A Practical Guide to Swing Trading by Larry Swing
6.8 Once half the shares close at a 7% profit, the
other half remains open to “ride the wave”.
When do we close the second half of the trade?
A
trailing stop is used to close the 2
nd
half of the trade. Remember that a
trailing
stop is used to raise the
sell stop (stop loss) during the trade. The same rules
apply (see 6
.6 above). The shares are sold when the price drops to 6 cents below
the low of previous day (no gap on open) or the current day (gap on open).
6.9 The Short Swing – how we make money when we
think the price of the stock is going down
A
short swing is used to make money when a stock’s price is predicted to go down.
We
sell short the stock. For those unfamiliar with
shorting stocks, we sell the
stock without having previously owned it. Additional detail about shorting stocks can
be found the Appendix. For now, it is only necessary to know that our goal is to sell
the stock and buy it back at a lower price.
While anyone can sell short, you must make sure that
your brokerage account is
approved for trading on
margin. If you do not have a
margin account, simply fill
out the necessary forms with your current brokerage firm or open an account with
one of the firms recommended for
swing trading.
A
short swing is a mirror image of a
long swing.
The price of a stock in a
downtrend tends to have periodic, short-term rallies (pull-ups) as the price moves
lower. The set up for a
short swing is the brief rally (or pull-up). The decision
rules in the
Master Plan help enter the trade when the stock is resuming it’s
downward path.
A chart showing a downtrend that is conducive to
short swing trading is shown on
the next page.
Visit:
http://www.mrswing.com/
or email: larry@mrswing.com
