roshcrazy
MP Guru
Swing Trading And The Importance Of Volume
Swing trading consists of holding a position for
anywhere from several days to several weeks. A
concrete method which enables the trader to usually
capture anywhere from 3 points and up involves the
reading of the volume tape which is one of the most
important calculations when determining entry into a
stock.
It is always best to pick a stock with good
fundamentals and watch how it moves. The stocks with
five point interval scales on the side of the price
scale on the chart make outstanding candidates when
looking for entry. These are usually the strongest
technically as well because the market makers don't
try to gun the stop orders as much as with a lower
priced stock. It should also follow a line on support
as well.
When a good stock is chosen measure the bottom from
the sideways action to the peak of a previous swing
high to get an idea of the points you can capture and
stay on the low end of your estimate. It is always
better to secure a solid gain than to try and sell at
the peak. You will also get a better fill on the way
up when the institutions are driving the price up. Now
study the sideways action and how the previous volume
looked before the last peak developed. You will see a
pattern when the institutional buying dried up and
only small investors were trading. This is what I call
the dead zone and is your prime opportunity for entry.
Make sure to enter a stop order after entering your
position, at most 10% of your entry price, and use a
trailing stop if desired.
After entering a position sell as soon as your target
price is reached and it usually happens fast when the institutions start buying. A position will normally be held from as little as two days to a maximum of a
month. Good luck and happy trading.
By Jeff Church (StressFreeTrader)
Swing trading consists of holding a position for
anywhere from several days to several weeks. A
concrete method which enables the trader to usually
capture anywhere from 3 points and up involves the
reading of the volume tape which is one of the most
important calculations when determining entry into a
stock.
It is always best to pick a stock with good
fundamentals and watch how it moves. The stocks with
five point interval scales on the side of the price
scale on the chart make outstanding candidates when
looking for entry. These are usually the strongest
technically as well because the market makers don't
try to gun the stop orders as much as with a lower
priced stock. It should also follow a line on support
as well.
When a good stock is chosen measure the bottom from
the sideways action to the peak of a previous swing
high to get an idea of the points you can capture and
stay on the low end of your estimate. It is always
better to secure a solid gain than to try and sell at
the peak. You will also get a better fill on the way
up when the institutions are driving the price up. Now
study the sideways action and how the previous volume
looked before the last peak developed. You will see a
pattern when the institutional buying dried up and
only small investors were trading. This is what I call
the dead zone and is your prime opportunity for entry.
Make sure to enter a stop order after entering your
position, at most 10% of your entry price, and use a
trailing stop if desired.
After entering a position sell as soon as your target
price is reached and it usually happens fast when the institutions start buying. A position will normally be held from as little as two days to a maximum of a
month. Good luck and happy trading.
By Jeff Church (StressFreeTrader)