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Here are a few things i look for before initiating a swing trade 
:
(i) TREND: the stock must be in an uptrend. An uptrend means a stock is forming a higher lows and higher highs. I like to use a DAILY chart.
See chart below; i've highlighted the higher highs and higher lows:
:(i) TREND: the stock must be in an uptrend. An uptrend means a stock is forming a higher lows and higher highs. I like to use a DAILY chart.
See chart below; i've highlighted the higher highs and higher lows:
(ii) CONSOLIDATION: after i spot an uptrend, i look for the stock to consolidate (side way movement) for at least 2 weeks or more.
The consolidation allows for the stock to take a breather thus, attracting more buyers.
Look at the blue horizontal lines on the chart
The consolidation allows for the stock to take a breather thus, attracting more buyers.
Look at the blue horizontal lines on the chart
(iii) BREAKOUT: after a tight consolidation i look for the stock to break the upper resistance line --- when bullish, i ALWAYS buy at resistance breaks. (green highlighted circle)
My stop loss will be at the low of the breakout candle -- ALWAYS!
My stop loss will be at the low of the breakout candle -- ALWAYS!
(iv) PROFIT: i like to sell 50-75% of my position when the stock has reached a 3:1 risk reward ratio -- I'll trail the rest.
Example: If my stop loss is at $90 and my buy point is at $92, i will look to take partial profits when stock hits $98 (3:1)
Example: If my stop loss is at $90 and my buy point is at $92, i will look to take partial profits when stock hits $98 (3:1)
Swing trading is all about momentum -- you buy high then sell higher and vice versa.
An object in motion will remain at motion until stopped by an external force.
This simple strategy will make TONS of money, if you have the patience to sit tight and properly manage your risk.
An object in motion will remain at motion until stopped by an external force.
This simple strategy will make TONS of money, if you have the patience to sit tight and properly manage your risk.
