About MY Swing Trading:
- To have a meaningful result, I will let the stocks to run for few weeks
- Market trend is critical- when overall market is in strong uptrend (Bull Market) and I trade with a strong momentum stock, I will have a much better result.
- In Bear market – I may stay out or trade less. Too many investors ignore this bear market and keep holding their trade to big losses.
- For swing trading, I will have a plan with stop loss level and target level in place before I make the trade. Depending on the stock’s behavior, I may get out sooner without hitting stop loss or target level. The first few days are critical. Once I have good profit built up in the trade, I will let it runs with bigger room to swing as long as it stays above my entry level. I must have a reward/loss ratio of 3:1 or bigger. That means if I am wrong, I will lose $1.00. If I am right, I will win at least $3.00 in proportion. Swing trading is a game of probability. I expect to have some losses, but I will limit the losses to small scale.
- I will never buy more shares when the stock is going down. The world's most successful traders never add averaging down. They only add averaging up. Successful traders will cut loss early and never look back and feel sorry. They can always buy back or trade another momentum stock. The market will never run out of opportunities. We may run out of money.
- Ideally, I want to have 25%-50% profit for 4, 5 weeks of holding time. I will use Breakout of consolidation/pullback/trading range Pattern. For 50% to over 100% profit, I will use Bottom Up Pattern, it may take 3, 4 or 5 months to accomplish. I may have a few trades with small losses before I really nail down one to hit my target.
- With Compounded basis, Swing trading can create wealth. Successful traders are making millions every year.
- 50 years ago, Nicolas Darvas figured out how to trade stocks which broke out new high for his Trading Box (chapter 3, 4). This is exactly what I teach for years with a breakout new high pattern after consolidation or pullback. It took a lot of hard work and a struggling period for Mr Darvas to reach $250,000. Then he made a fatal mistake of giving up his winning method. Spending hours of studying the fundamentals of the stocks proved to be a waste of time. "Using the fundamental approach, I was wrong. On the other hand, using the technical approach, I was right. Obviously the best method was to try to repeat the successful approach" he said. He finally figured out that listening to rumors, tips, broker's information were a mistake. After he went back to his breakout box trading, it was easier and faster for him to reach $2 million profit (chapter 8, 9). You need to read this story to have the proper trading attitude.
- Almost all successful traders experienced crisis before they could be successful. At the early stage of their trading careers, they did not realize that a Bear market or a market correction was not the time for long trading. All trading methods might not work. Trading strong momentum stocks in a Bull market can provide huge profit which I can not accomplish in day trading. Most investors are afraid of buying at new high. Successful traders only buy at breakout new high. I learn from others' mistakes. "Trade with the Trend"
- If you are not better than me, get me to be your partner. (Do not afraid to make 500% - 1000% on your investment.)
