Swing Trading

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)