Insights on Swing Trading Strategies

Nov 11, 2024

Lecture on Swing Trading and Episodic Pivots

Introduction

  • Speaker: Pri Bond, founder of Stock B
  • Focus: Process, momentum burst, and episodic pivot setups
  • Objective: Share insights on swing trading

Trading Strategies

Types of Setups

  1. Catalyst-based Trading

    • Identifiable catalyst that leads to significant stock movement
    • Aims for large account increments (20%-100% per trade)

  2. Momentum Burst

    • Shorter duration trades
    • Smaller increments (1%-5%)
    • Opportunity to find numerous trades annually

Episodic Pivots (EP)

  • Defined by a surprising catalyst leading to market re-evaluation
  • Two types:
    1. Real Catalyst EP
      • Based on tangible catalysts like earnings or sales growth
      • Rare but significant impact
    2. Story EP
      • Based on plausible stories, not necessarily backed by data
      • Potential for large moves based on market perception

Market Dynamics

  • Market changes affect how stocks react to catalysts
  • Higher risk with immediate EPs; delayed reactions can offer better entry points

Criteria for Selecting Stocks

  • Magna 53 plus Cap 10 by 10 Criteria
    • M: Massive acceleration in sales/profit
    • A: Acceleration in sales
    • G: Gap up
    • N: Neglect prior to catalyst
    • 5: Short interest of five days or more
    • 3: Three or more analysts raising price targets
    • Cap 10 by 10: Capitalization below 10 billion, IPO within 10 years

Trading Methods

Delayed Reaction EP

  • Wait for better entry after initial catalyst-induced volatility
  • Often used for short-side trading

9 Million EP

  • Focus on stocks with sudden volume surges (>9 million)
  • Main strategy for frequent trades and larger profit potentials

Momentum Burst

  • High-price stocks preferred for smoother moves
  • Focus on biotech and technology sectors
  • Requires situational awareness to avoid choppy markets

Situational Awareness

  • Determining breakout viability and trading aggressiveness
  • Use of market monitor and 20% study for market breadth analysis
  • Daily routines for identifying new opportunities via news and pre-market analysis

Additional Insights

Key Advice for Traders

  • Focus on Structural Elements: Momentum, news-driven moves
  • Develop a Setup: Study extensively and adopt proven methods
  • Avoid Overtrading: Adjust aggressiveness based on market conditions
  • Self Leadership: Essential for long-term success in trading

Conclusion

  • Emphasis on continuous learning and adapting strategies
  • Encouragement to deeply study markets and setups
  • Self-leadership and motivation as critical factors for success

This lecture provides extensive insights into swing trading strategies, focusing on episodic pivots and momentum bursts. The methodologies discussed emphasize both understanding market catalysts and having a disciplined approach to trading.