My Swing Trading Rules

 Note: These rules are a bit different than for Day Trading.

Duration of Swing Trades = normally 1-5 days (longer if the trend remains intact), I almost Never  hold a Swing trade over a weekend, (exception: unless I am utilizing options.)

 

  • All swing trades are based on Technical Analysis First and foremost
  • Fundamental Analysis is extremely important, however it is slightly subordinate to Technical Analysis
  • Always Keep records of swing trades, to reflect upon, as educational tools.
  • Swing Trades are mostly mechanical in nature !
  1.  Technical Analysis, must be done, prior to entering a trade.
  2. Always determine ENTRY Points, and EXIT Points, for your trades
  3. Stop losses, must be utilized, as these trades are not monitored as closely as day-trades.
  4. Never add to a losing position. It is a prescription for disaster (JMHO). I do not believe in cost averaging down, in relation to salvaging a swing trade that has gone bad.
  5. I always protect a winning trade when I am up a dollar or more.
  6. I always protect profits when a stock moves 5+% in my favor, (I will hold it if most indicators indicate the trend will continue). I find it is better to re-enter the next day, then to hold and potentially see a nice profit GAPPED away. (Note: Many Funds do not return 10%+ a year, do not overlook 5% in less than a week, and to see it evaporate on a Gap-Down or Gap-Up is extremely painful. There are many great Swing trades out there each day…do not become fixated on what you could have gained…become fixated on your gains…just imagine what 5% a week compounded over 50 weeks comes to… a very hefty sum ! JMHO)
  7. LET STOCKS COME TO YOU DO NOT CHASE A STOCK READ the Golden Rules when in doubt ! Exit all trades, when a you expect a major trend reversal !

Some Food for thought for those obsessed with catching tops and bottoms 

Movemment
0 - 10%
Buying commitment is starting to turn from Selling to Buying

Safe Play Zone

Represents 80% of a stocks Movement or expected Movement  The same hold true for shorting stocks…just

Movement
90 - 100%
Buying commitment is starting to turn into Selling from Buying