Swing Trading - How To Make Money Swing Trading
What is Swing Trading? Everyone is familiar with waves.
A wave alternates from positive to negative, then to positive and negative, and so on.
Waves are found in nature - you see waves when you throw a rock into a lake.
Sound is transmitted in waves.
And when stock prices change, they follow a wave-like pattern.
The wave is rarely as orderly a sine wave, but they are waves nevertheless, and we use these waves in Swing Trading.
What Can You Expect from Swing Trading? First - only a portion of your trades will be executed.
The Master Plan is designed to only trade stocks that initially move in the anticipated direction.
If the price moves in the opposite direction (continues pulling back or pulling up), the trade is not placed.
Second - you will be holding positions for a limited amount of time.
While swing trading is not day trading, you are only holding positions until targets are met.
Third - some of your trades will result in losses, however losses are minimized by the Master Plan which raises the stops as the stock price rises; this is known as trailing stops.
Being disciplined, and following the Master Plan will insure that profits exceed losses which means you will make money.
How Do You Identify Stocks that are Appropriate for Swing Trading? All of the methods that are used to identify stocks that are appropriate for swing trading are based on technical analysis.
Technical analysis is a way of using historical price/volume patterns to predict future behavior.
It is not necessary to have a detailed understanding of technical analysis in order to swing trade.
There are tools available that can assist investors at every level - from novice to expert.
While there are many sources of information and tools that help identify swing trading opportunities, this article series will focus on those provided at my site.
Once you understand the principles, you can explore other sources of information.
What Tools are Available? The tools fall into several categories.
• Subscriptions services that provide daily swing trading recommendations - my site offers a service called MasterSwings.
Larry Swing uses technical analysis and pattern recognition software (SwingTracker) to identify candidates for swing trading.
Every evening, subscribers receive e- mails that identify several different types of patterns that are conducive to swing trading.
Aside from showing you the pattern, the email indicates the current price, the entry price, the target (limit) price for taking profit, and the stop loss price for limiting downside risk.
This service can be used by investors at all knowledge levels.
An example of a MasterSwings email alert for Lockheed Martin (LMT) is shown on the next page.
A candlestick chart shows the recent price action for LMT, and a table indicates the closing price and all three action prices - the price to buy (using a buy stop order), the target price which is 7% above the purchase price (using a buy limit order), and the protective stop price which is approximately 4% below the purchase price (using a sell stop order).
The 20- and 50-day moving averages (MA) are also shown so that you can more easily visualize the direction of the trend.
The rational behind these prices will be discussed in another article.
A wave alternates from positive to negative, then to positive and negative, and so on.
Waves are found in nature - you see waves when you throw a rock into a lake.
Sound is transmitted in waves.
And when stock prices change, they follow a wave-like pattern.
The wave is rarely as orderly a sine wave, but they are waves nevertheless, and we use these waves in Swing Trading.
What Can You Expect from Swing Trading? First - only a portion of your trades will be executed.
The Master Plan is designed to only trade stocks that initially move in the anticipated direction.
If the price moves in the opposite direction (continues pulling back or pulling up), the trade is not placed.
Second - you will be holding positions for a limited amount of time.
While swing trading is not day trading, you are only holding positions until targets are met.
Third - some of your trades will result in losses, however losses are minimized by the Master Plan which raises the stops as the stock price rises; this is known as trailing stops.
Being disciplined, and following the Master Plan will insure that profits exceed losses which means you will make money.
How Do You Identify Stocks that are Appropriate for Swing Trading? All of the methods that are used to identify stocks that are appropriate for swing trading are based on technical analysis.
Technical analysis is a way of using historical price/volume patterns to predict future behavior.
It is not necessary to have a detailed understanding of technical analysis in order to swing trade.
There are tools available that can assist investors at every level - from novice to expert.
While there are many sources of information and tools that help identify swing trading opportunities, this article series will focus on those provided at my site.
Once you understand the principles, you can explore other sources of information.
What Tools are Available? The tools fall into several categories.
• Subscriptions services that provide daily swing trading recommendations - my site offers a service called MasterSwings.
Larry Swing uses technical analysis and pattern recognition software (SwingTracker) to identify candidates for swing trading.
Every evening, subscribers receive e- mails that identify several different types of patterns that are conducive to swing trading.
Aside from showing you the pattern, the email indicates the current price, the entry price, the target (limit) price for taking profit, and the stop loss price for limiting downside risk.
This service can be used by investors at all knowledge levels.
An example of a MasterSwings email alert for Lockheed Martin (LMT) is shown on the next page.
A candlestick chart shows the recent price action for LMT, and a table indicates the closing price and all three action prices - the price to buy (using a buy stop order), the target price which is 7% above the purchase price (using a buy limit order), and the protective stop price which is approximately 4% below the purchase price (using a sell stop order).
The 20- and 50-day moving averages (MA) are also shown so that you can more easily visualize the direction of the trend.
The rational behind these prices will be discussed in another article.