For this comparison of stock picking to swing trading the latter is about trading one thing and switching it from a long to a short position and back. That kind of swing trading is the opposite of picking something. Once it got picked, but then you stay with it.
The obvious advantage of a stock picking system is that it reacts automatically to changes, whereas trading the swings can quickly become like riding the wrong horse. Of course, you can still trade trends with stock picking. Just pick the ones that have a trend or short trends aka swings.
Being able to select among thousands of stocks is the biggest advantage of the stock picker. Traders of other markets like Forex are fighting day in day out with their subconscious that constantly wants to tell them this inconvenient truth.
Switching the holding direction has also an advantage. The trader is technically oriented and is reacting to the price. Especially the restriction to be always in the position, either long or short, offers a real trading advantage. It automatically leads to a neutral stance about the traded medium.
A two state comparison, long vs short, is symmetric. Having three states with the additional be in cash option, will often result in a confused trading mind. Either the trader is too optimistic and neglects the third state, or the other way round, he gets too cautious, leading eventually to a trading block.
The switching system is simple. You decide whether the price looks more like it wants to go up or down. This could be also done by a trading algorithm, sort of a weighing machine. Machines are generally resistant to psychologic problems.
Stock picking suffers to some degree from this three-state phenomenon. Optimistic traders see chances where there aren’t any and intimidated traders can’t pull the trigger.
Let’s think a bit outside the trading box and we arrive at the idea to fuse both systems to get all advantages together. Pick a stock and trade it like the long-short switching swing trader.
This requires to make the stock pick more by technical criteria. Look for a swingy or trendy chart. Wide swings and small ripples. Large trends and small pullbacks. The chart has to look “clean”. This is the right input for the on-off or long-short trading system.
So, what system is that? You could do it manually by swing trading the good old way. But it can be also done by the computer. We can recommend this neural trading system that is designed like a human brain. Technically it is a complex trading algorithm that is able to adapt itself to the idiosyncrasies of a specific stock.
There we have it. Modern teamwork of a human trader and a mechanical trading robot both doing what they can do best. The human is judging the overall picture and the machine carves out the small runs as precisely and calm as possible.