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Swing Trading the Stock Market
By Zigzag Man of market-master.net
Day Trading requires only a minimal knowledge of the 'Fundamentals' of the Company you are Trading, and is usually done on the most recent 'News Releases' or 'SEC Filings' that are put out. Day Trading is done mostly on your ability to 'Read the Charts' correctly. Day Trading with charts uses very short term charts like the: One Minute, Five Minute, Fifteen Minute, and the Half Hour and Hourly time frames. Swing Trading requires much more Research into the Company you are interested in 'Investing' in. Swing Trades can last from just a few days, to a few weeks, or even months. It also requires a good understanding of the charts using longer time frames like the Ten Day/Hourly, the Three Month/Daily, the One Year/Weekly, and the Five Year/Monthly. In order to Swing Trade successfully, there is a lot of research that must be done. You must know how to read and understand all of the most recent SEC Filings the company has put out. You have to check for 'Headlines' on a daily basis to see the most recent developments the company is going through. You must know how to read their Balance Sheet and other Key Statistics. You must follow the Insider Transactions to see what the Officers of the Company are doing with their own shares, as that gives you a clear picture of what the 'Insiders' of the company are thinking about their own company. You also need to know what the analysts that follow your company are thinking, as they have a profound effect on how the Price Per Share (PPS) reacts after that Company reports their Quarterly and Year End Numbers. This includes knowing all of the most recent Upgrades and Downgrades that are given by them to the companies of your choice. It's also a good idea to keep track of the Institutional Interest in your company of choice, by following any changes in their positions. If they add to their position, that is a good thing. If they sell some or all of their position, that brings up a red flag. You must also follow the other stocks that belong to the 'Sector' your stock of interest is in, as they also have an effect to a certain degree on how well your stock will perform. Analysts not only give Upgrades and Downgrades on particular stocks, they also give them for individual 'Sectors' of Industries. Then, you need to make a decision about whether you believe the (PPS) of this company will increase over a period of time, or decrease. If you like what you see, then you will be looking for a good entry by studying the longer term charts. You are trying to pick a good entry during a phase when the PPS is undergoing a 'Pullback', and trying to pick the 'Second Low' of this 'Pullback' during a double-bottom chart pattern. That gives you the ability to set a Stop Loss Zone if the PPS breaks below the 'First Low' to minimize losses. Then you need to figure out your 'Exit Strategy' to maximize profits. This entails reading the daily charts for signals of a negative chart pattern after a good run which signals a potential pull back, coupled with the Volume Studies of the Historical Daily closes. One of the most important tools for entering a Swing Trade successfully is 'Volume Studies'. You study the Historical Prices found on the Yahoo Finance page to find the patterns of your stocks daily volume. This is a lesson I give that is of the utmost importance in the Swing Trading series of lessons. Swing Trading takes up very little of your time. All you need is about fifteen minutes each day to check the most recent News Releases and SEC Filings for your stock and others in it's sector, then check the daily chart for possible breakdown patterns, and know the average daily volume and the daily closing price.
This intel first appeared on: http://www.market-master.net/swingtrade.html
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This intel was contributed by zigzagman
zigzagman
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May, 2012
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