Effective Swing Trading Strategies Overview

You saw as you see from this Nvidia trade, like you only need one swing trade a month or one or two a year for some people to make this work. Swing trading, swing trading, swing trading. Swing trading is some of your most requested trading topics so far this year. If you've been watching my trading videos on the channel, you know that I'm predominantly a day trader. However, as I get older over the years, sometimes you just... can't handle the intraday volatility up and down anymore. Right? As traders, we can only handle a GameStop every two or three years. That's why I've been allocating another trading account dedicated to swing trading. And I've been scanning for swing ideas on weekly or bi-weekly. basis. I like to keep my swing trading process relatively simple especially when compared to day trading. In this video, I'll walk you through my favorite event-driven swing trading strategy using my recent swing trade executions on Nvidia to demonstrate how I made this total profit in one swing trade that took a span of over four days. Yes, yes I understand that the five figure or six figure profit. may seem exciting to you. But as always, my goal is to explain my entire trading process to you rather than focusing on the profit figure. Remember, if you give a man a fish, you can feed him for a day. But if you teach him how to fish, you can feed him for a lifetime. For me personally though, I choose to be fed with ramen delivered by Lamborghinis. Thank you very much. Okay, all jokes aside, I'm very grateful. So whether you want to be fit for a day or for a lifetime or even just a few months or a few years, that's completely up to you. I just hope these video lessons I make will help you in your personal trading journey. Of course, your gentle smash on the like button is always the biggest motivation for the channel. Okay, so in this video, you're going to learn the events-driven swing trading strategy criteria. Technical analysis and chart pattern for this particular setup How to plan your entry, exit, and risk level in this particular strategy And finally, how to manage your winning trades and maximize your profits If you just pay attention to this trade planning process, you'll be surprised at how simple and repeatable this events-driven swing trading strategy can be Once again, just another reminder, this is swing trading These setups don't happen every single day, but when they do, every couple of weeks or months, you can get really big potential moves like these. So I would totally recommend this strategy for beginners or part-time traders who want to grow their small accounts, especially if you don't have too much time for active day trading. Okay, let's start with this events-driven swing trading strategy criteria. A consistent trading strategy should always have a set of defined criteria, whether that's for day trading or swing trading. As traders, our goal is to find the best opportunity given by the market. The majority of our time should be spent researching and planning for the right entry timing. So let's start with my stock selection criteria for this events driven swing trading setup. So the scanning criteria and stock selection process for the swing trading setup It's the same as my day trades for trend join law. You are essentially scanning for the top gainers on the day with high volume. So we're now on my scanner. I use every single day pre-market for swing trading and day trading. So this is Stocks.io, my proprietary stock scanner. So you can see once you're here logged in, you can see a lot of pre-built scans. The one I use for large cap scanning for gappers, for trend join law. and a lot of my day trading strategies and for this particular swing trading setup i use this one so you can see i'm scanning for price above a dollar per share dollar volume i'm using 1 million for pre-market volume gap percentage i need i'm scanning for stocks gapping out more than three percent market cap we're looking for more than 800 million market cap now you can see that for For this one, I'm scanning for dollar volume of $1 million. So dollar volume is calculated by the average price times the actual volume traded on the day. Essentially, you're looking at how much money has been traded in the stock during pre-market session. So for me, I use a million, but you can probably scan for similar results using a different one, using actual volume. So 20,000 shares, that's more than enough for pre-market for large cap stocks. So if you look at the screenshot from that, particular day Nvidia gapped up. You can see this in pre-market was trading almost gapping at 7% on the day. Volume was trading 2.8 million shares during pre-market. So the dollar volume for that is $1.4 billion. So that's how much money has been traded pre-market for Nvidia. So that's another thing you want to see. Not only do you want to see a high gap up percentage, more than 3%, you also want to see a lot of dollar volume traded for this particular stock, for this swing trading strategy. And also very importantly, as we talked about in our last swing trading crash course, I do not swing trade small cap stocks anymore. So that's the reason we're scanning for a market cap of at least above $800 million. Okay, so now after we use this very simple scanning process to help me narrow down the stocks that fit my criteria and all the filters, here comes the most important step in my swing trading planning, researching the news catalyst. By the way, this is Stocks.io, the scanner I developed. Stocks users already have access to all these swing trading scanners