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The Insider’s Guide To Swing Trading Strategies

Swing Trading Strategies

By definition, a swing trade is when you purchase a stock and sell it the following day. Many new traders love to swing trade because it helps them to trade without breaking the PDT rule.

 

Understanding the basic swing trading strategies is important for all traders, no matter your experience.

 

One of the most common questions I get is “how can I trade while under the PDT rule”?

 

The point of this blog post is to teach you some basic swing trading strategies. But, first, be sure to read my other blog post about the PDT rule.

 

What is it? Why does it exist? Can we get around it? And many other questions are answered in that article, so be sure to check it out. So, let’s start with the basics.

 

Swinging a stock (holding it overnight) carries some inherent risk. A company could release news early in pre-market, or in after hours, and the stock could drop before you can safely exit, and you could suffer greater losses.

 

Stop losses are not active in after-hours trading. This is important to know because most traders understand the importance of having a stop loss at all times. Meaning that if you buy a stock, and it drops to a certain level, then the stock will automatically sell and your loss will be limited.

 

But, as I mentioned, these stop losses are not able to work in extended-hours trading, so any bad news from the company released in pre-market or after-hours can be devastating. I want to make sure this is clear.

 

Of course, there are certain things and setups that you can look for to limit the possibilities of that happening and increase your chance of having a nice profitable and winning swing trade!

 

First, I want to talk about avoiding swinging “low float” stocks. Be sure to check out my other blog post or video lesson on low float stocks so you have an idea of what those are.

 

Knowing the float of a stock is critical before swinging it because the lower float a stock has, the more freedom, and even incentive a company might have to do what we call a stock offering.

 

And, yes, be sure to read that blog post too so you know why these are so bad.

 

Okay, so you have checked the float of the stock and feel comfortable with its float size. What else can we look for?

 

Strength is key! What I mean by this is that we want to pay close attention to how strongly a stock is closing. Is it closing near the high of day or low of the day? Or maybe it’s even mid-range and looking to close at the mid-range point of its daily trading range.

 

As an important general rule, the closer a stock closes the day to it’s high of day price, the stronger a candidate it is to buy and hold overnight.

 

So, if a stock opened at $10, touched as high as $13 and is heading into market close at around $11, that would be a weak close and would not be a good candidate to buy and hold overnight.

 

Okay now let’s take a look at the catalyst that is moving the stock. When looking for good swing trading strategies it’s so important to be sure you are looking at stocks that are trading at a higher daily volume than they usually do. This typically will happen to stocks that just released a hot new press release.

 

If a company releases positive earnings or a big new contract, those are great catalysts that lead to good swing candidates. Be sure to make sure the stock fits the other requisites posted above still though.

 

To swing a stock, it has to be the perfect storm where all things come together to make an A+ swing setup.

 

High relative volume, good closing price action towards high of the day into the close, and a safe steady float are some of the first things you want to look for when looking for a stock to swing.

 

I now want to discuss certain catalysts that may seem positive, but actually, carry much greater risk to swing. The main example being biotech stocks that release positive phase 1/2/3 data or FDA approval.

 

While it might seem like a good idea to swing a stock whose company just announced positive test results about their cancer drug, this tends to be the most common time for a company to perform a stock offering. Which is bad news for you and your swing.

 

Lastly, be sure to check in on overall market strength. If the indexes (Dow Jones Industrial Average, NASDQ, etc.) are having a bad day, that typically is a bad sign to swing stocks.

 

While very simple, using this short guide as the beginning to your swing trading strategy, you can save yourself a lot of heartaches and start to find those diamonds in the rough to swing trade!

 

We offer swing alerts in our trading room nearly every day so be sure to check us out and start your free one-week trial with us!

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How To Master Your Daily Trading Routine

How To Master Your Daily Trading Routine

2018 proved to be one of the most difficult trading markets that I have come across in my 7-year trading career.

 

The volatility that entered markets starting in early February of 2018 sent waves across the entire financial industry.

 

We saw record numbers of funds shut down, traders exit the game, and people lose faith in the financial markets. However, wherever there is difficulty and trial, there is also an incredible opportunity to grow.

 

Here is a breakdown of some vitally important lessons that I learned in 2018. Furthermore, here is how I expect to capitalize on those lessons, to have my best trading year ever in 2019, specifically in regard to my daily schedule, and morning routine.

 

2018 Breakdown

 

After intense review, I found that I won 79% of all trades that I took within the first 60 minutes of market open.

 

In the hours that followed, my winning percentage dropped as far as 59%.

 

I won 82% of all short trades that I took in 2018 while winning roughly 68% of the long trades that I took.

 

Upon further review, I found that had I of only traded the first 60 minutes of market open, and not a single trade after that, it would have led to nearly $125,000 in additional profit.

 

WOW. Right? WOW.

 

I could end this post right here on that note, and that info alone could be enough to completely change your trading career. But, there is still so much to learn from 2018.

 

2018 forced me to play strategies that I had never before considered. I was forced to throw out some of the most basic rules of discipline, and do things that often felt entirely backward, simply because the markets were asking for it.

 

This unusual activity led to one of the most impressive two week periods in my life as I made nearly $40,000 in just 13 trading days. However, this same irregularity also led to some of the worst losses in my trading career.

 

I am grateful for every lesson that I learned in 2018. What I learned in those 12 months “Trumps” (pun intended) nearly all that I had previously learned over the years.

 

The last year was a great reminder of how small we really are in the grand scheme of things. It wasn’t until my intensive end of year review though that I took away the greatest lesson of all from 2018.

