What is Swing trading?

* Keeping things as simple as possible
"Things should be made as simple as possible, but not any simpler;" - Albert Einstein

It is our firm belief that there is only one easy way to trade with discipline and that is when you keep things simple: BEAUTY THROUGH SIMPLICITY. This should be a general rule for everything you do in life: REDUCE TO BASICS

To fully understand what swingtrading really is, we are going to first define what up/down trends are ...

* Trends

UpTrend - A price movement consisting of a series of higher highs and higher lows. In other words, an uptrend is a series of successive rallies that extend though previous high points, interrupted by declines which terminate above the low point of the preceding sell-off. See MYGN

DownTrend - A price movement consisting of a series of lower lows and lower highs. In other words, a downtrend is a series of successive declines that extend though previous low points, interrupted by increases which terminate below the high point of the preceding rally. See VRSN


* SwingTrade

Long Swing - Looking more closely at the definition of an uptrend: "an uptrend is a series of successive rallies that extend though previous high points, interrupted by declines/pullbacks that end above the low point of the preceding sell-off".

The Long Swing identifies buying opportunities in stocks that are in clear uptrends on the daily chart. In addition, the stock must be experiencing a minor decline/pullback within the context of this uptrend, allowing the purchase of the stock at a discount to its recent prices.

These declines identify the start of a long swing trade. We will use a technique for entering the market called trailing buy-stop. When the trend is up and the daily trend declines, it activates a trailing buy-stop technique: place a buy order 1/16 above the high of the previous day. If prices break out, you will be stopped out when the rally takes out the previous high. If prices decline, your buy-stop will not be touched.

Short Swing -Looking more closely at the definition of an downtrend: "a downtrend is a series of successive declines that extend though previous low points, interrupted by increases/rallies that end below the high point of the preceding rally".

The Short Swing identifies shorting opportunities in stocks that are in clear downtrends on the daily chart. In addition, the stock must be experiencing a minor rally as part of this downtrend.

These increases identify the start of a short swing trade. We will use a technique for entering the market called trailing sell-stop. When the trend is down and the daily trend rallies, it activates a trailing sell-stop technique: place an order to sell short 1/16 below the low of the previous day. As soon as the market turns down below the previous low, you will be stopped out on the short side. If prices rally, your sell-stop will not be touched.