and many other built-in scanners that you see on screen here. These are created based on my own trading strategies, for small caps and large cap stocks. I launched this scanner about three weeks ago, and I've made video lessons on how to use a stock scanner to elevate your trading performance. So feel free to check them out if you're interested in using my stock scanner. Okay, so now let's talk about the catalyst for NVIDIA. What caused this huge gap up over $1,000 and now trading at around $1,100? Nvidia had an amazing Q1 earnings report, and the stock immediately gapped up following the news. With this incredible growth in revenue, a lot of analysts upgrade, and the company also announced 10 for 1 forward stock split. Overall, this is a very bullish sentiment on a stock that has already been on a long term uptrending chart. So that's another crucial thing you need for this event-driven swing trading strategy. I mean, it's called event-driven after all, right? So you need an extremely bullish catalyst and ideally one that's forward-looking. So you're looking at a growth in the next quarter or next two or three quarters or even next year. So you might be asking now, Shay, what kind of catalyst are you looking for then for swing trading? In a nutshell, I usually look for these three kinds of catalysts for swing trading. The first one is a huge earnings beat and growth expectations, which is one you saw for Nvidia. Usually these catalysts are paired with raising guidance. A second one, this is also one we talked about before in a previous video, sector hype. This can be meme stock hype, which unfortunately was short-lived, or crypto hype, which lasted months and actually the entire 2021. The third one, this one is the most short-lived out of all the catalysts, IPO hype. So these will be examples like the Reddit stock, DXYZ that I traded before. This will be more suitable for those overnight swing trading strategy. Sounds simple enough? Like I said earlier, I keep swing trading process very, very simplified and enough for me to manage it like a part-time trader. If you're following along my thought process so far, please remember to like the video down below. So now that we talked about the strategy criteria, let's move on to talking about the technical analysis and chart pattern for the swing trading strategy. Remember, knowing the right timing to execute your trade is just as important as finding the right stocks to trade in the first place. So now that you learned to find and scan for potential swing trade opportunities. let me explain to you the entry criteria of this events driven swing trading strategy pay attention now because i'm about to share with you some golden trading tips first of all how do you use technical analysis to identify key entry levels and how do you recognize a chart pattern that's setting up for your potential entry okay now we're looking at the daily chart for nvidia Earlier, we talked about how to scan for these gappers on the day, right? The potential stocks to swing trade. So once you have the gappers, you want to look at and analyze the daily chart. to see if they're suitable. A stock can have all the right catalysts we talk about and be on the gapper list. But if the daily doesn't look good, then it's not an ideal swing trade. I wouldn't take it. So let me show you what exactly am I looking for on a daily chart. So daily chart, I want to see an uptrend. So that's very general, right? So essentially, I want to see a stock. If you zoom out on NVIDIA daily, right? This is a huge uptrend. Even just in 2024, like... We talked about many times you already know the stock came from 500 all the way to a thousand now it's on a huge uptrend you don't want to see this kind of chart right the stock is is trending down you know it's gapped down multiple times this is a downtrend an example of a stock not to swing trade on the long side and now let's talk about indicators i use i use the 200 sma You can see it here 200 SMA on the daily chart kind of small SMA over here the blue line and daily 8 EMA and I want to see a stock above both EMA and SMA so that's why another thing AMC does not qualify. The stock is below both of these indicators. Now, if you go back to NVIDIA, not only is the stock uptrending, it's above 200 SMA and riding along the 8 EMA. Now, 8 EMA is a momentum indicator, right? We talked about before, this is something I learned from my trader friend who taught me how to use it. And now I use it for the daily charts for swing trading as well. Essentially, you want to pick stocks that are riding along the ATMA and has a history of reclaiming that indicator. So without looking at the catalyst, you can see this stock. Yes, Nvidia, you can see sometimes it sells off the ATMA. reclaims over that gaps over reclaims. You can see pulls back to the ATMA once again, and then no breakout pulls back right along the ATMA and breakout. Yes, you can see it does sell off when the entire market trended down, failed. to reclaim, break down, but now it's reclaiming once again. I think this run is running into earnings. Now the actual earnings day is this particular day. So those are just the general indicators I look at for swing trading. And that's regardless of whether I'm using this events driven strategy or the other technical breakout strategy or the overnight long that we talked about. So now we talked about the daily chart, right? You can see the day we're talking about here, the day I took the entry was this day. when the stock gapped up to new all-time highs. Now whenever a stock gaps up to new all-time highs that's also another very