Thursday, December 6, 2012

25 Swing Trading Tips

1.Maintain at least a 3-1 win-loss ratio. If your trade target is to earn 9%, don't use a stop loss wider than 3%.

2.Don't day trade. The shorter the time frame, the more market noise confuses you about general trend direction. If you are swing trading, give your trade room to work.

3.Buy high and sell higher. Leading stocks make new price highs. Buying laggards increases the chances your trade will fail.

4.Turn off CNBC. A million and one factors impact a stock's price. Watching the news will just throw you off track. Price is all that matters.

5.Keep it simple. If your trade signal is unclear, it probably isn't there.

6.Never buy more than 3-4% above a sound base.

7.Place your stops below a base of support.

8.Pay attention to leadership stocks. If market leading stocks are performing poorly, it is time to get defensive.

9.5-6 distribution days over a short period of time can kill an uptrend. A distribution day occurs when the markets are down on significantly higher volume than the previous day's volume.

10.Never short an uptrend. Wait until the market rolls over and short the first bounce.

11.Don't chase breakouts. If a stock makes a new high, buy the first pullback.

12.Buy where it causes you pain. Rising stocks retest support. Buying the retest can be scary, but offers a low-risk opportunity.

13.If you think your set up is a sure fire winner, it probably isn't. If it's too obvious, everyone else probably sees the same thing and smart traders tend to fade the crowd.

14.Pay attention to the closing hour. Smart money gets busy during the close. Strong closes confirm trend strength. Weak closes should cause you to think about getting defensive.

15.Sell into strength. Trailing stops just cause you to sell low before prices rebound. Sell when the crowds are greedy, not fearful.

16.The 50-day average is defended by smart money. In up trends, prices tend to bounce from the 50-day, in downtrends sellers wait there.

17.Don't buy the open. Too many games get played at the open. Strong opens tend to get sold into.

18.Watch the volume. If prices break out on average or low volume, participation in the breakout is thin and likely to fail.

19.Avoid cheap stocks. Stocks below are usually laggards and are prone to manipulation. Institutions follow leading stocks and price action is more predictable.

20.Check short interest. If it is too high, somebody probably knows something.

21.Buy stocks with consistently improving earnings.

22.The market is never too high. Don't pay attention to permabears who always predict a market crash. Bull markets can go much higher than short traders ever imagine they can.

23.Don't buy falling stocks. Buying pullbacks in an uptrend is one thing, buying stocks that have broken down is trader suicide.

24.Trends are resilient. A small bit of technical damage brings out the sellers, but it is rare for the market to turn south without weeks and weeks of distribution.

25.Have a system for taking profit. If you don't lock it in, it tends to disappear quickly.
SRS Swing Trading Service
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