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My trading methodology

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  • My trading methodology

    Over the years I have developed a top-notch swing trading strategy fo stocks through trial and error and testing with real money. It is as follows:
    • Long only - I have never had much luck shorting stocks as markets aren't meant to go down. Not that they can't but stocks represent companies who are using the stock to raise money. Most people around every stock are looking for the stock to rise so go with that flow. READ: Why I Rarely Short Stocks
    • Extended uptrends - I only trade stocks that have been trending up for at least a year, give or take a few months. See image below:
    • Never try to catch a falling knife - If a stock or etf is trending down you DO NOT go long. There have been times when the overall market was DOWN but a particular stock I was eyeing was UP. I buy those stocks.
    • Cut losses short and cut them QUICKLY - I struggled with this concept for YEARS and it all boils down to EGO. I would always hold on to losing trades with the hope that they would recover. Most traders have dealt with this same issue. You HAVE TO get over it. Give your stocks some room to breathe i.e. let them go down a reasonable amount and potentially recover but don't let them drop like a rock.
    • Never buy ahead of earnings - Before I put a stock on my watchlist I ALWAYS check when its next earning report day is. If the date is less than one month away I avoid it. The reason for the one month is that I don't even want to risk getting stuck in the stock when it's approaching the earnings date because earnings estimate news often comes out in the weeks before that alters the stock price.
    • Buy the recovery - When a stock is uptrending and trades back down to a major moving average it is your que to start watching it for a recovery. Once it starts to trade back up you can buy in the last hour of the trading day. The reason it needs to be the last hour is that it shows you the stock is really a green day that day. If you buy too early you could end up watching the stock trade back down and even go red before the market closes.




    That is my basic methodology. Please respond to this thread if you have any questions.
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    "Step into the arena and hold on to your hat. Don't get discouraged if you don't make 8 trillion dollars in your first month. Trading is not a get rich quick scheme. Realize that trading is a skill and just like any other skill it takes time to learn. Have convictions in your decisions in life and trading. Ignore the comments and "advice" of those that have never traded a day in their life."


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