 

And that is this, each one of us is COMPLETELY in control of our own destiny. Cheesy right? Well, let me try to rephrase that so you can see it from my eyes.

 

I let the market shake me and change me. I let the market talk me into doing things I shouldn’t have done. And, that is not the market’s fault, it isn’t President Trump’s fault, it isn’t the Fed’s fault, it is MY fault.

So please, I beg of you, control your own destiny. By doing so, it will lead to the best trading year of your career. Let me dive into how that is going to be possible, and it’s all about our daily schedule.

 

2019 Basic Schedule

 

Our daily schedule is so often overlooked. In later blog posts, I will talk more about specific trading strategies but those don’t mean anything if you can’t master a daily routine. Take this as you will, your schedule likely will look different than mine. Find something that works.

 

The schedule I will share with you is one that has been backtested for almost 4,000 days in my life and it has proven time and time again to be the one that I perform best in.

 

*All times are in Mountain Standard Time Zone*

 

5 am: Wake up, light protein/vegetable shake

 

Right when that alarm goes off, tell your spouse you love them. Give them a morning smooch. It’s the little things in life that matter.

 

5:20 am: Gym

 

I don’t care if you are 18, or you are 81, physical exercise is not an optional part of your daily routine. Taking a workout routine seriously stimulates your mind, destresses you, and is proven to lower anxiety and depression. The mind will fire up your “feel good” chemicals. You will have more energy and be more focused when trading. I kid you not, working out makes you a better person. The benefits will even carry into your relationships with your significant other, your family, hell even your dog. DON’T SKIP THIS! Get some headphones, play your favorite podcasts, your favorite music, but take advantage of this self-care time. It may be the only hour of self-care you get all day.

 

6:20 am: Turn on news outlets, shower, full breakfast, “get ready”

 

*I can’t stress enough how important it is to GET READY. Trading in your pajamas without breakfast and waking up minutes before market open is a guaranteed way to kick yourself out of the trading game quickly.*

 

6:50 am: Scan for news, press releases, create trade plans, communicate

  

It’s now go time. This is when you want to start firing on all cylinders. Having a strong trading community as we do at KAF Investing, this is when you check in with a really nice “GOOOOOD MORNING”! Chances are most people already will be active and throwing out ideas and news headlines etc. This makes a world of difference. Trading lonely is miserable. Don’t do it. Find a team that is genuine and that cares and then do all you can to help contribute to that team. You will find immense satisfaction in developing relationships with other traders. We are all on the same team. It’s us against the brightest minds in the world. What a beautiful challenge that is daily. I love it. There is always room aboard our trading room, and we would love to have you join us if you are genuine about learning and building up others.

    

7:25 am: Voice channel, market breakdown, trade idea walk-through

 

This is when I go live on our voice channel for all our trading room members to hear. I talk about the stocks that I will be focusing on, I explain exactly what I am looking for them to do and how I want to trade them. I explain recent news headlines and events, and most importantly, I TEACH. I feel there is no better way to learn how to trade than dealing with the day to day real life, happening right now events in the markets. I trade live while talking on the voice channel for the first hour of market open.

 

8:30 am: Hand the voice channel over to our other moderators

 

After being on the voice channel and trading for the first hour of markets with everyone, it’s now time for me to step away from the computers for a bit.

 

This is new. This is different.

 

In 2018 I sat at the computer for 8 or 9 straight hours constantly trading, but as I mentioned above that cost me a lot. At this time I will still listen to our other moderator’s trade and explain what they are seeing. I will review my own personal trades and make video recaps and reach out to members and help build others up as much as I can. My work day is still very young, my trading day though, is over. There are exceptions for setups that I just can’t pass up on, or if we have major news drop midday that we want to trade. But 95% of the time, I won’t take new positions after the first hour of market open in 2019. I will still likely be in a position or two, but my hard stops and price target will be in and locked.

 

10 am: EAT

 

It is a little embarrassing but if I don’t have reminders all over my computer screen, I will go sometimes 12 hours without eating. I just completely forget. I get so absorbed into all that I do that it just doesn’t get attention. I have to be better about this though in 2019. Cannot let the little things slip by. Go to lunch with your wife, surprise her with flowers or something. I dunno, you’ll figure it out. But, take a little midday break.

 

2 pm: Step away from work, and re-balance

 

Markets close at 2 pm and it is really important from a mental standpoint that I get away from the computers. However, I do usually have a one-on-one mentoring session with some of our trading room members periodically throughout the evening, so that schedule is subject to change.

 

*Now let us jump ahead to my nightly routine. This is subject to change. Sometimes I will have my watchlist picks written up before the market even closes, other times I may not write them up until 8 pm or so. However, here is a general template.*

 

6 pm: Make watch-list

 

This doesn’t take long because I spend all market open constantly scanning for setups and things that I can take advantage of the next day.

 

7 pm: Wind down time

 

10 pm: Lights out

 

I love to send out one more little market futures update right before I go to bed, but then it is lights out. No watching Netflix in bed, or scrolling through Instagram. Doing these things in bed actually subconsciously train your body to sleep worse because its used to doing these other things while in bed other than sleeping. If you have sleep issues, try cutting these things out and you should see a significant change.

 

Make Your Daily Routine

 

Chances are, you and I are really different. This is just a small example of how I aim to be better and more disciplined in 2019. So, now it is your turn to figure out what works best for you.

 

Don’t hesitate to reach out to me personally via email to ask me any questions or feedback about your schedule.

 

Obviously, no day is the same and my days vary from day to day, but having a guideline and doing all you can to stick to it will make you more efficient, more diligent, give you greater self-control, and really can make all the difference in your life.