Stocks without news may be plain, but they can be easier to handle for swing trading

When looking for stocks, your eyes naturally turn to those featured in the news. Good earnings, new products, industry buzz—stocks with catalysts have large movements, and they seem to offer opportunities.

On the other hand, stocks without any particular news may seem plain, have small movements, and not look very attractive. However, for the swing trading method, there are situations where such ‘stocks without news’ are easier to handle.

In this article, I would like to organize the reasons why stocks without news can be suitable for swing trading, along with some points to keep in mind, for beginners.

Stocks with news tend to have volatile price movements

First, let’s confirm the characteristics of stocks that have news.

When a catalyst appears, many investors react all at once. Buying and selling concentrate in a short period, and the stock price moves significantly. It rises sharply, but it also falls sharply. Immediately after a catalyst, people buying on expectation and people selling to lock in profits mix, and price movements tend to become unstable.

Also, such stocks often have large gaps from the opening. Following news released overnight, the stock price may open significantly higher or lower the next morning. In that case, even if you have placed a stop-loss order, it may not execute at the price you anticipated.

Price movements based on news are suitable for fast-paced short-term trading, but for swing trading, which takes place over several days to several weeks, they can be difficult to control.

Stocks without news tend to show chart patterns more clearly

So, how do stocks without news move?

Stocks without special catalysts tend to move relatively predictably based on the overall market flow and investor supply and demand. Sudden gaps are less likely to occur, and since the stock price moves up and down in stages, support lines, resistance lines, and trend patterns on the chart are more likely to function.

In swing trading, you decide where to buy and where to place a stop-loss based on chart patterns. Stocks where the chart moves predictably have the advantage of making it easier to apply those criteria and create a plan.

For example, buying when an uptrending stock pulls back near a moving average and placing a stop-loss below the low of the pullback. Such typical methods can often function better in stocks that are less affected by news.

The risk of gaps is small

Another advantage is that the risk of gaps is relatively small.

Since it is relatively unlikely that news will emerge overnight to cause a large movement in a stock without news, the risk of the stock opening at an unexpected price the next morning is reduced. Of course, it is not zero. However, compared to stocks with catalysts, stop-loss orders are more likely to function as intended.

For office workers who cannot watch the market during the day, this is a major advantage. The less you have to worry about the stock price jumping significantly while you are not watching, the more you can focus on your work and continue operating according to your plan.

It is harder to get emotionally disturbed

When price movements are calm, it also works to your advantage in terms of your mindset.

When you hold a stock with a catalyst, you become curious about follow-up news or discussions on social media, and you want to check the screen repeatedly. Every time the stock price moves wildly, your anxiety and expectations are shaken, making it easier to take actions that deviate from your plan.

Stocks without news have less of that kind of stimulation, making them easier to hold calmly. In swing trading, where waiting is important, the fact that your emotions are less likely to be disturbed is a strength that cannot be overlooked.

The pitfalls of “having no news”

However, stocks without news also have their own specific points to be aware of.

One is that many of these stocks do not move. The lack of catalysts also means there is no trigger to move the stock price significantly. After buying, it may continue to trade sideways for days, not moving as you expected.

Therefore, it is important to set a time-based criterion. For example, if it does not move after a certain period of time since purchase, sell it. This is to prevent your capital from being tied up for a long time.

Another point is that “having no news” and “no news will come out in the future” are different things. If the scheduled date for an earnings announcement is approaching, major news can suddenly emerge. It is essential to check the earnings date before buying.

The perspective of looking for stocks “before the news comes out”

Here, let’s change our perspective a little.

Stocks that have released news are already known to many people. If you buy after seeing the news, the stock price may have already reacted, and you might be late to the party. On the other hand, stocks before the news comes out are not yet attracting attention and are in a state where the news has not been priced in.

Of course, it does not mean that if you buy all stocks before the news comes out, it will go well. In many cases, nothing happens and it ends there. However, stocks that have formed a good chart pattern and whose trading volume is starting to increase little by little may have buying coming in under the surface.

Finding such stocks before the news comes out and holding them according to a plan. This idea of “entering at a quiet stage” is one of the interesting aspects of swing trading.

How to deal with news

So, does that mean you don’t need to look at the news? That is not the case.

You should always check the news regarding the stocks you hold or are planning to buy. These are basic pieces of information, such as whether any bad news has come out or when the earnings date is.

The important thing is not to make the presence or absence of news the axis for choosing stocks. Stocks with news have large movements, and stocks without it have small movements. Understanding those characteristics, you should choose the one that fits your own method and lifestyle. If you are a company employee engaging in swing trading, I feel that choosing to focus on stocks without news is also sufficiently rational.

Even if they are not flashy, stocks whose charts move predictably and are easy to plan for. By turning your attention to such stocks, your trading should become a bit more calm.

This article is for informational purposes only and does not recommend buying or selling any specific stock. Please make your final investment decisions at your own responsibility.