Swing Trading Entry Strategies

[Young Financier 10]

I've spoken with a few traders on this s ubject but I'd like to see how many of you go about entering a trade.

 

For myself, I trade swings (1-4 day moves) for the most part off of the daily chart. I've used a method where I analyze a probable turning point and will place a buy stop above a strong bull bar (candle), one that finishes near it's high and the reverse for selling/short resistance. That way, I'm entering on momentum and increasing the chance that I'm right. I also don't like for the market to pull back too much against me. I like quick conformation. At the same time, it's sort of like paying an insurance premium to increase the likelihood of being right. However, to do this, you enter further away from a danger point (swing high or low).

 

There are others who simply buy or sell in an area of supply/demand or support/resistance and wait it out to see if they're right. IE: Selling really close to the top of a resistance level and placing a stop at a swing high. This method sounds good and highly profitable if you're right especially since you'd increase your risk reward. These guys don't enter blindly at these points, of course, They'd usually wait until there's a sign of strength at the bottom or a sign of weakness at the top and get in as close as they can to the bottom or top with a market order or maybe on a lower timeframe.

 

What method(s) do you use?

[EatSleepTrade 10]

Every chart has to be read differently and I don't think there is just one strategy that works for every stock. But I base my entries off good risk to reward. 1:3 or higher. So when I find a chart that offers me at least 1:3 risk to reward ratio. I make sure that my stop can be placed low enough that the stock has room to move, so I don't end up stopping out early. But not risking more that 2% total capital.

 

Example would be $COWN

 

 

My Idea on this stock was to take advantage of a major sell off or large dip. There was strong support in the 5.45 area as well as the 50day sma that was holding up. The yellow circle represents the day I started my swing at 5.50. The Red circle represent our previous low of 5.39 an area we could place our stop to define our risk. The green circle is our target at 5.95, our previous high as well a strong resistance area. so in term we are risking .11cents with a possible .45cent reward to giving us a 1:4 risk:reward ratio. Once my risk is defined I figure out how large of a position size I can do based off only risking 2% of my total capital. If a chart can not offer me these two things together then for me it is not a good entry point.

[Young Financier 10]

  EatSleepTrade said:

Every chart has to be read differently and I don't think there is just one strategy that works for every stock. But I base my entries off good risk to reward. 1:3 or higher. So when I find a chart that offers me at least 1:3 risk to reward ratio. I make sure that my stop can be placed low enough that the stock has room to move, so I don't end up stopping out early. But not risking more that 2% total capital.

 

Example would be $COWN

 

 

My Idea on this stock was to take advantage of a major sell off or large dip. There was strong support in the 5.45 area as well as the 50day sma that was holding up. The yellow circle represents the day I started my swing at 5.50. The Red circle represent our previous low of 5.39 an area we could place our stop to define our risk. The green circle is our target at 5.95, our previous high as well a strong resistance area. so in term we are risking .11cents with a possible .45cent reward to giving us a 1:4 risk:reward ratio. Once my risk is defined I figure out how large of a position size I can do based off only risking 2% of my total capital. If a chart can not offer me these two things together then for me it is not a good entry point.

Damn good breakdown. Since making this thread, I've switched to a much similar strategy. I was too concerned with the intricate details of entry instead of just getting in when the environment was right.

[timlisten 10]

There are many strategies that would work, but it is the discipline that differentiates the winners and the losers. When I first started trading, I follow some strategies and was losing money, and now I'm basically using the same strategies with disincline and I'm making money. I use support and resistance and whenever a stock I like make a breakout with strong volume, I enter the trade with a stop loss.