bullish technical factor for this events driven strategy because technically speaking if a stock gaps up to new all-time highs especially if you have these catalysts you technically don't have any ceiling right you don't have any resistance that's proven prior to sell off right the prior resistance before the earnings was here around 970 now after earning stop gaps over on that day there's no ceiling for the stock technically you don't have you have uncapped upside obviously i'm not saying it's gonna double in one day but just saying like technically speaking you know this is very bullish That's the reason I do not short stocks. That's trading at all-time highs or near all-time highs. Okay, so looking at the intraday five-minute chart now, you can see the stock gapped up pre-market. That's where we saw on the scanner, right? It was almost up 7% on the day. Pre-market, it sets up a low of around this area. Let's just call it 10-10 area, 10-10. Pre-market, it consolidated a bit. And at the market, it just breaks out. over pre-market highs of 1020 it makes you know trended out and makes new highs on the day even though it did pull back near the end of the day you can see still held most of that gap for the intraday breakout so for me for this particular swing trade I want to get long on the stock after it's able to break above pre-market highs. So pre-market highs, I just call it 1022. You can see on the five-minute chart, it breaks out. It pulled back a little bit to VWAP and continued to uptrend. trend. So if you look at my execution chart, I'll put it somewhere on the screen, I actually got in you know once the stock broke out from 1022 to 1040 and pulled back to VWAP area. I think I got in around like 1030 or 1028 something like that here. That's why I got in on the swing trade. And then intraday you know I traded this also as a trend join long setup. I sold into some of the day trade gains so that's the reason if you look at a chart I believe I sold some into the 1045s, maybe a little bit more. and I added some more at the end of the day, I think around like 1040. So even though I didn't catch it right at 1022, when it dipped down, I caught it at around 1030. That's pretty good. So the way I take a lot of my swing trades is, if I have a good position and intraday it moved up quite a decent amount, so from 1030 to 1050-ish area, that's a decent 20-point move, I will lock in some profit for day trading. And then I keep my good eye. average for multiple days. So even if the next multiple days the stock sells off, I'll always have locked in some profit. So as you can see on the chart, I ended up riding the swing trade for most of the next couple of days. I did sell some the next day. So if you zoom out on the 15-minute chart, you can see the stock held a very, very nice uptrend after my entry on the first day. If you see at 15 minutes, you can see the trend line here and even gapped up even more the week after. And you can see all the way here, it's riding all the way to actually today, actually, it's riding a nice uptrend on the daily chart. I locked in a lot of my profits around the 1048 area, 1046, 1048. Actually. still have a small piece so today you can see it's selling back down a little bit but the only reason i can stay in for so long without getting shaken out is because i have a good average from this first gap update over here my thing my average about 10 30 so i'm already in the money about you know right now it's no longer 100 points but at one point i was up in the money money 100 points so yeah this is the time frames i use for swing trading in particular uh daily chart and execution I'll use use a five minute chart intraday on the first day. And after that, I'll try to zoom out, use the 15 minute charts, you know, to stay in to see the big uptrend or the hourly chart. I don't use it as much. Sometimes it gets messy, but you can see on the hourly chart, it kept a very nice uptrend all the way until today. okay so now that we talked about the entries for this swing trading setup let's talk about the exit and the risk levels in this events driven swing trading strategy because as you know in day trading oftentimes you're just looking for like 20 cents 50 cents a dollar two dollars per share profit but in swing trading if it works you're aiming for the big move up because your risk is all so much of greater as well, right? Sometimes you can be risking $5 or $10 per share. So you want to make sure that you have the potential of aiming for 3x, 4x, 5x your risk for the potential upside. So I essentially held this position for 1, 2, 3, 4 days. It definitely helps a lot just to look at the daily chart. And if you are itchy, you have itchy fingers, you want to look at intraday, then look at the 15-minute chart. That's what you saw earlier with a huge uptrend or the hourly chart. Because remember, when you're swing trading, you are letting the stock work for multiple days. Hopefully it's a multi-day breakout. So you don't want to cut your profits short. You want to hold on to your winners for a long time and cut your losers quick. So those are the tips for holding on to your winners longer, especially in swing trading. Use higher timeframes. And another thing is you can sell small partial positions intraday or in the second day breakout. You don't want to sell too much. Like for me, each sell was only about 10, one 10th on the first two days. You want to try to maximize your profits. It definitely helped a lot that this event driven swing trading strategy is just an extension of my, one of my day trading strategies, the trend joint long. So I can still kind