Swing Trade Success
So, over the last month I’ve been doing more SWING TRADING.
What is SWING TRADING?
Swing trading is when you specifically buy a stock with the intention of selling it shortly thereafter. Hold times can be a few days to a few weeks.
Home Depot (in my IRA): I bought this 3/16 through 3/20 and sold on 3/24 for a 6.06% gain
Lowes: I bought on 4/1 and sold on 4/6 for a 8.77% gain
Smucker: I bought this on 3/17 and 3/27 and sold on 4/17 for a 9.7% gain
What sort of strategy do I use for Swing trading?
- I only pick stocks I’d be happy holding long-term if I had to. This is just in case the trade turns bad short-term
- I ideally want 5-10%; however, as the position size increased and duration is decreased, I am happy with 3%.
- I look for support and resistance as well as past chart patterns. I am not much of a technical analysis guide. However, I do base my buying points on previous support levels. I choose when to sell based on prior resistance levels.
- Some stocks are cyclical short-term and make good swing trading stocks. Some of these are Delta, Leggett & Platt, Kaiser Aluminum, and Mueller Water Products.
- I don’t risk much so if things don’t go my way, I am not out much. At this point, if I can make $100 a month on swing trading I am happy. I prefer buying and holding longer-term ( a year or more). If I sense I can make 10%, I will risk say $500, with a $50 goal in mind. If the stock isn’t as volatile, I will use a larger position $800-$1000 and try for 3-5%.
Personally, I think a lot of LUCK is involved. I don’t have a system. I realize that’s not the answer you want to hear, especially when so many people claim to have a system using technical analysis. No exact technical analysis stuff here, I can’t help you make successful trades other than the small bit of advice I give above to increase your chances. I just look at stocks that I think are unfairly beaten down. Some I watch each week, so I see what I THINK are patterns in their movements.
You get familiar with them over the course of a year and that can help as well. There is nothing scientific about it but I must say a bit of a gut feeling is involved after watching the same stocks for long periods of time.
Some stocks are easier to swing trade like Delta, the graph exhibits waves up and down over time. Simply buy when the wave is nearer to the bottom than the top and ride it up for a few percentage points. Kaiser Aluminum looks a lot like that as well. Leggett and Platt is another, very cyclical stocks over a period of months.