Risk/Rewards

Swing trading requires a serious commitment to skill, knowledge, and emotional control. Treat it as a business at all times. Prepare a personal trading plan, carefully evaluate risk capital, and set attainable goals for the future. If personal bias expects this discipline to earn quick wealth, find another hobby immediately or just take up gambling. The markets have no intention of offering
money to those who do not earn it. And always remember this valuable wisdom: attention to profit is a sign of trading immaturity, while attention to loss is a sign of trading experience. Show a willingness to forgo marginal positions and wait for good opportunities to appear.

Prepare to experience long periods of boredom between frantic surges of concentration. Expect to stand aside, wait, and watch when the markets offer nothing to do. Accept this unwelcome state as all successful participants do. The need for excitement makes a very dangerous trading partner.

Careful stock selection controls risk better than any stop loss system. Bad timing does more damage than sustaining large losses. Make wise choices before position entry and face less risk at the exit.

Watch out for secondary gains that have nothing to do with profit. Trade execution will release adrenaline regardless of whether the position makes or loses money. Always face your true reasons for swing trading the markets. The primary motivation must be to aggressively take money out of someone else’s pocket. Rest assured, the skilled competition will do their best to take yours at every opportunity.

Every setup has a price that violates the pattern. The measurement from this breach to the trade entry marks the risk for the position. When planning execution, look for levels where price must move only a short distance to show that the trade was a mistake. Then expand this measurement to find the reasonable profit target and apply this methodology to every new opportunity. Limit execution to positions where risk remains below an acceptable level and use profit targets to enter markets that have the highest reward:risk ratios.

Each swing trader carries a different risk tolerance. Some find comfort flipping NYSE behemoths, while others play low float screamers. Follow natural tendencies and remember that swing strategies use discretionary entry. The trader alone must decide when to enter, exit, or stand aside.

Test overall results by looking at profit and loss at the end of each week, month, and year. Good results make money, while bad results lose it.