it can be applied in markets exhibiting upward trends, downward trends, and periods of consolidation.
This strategy offers efficiency and returns by capitalizing on price volatility, aiming to buy low and sell high to capture short- to medium-term profits. Swing trading relies heavily on technical analysis, which can be effectively quantified, allowing AI to leverage a substantial dataset of price and volume information for efficient learning.
With numerous swing trading strategies available in the market, Growin introduces a medium-term swing trading approach on our platform. This strategy requires minimal time management, with the need to check only every few days, making it suitable for investors who can’t monitor the market on a daily basis. The holding period averages around 2 months or more. When the stock price is in line with expectations, investors might hold for 3 to 6 months to accumulate profits. However, if the stock price doesn’t perform as anticipated, stop loss measures can be implemented within a week. This approach is well-suited for investors with limited time availability.
Is Swing Trading Difficult? Mastering Trade Timing with Growin’s Swing Trading Score
Swing trading can be divided into different trading frequencies such as intraday, short-term, and medium-term strategies. Each frequency focuses on specific patterns like consolidation, uptrends, and downtrends. It often involves analyzing the relationship between price and volume, as well as trendlines, to identify investment opportunities.
Growin utilizes extensive data and AI technology to simplify swing trading for investors. It offers an easy-to-use swing trading system that categorizes the strength of each stock’s swing into five levels ranging from 1 to 5. A higher score indicates a greater potential for a bullish swing.
Investors can input the symbols of their interested stocks and quickly assess the potential for future swing developments. They can then set their preferred score as a swing signal and combine it with their preferred technical indicators to make informed entry and exit decisions.
The importance indicators behind the Swing Trade Score
By extracting crucial factors from price and volume information and employing AI algorithms for learning and analysis, the Growin AI Swing Trading Score incorporates elements such as ATR, ADX, and the Box indicator, as well as exclusive Growin indicators like Power Squeeze and Surfing Trend. This comprehensive approach effectively aims to identify the probability of an upward swing movement.
The Swing Trading Score of NFLX
As shown in the chart above, if investors search “NFLX,” they can observe the AI’s recent Swing Trading Score for NFLX along with a backtest using historical data spanning over 10 years. This provides clarity on how NFLX has performed under similar ratings in the past.
Despite NFLX’s recent significant price decline and six months of consolidation, the Growin’s Swing Trading System assigns it a high score, indicating that the recent price consolidation phase might be coming to an end, and an upward swing d might be on the horizon. The description in the right half of the chart also provides insights into the frequency of similar ratings occurring in the past 14 years for NFLX, along with the average gains and losses:
“From the backtest data for NFLX, entering at a swing trading score of 5 and exiting at a score of 1, this strategy has been executed 11 times. The winning rate is 63.64%, with an average gain of 55.13%.”
Investors can use this historical data as a reference, combined with their own investment strategies, to make more effective trading decisions.
Validating the swing trading strategy through backtesting
Growin Stock Mining service provides users to perform a backtest on any stock of their interest using 15 years of data.
Firstly, investors can input their specified entry and exit Swing Trading scores in the backtest area. Taking NFLX as an example in the above Figure, we can set an entry at a Swing Trading score of 4 and an exit at 1. By clicking the “Calculate” button, users can quickly conduct a backtest and see a brief summary of the backtest results below:
“NFLX’s Swing Trading Strategy with entry at score of 4 and exit at score of 1:
This entry and exit strategy exhibits relatively stable growth (winning rate 53.33%, risk-to-reward ratio 10.45%). During the backtest period from January 2007 to present, NFLX achieved a cumulative return of 8286.15%, an annualized return of 32.63%, and a volatility of 39.51%. The Sharpe ratio for NFLX during this period is 0.83. Additionally, NFLX had 15 trades with an average profit/loss of 73.44%.”
Despite a winning rate just over 50%, the strategy has an excellent risk-to-reward ratio of 10:1. Out of the 15 trades, each one has an average profit and loss exceeding 70%, indicating the ability to achieve the principle of “big gains, small losses.”
Additionally, we can visualize the entry and exit points of each trade during the historical period using built-in graphical charts at Growin’s website, as shown in Figure 4. Green dots represent entry points, and red dots represent exit points. The numbers associated with each point indicate the trade number during the backtest period. For example, the green dot “B15” represents the entry point for the 15th simulated trade, while the red dot “B15” represents the exit point for the same trade. The second layer of the chart in Figure 4 displays the cumulative return rate over the backtest period. Generally, a steady upward trend in the backtest return rate is desired, indicating consistent asset growth.
Investors who want to access more statistical data can refer to the following statistical table. This table compiles data for every trade that met the investor’s set buy and sell conditions over the past 15 years. It includes the following information:
- Historical Records: Statistics on the win rate of profitable and losing trades.
- Holding Period: Average number of days each trade was held from entry to exit.
- Return Statistics: Records of how much was earned and lost during profitable and losing trades, along with the profit-to-loss ratio.
- Return Distribution: Percentiles of return rate distribution, including 25th percentile, 50th percentile, and 75th percentile. Additionally, this analysis will not only calculate the results for the specified target, but also provide averages for sector peers and the overall market as benchmarks for comparison.
As shown in Figure 5 below, through the data table, investors can have a clearer view of the highlights of the historical backtest for NFLX.
According to the data presented in Figure 5, several key characteristics of NFLX’s historical swing trading strategy can be observed:
- Out of the 15 trades conducted for NFLX, 8 trades were profitable, resulting in a winning rate of 53%.
- The average holding period for each trade was 176 days, which translates to over half a year of holding time. This indicates a medium to long-term investment approach.
- The average profit and loss (P&L) stands at an impressive 73.4%. Despite the winning rate being 53%, the strategy managed to achieve substantial overall returns due to the (4) high average profit of 150.3% in profitable trades and a relatively modest average loss of 14.4% in losing trades.
- The strategy’s high average risk-to-reward ratio of 10.45 reflects the focus on achieving significant gains when profitable and minimizing losses when not.
- Comparing the return distribution to sector peers and the overall market, it’s evident that NFLX’s strategy boasts a more favorable distribution of returns.
Through backtesting, it’s clear that applying the swing trading strategy to NFLX has shown competitive performance, making it a potential candidate for swing trading strategies.
How to efficiently monitor the trend scores of the stocks you’re interested in
If you have dozens of companies on your watchlist, you can quickly scan the current Swing Trading Scores of the targets using the following three steps:
- Open your watchlist and add the symbols of all the companies you’re interested in.
- Switch to the “Swing Trade” dimension.
- You will be able to see the current Swing Trading scores of all your monitored targets.
By following these three steps, you can quickly identify targets with high Swing Trading Scores and start your research!
Want to know more about targets with high AI Swing Trading scores? Or interested in knowing when your preferred stocks might switch from bearish to bullish? Feel free to try out Growin’s Stock Mining for free, and let AI and data assist you in making more efficient investment decisions!
Want to learn more about Growin Stock Mining?
Click here to watch the complete guide on how to use the Growin Service : https://blog.growin.tv/stockmining-instruction/