What Is Swing Trading
Swing trading is buying low and selling high in a short span of time. Some traders do it Intraday called as day traders and some take position for a few days.
Swing trading combines fundamental and technical analysis in order to find the stocks direction from the current position. Swing traders do not look for only up direction, if they feel the stock may go down they short them. All they are looking for is short momentum.
When they see the stock is not poised to move they do not take the trade. The benefit of swing trading is efficient use of time and money and higher returns. However their are drawbacks as well like high brokerage commission and high losses if their trade goes wrong.
Swing trading can be difficult for the average retail trader who is not equipped with either technical or fundamental knowledge. Some of the good technical indicators are Bollinger Bands, Candlesticks, moving averages, Average True Range – ATR etc.
The professional traders have more experience and information. They always trade in brokerage houses with lower brokerages. On top of that they get better margin.
Large institutions trade in very big lot sizes. They usually get in an out quickly. Some automate their trades. This is called algorithmic trading.
Knowledgeable retail traders can take advantage of these things in order to profit consistently in the marketplace. In this article, I will lay out what should be daily routine for traders like you and me. Its not that hard to be successful.
How To Do Swing Trading
Before reading this article I suggest you read this article on Swing Trading Rules.
You must read newspapers to know what has happened in businesses when you were sleeping. Look for any major news that may move the markets. This will help to find potential opportunities to trade.
Keep An Eye In The Following
Once all of the above is it will be easy to screen stocks. Stock Screener is a good and free website that can screen some stocks for you.
Now that you automatically got news of the companies you want to trade you can look for the best opportunity to trade.
You can enter a position with a fundamental move and exit with some kind of technical analysis.
How To Find Fundamental Based Move
Headline making news, or big order acquisitions, bad debt, results, insider buying, buyouts, takeovers, mergers, restructurings, acquisitions and other similar events.
Al of the above are major news that will shake the stock either up or down. Take the position as soon as you read the news.
These types of opportunities often carry a large amount of risk therefore hedge your trades especially if trading futures. Overnight positions should never e traded without a hedge.
News based trades are mostly positional trades as the good/bad news can move the stock at least 5-10% then reversal can take place.
Over time these kinds of trades will reward those who carefully research each opportunity and hedge their positions to make sure losses are capped even if there is a gap up or down opening against their trade.
Trades Based On Charts
Swing traders also take trades based on charts. Give emphasis to moving averages. 20 days Moving Average is good for derivative swing trades and 200 days moving averages is good for investor swing traders. Here is a article on how to trade moving average
Other important technical tools are key support or resistance level (easy to find on 200 day moving average), ATR (average true range), triangles, channels, Wolfe Waves, Fibonacci levels, Gann levels, etc.
Keep Five Positions Open At A Time
You may be tempted to trade a lot of opportunities when you get some experience but they will get hard to manage. All swing trades done on derivatives (options/futures) have to be managed well so calculations take time. Its better to be focused on 5 scripts only as you will be able to manage them well, else emotions will take over and you will destroy your account.
Investment swing trades (pure equity investments for 2-6 months) can be up to 20 stocks at a time.
Investment swing trades are easy to mange as they do not have an expiry date but derivatives have an expiry date so its better to have them less in number.
Check Positions Twice A Day Especially If Positions Are Hedged
The beauty of hedging is that you need not sit in front of your computer all day along until the markets are open. Gap up or down is taken care by the hedge, all you have to do is take an exit decision. You an check once in the morning and once during lunch time to hold or exit the position with profit or stop loss.
Never Adjust A Position To Take More Risk
Swing trade is never traded on hope. Once the plan is made stick to it. Do not move your stop loss. Only adjustment has to be moving your stop loss up to make more profits. Read this article on how to let the winners run in stock trading.
Carefully Record All Trades For Tax And Performance Evaluation
This is as important as taking the trades themselves. Once the year is over you have to send this data to your tax professional. Performance Evaluation recording will make you a better trader month after month. Evaluation of trades will help you to identify things that need improvement.
What You Can Do If You Want To Learn Hedging?
You can do my course which has five strategies that teaches how to hedge properly options with options, futures with options and equity with options. Once you complete the course you will become a better trader and learn the importance of hedging and stop trading naked (without hedge) for ever in your life. Fees can be paid here.
You Can Read More On My Site
Hi, I am Dilip Shaw, owner of this website. I am a trader like you. I have been trading since 2007, but lost a lot of money till 2010. I then stopped trading and studied options like college exams. Started trading again from 2011 and never looked back since. I did a lot of research, read books and did countless paper-trading before being profitable. You can read about me here.
My conservative trading course since 2014 is helping many retail traders just like you who have a job or business make consistent profits like this:
What Traders Say About This Course
Testimonials Year 2015
Testimonials Year 2015 Page 2
Testimonials Year 2015 & 2016
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Testimonials Year 2020 to 2023
What People Say Just After Reading My Course
Emotional Testimonial by a Young Woman Trader and Her Mother
One Of My Client Is Making Rs.25k Per Week
Difference Between Other Courses And Mine
What Others Charge for Courses
You can do this course from your home. Some traders make amazing profits like Rs. 16.26 lakhs profit in 5 days though results may differ for all.
This course helps you learn to trade conservative option strategies for monthly income. Once you finish the course you can start trading immediately. You can start trading from any day. No need to wait for expiry. You will make profits consistently.
This course is good if you have a regular job or business. You DO NOT NEED to monitor your trades every second.
What You Get?
Before reading please understand that for all 5 strategies, strike selection will be taught. Strike selection while trading Options is the most essential part to succeed.
You get two conservative non-directional strategies on options, one conservative stock option strategy and two conservative directional strategies on Future & Option combination.
Non directional trades are profitable 80% of the times and make 3-5% per trade (Results may vary).
Directional strategy makes money fast. It does not matter which side the stock moves. In fact you make more when you are wrong in the Future trade. 🙂 Some amazing profits possible here.
The stock option trade makes 30,000 in one trade and if SL is hit there is a way to recover losses plus make 30k in that trade.
Technical knowledge is NOT required. No need to monitor trades every second.
In the course you will learn how to select the strike prices. You learn when to trade, which strikes to sell which to buy, how much profit target you should be looking for, the best place to take stop loss and what to do after taking stop loss – means how to get that money back. The success rate is more than 80%.
Since trades are properly hedged there is no stress in trading my strategies.
I am very confident that you will make money trading my strategies. To help you succeed I offer few months support for FREE.
11 Reasons Why You Should Do The Course:
1. TA Knowledge NOT required
2. NO Software Required
3. Regular Monitoring NOT Required
4. Continue with Your Job
5. Do Course From Your Home
6. 100% Hedged
7. Stress-Free Trading
8. Not too much money needed to trade
9. Scaling Possible
10. One Time Fee
11. FREE Support For Months
To know more Call/SMS/WhatsApp me on 9051143004 or email me now. I know English and Hindi.
Read the details of the course here.
If you want to enroll for the course you can do so here.
P.S: So many years of trading has thought me one thing - it is always better to make small profits month after month, rather than lose money month after month trying to make too much money. It never happens. But small money accumulated month after month can become very big in only a few years.
WhatsApp or Call me: 9051143004
If you have any question you can contact me.
You can read about me here and my trading mistakes here.
Dilip Shaw, Founder
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