A Practical Guide to Swing Trading by Larry Swing
Notice in the chart below that the downtrend is interrupted by short-term rallies
(pull-ups). The trade is placed after a short-term rally (or pull-up), once the stock
resumes its downtrend.
The trade is entered on a day when the price falls below the low of the previous day.
The rules for entering and exiting a short swing are shown schematically on the
next page.
While the rules might seem somewhat complicated, several brokerage firms make
the process quite easy. Interactive Brokers – described in the next section –
allows you to enter the three components of the trade all at the same time. For a
short swing they are:
•
A sell stop to sell the stock when the price moves below the stop price
•
A buy stop to buy back the shares if the price moves up 4%
•
A buy limit to lock in profits (on ½ the shares) when the price drops 7%
The schematic diagram provides instructions for how to adjust these prices on the
second day, third day, and so on, based on whether the stock has been sold short
or not. The schematic provides exit instructions as well.
Visit:
http://www.mrswing.com/
or email: larry@mrswing.com
A Practical Guide to Swing Trading by Larry Swing
m/
LOW
Yes
No
– Repeat for up to 5 trading days
Repeat until the
position closes.
Buy stop closes
the 2
nd
half of
the position.
• Wait 30 minutes
• Buy limit for ½ the
shares remains the
same
• Buy stop – whichever
is lower –
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