of theoretically day trade it. And then I let the rest of the stock ride. Because the entries on the trend join long and the swing trade is extremely similar. Keep it simple right? So how did I know that Nvidia the stock was going to go higher? Well the answer is I didn't know. Not for 100% certain of course. The truth is nobody knows for sure where the stock is going to go in the short term. No, not me, not the banks, not your financial advisors, and definitely not Jim Cramer. You can only make educated decisions based on chart pattern recognition and experience. So while I didn't know for sure 100% that this NVIDIA's trade is definitely gonna make me money, but I traded the swing trading setup many times over the years to know the catalyst and ideal chart pattern that should work out well. But what if it doesn't? Let's say my thesis was completely wrong. That's where risk management really comes into play. So you need to plan your stop loss area based on the key technical levels that we identified earlier on the intraday chart. So let's go back to that intraday chart for Nvidia. On the first day it gapped up. As we identified earlier, pre-market lows was around this 1010 area. The key level confirmation was over 10 22 my entry around 10 30s so there are many different ways to place your risk for a particular swing trade a very popular method is that a lot of people use the the low of the day on the candle that they place the trade on so on this intraday if you place an entry here a lot of people used to use like to use a lower day price so in this case will be 10 16. And that's valid. But for me, I like to be a little bit more conservative. In this case, it's around the same area. But for Nvidia, whenever there's a gap up and I take the gap up to continue up higher, I don't want the stock to sell off the pre-market gap. So a lot of times for the swing trade, I'll set my risk for the swing trade at pre-market low area. So that's what we saw earlier at 1010 over here. So remember, my entry was 1030, confirmation 1020. and the risk is down below at 1010 so that means i'm risking 20 per share on this particular trade so now that we identify the risk level which in this case is 10 10 that we talked about then from there i'll decide on the amount of share size to put on the trade in order to keep the potential loss the risk of this trade within my account tolerance so let me use this nvidia trade to to show you how to calculate. your proper position sizing so we talked about earlier entry was 10 30 and the risk is 10 10 so that means your risk per share is 20 per share so now that we know this is the amount of risk per share you plug that in so this is 20 per share risk let's say you know i'm trading uh let's say I'm trading a $100,000 account. And if I'm... more aggressive, I will use anywhere from 3% to sometimes even 5%. If you are more conservative, then you should use something like 1% on a day. So I'm going to use 3% for this example. That means I can risk up to $3,000 per trade with my 100K account. Okay, so you can see it automatically calculates at 3000, which is your max loss per trade divided by risk per share and you get 150. So that's a formula you can see 150. 150 is the maximum amount of shares you can take for this NVIDIA trade according to your account. So that shows you, you know, 1 to 1 risk award, 1 to 2 risk award, and 1 to 3 risk award. What the potential upsides are for this trade. And once again, if you are really new to trading, you know, you should be trading with a smaller account hopefully, but you definitely don't want to be risking too much. So I would recommend something like 1% risk or even 0.5% risk. The idea of using this risk calculator to calculate every single trade you take is so that you are keeping your risk constant, whether it's day trading or swing trading, depending on the strategy. But you don't want to be taking like a thousand shares on a penny stock and a thousand shares on Nvidia. You're going to have like varied amount of risk. So I've demonstrated this proper risk management calculation process in previous videos. And if you want this calculator, then you can sign up to my weekend email list down below. you're gonna get the calculator in the attachment on the second day. So I hope by now you guys realize how much emphasis I put on trade planning and risk planning, even though this is a relatively simple swing trading strategy. And I definitely want to give a shout out to Kalamaki. I met him last year at Traders for a Cause. He only swing trades and his talk at Traders for a Cause definitely inspired me. to tweak a lot of the little nuances about my own swing trading setups. I do not use as big of a risk as well as a stop loss area as him because I don't have the same risk tolerance. I kind of like make it a little bit tighter for my own personal style. But yeah, he definitely inspired me a lot about letting winners run. If you're interested in learning more from my swing trading crash course video here on YouTube, then you can check out this video. I go over two other swing trading strategies there. They're all kind of similar to this current one you're watching right now, but different in terms of the nuances. Make sure to comment swing trading down below if you prefer this style of trading. And if you want to see more swing trading content on the channel. Or comment day trading if you still prefer day trading over swing trading. I get it. Some people just like the intraday volatility. Another pro tip to writing out your swing trades longer to maximize your profits, you should have separate accounts for day trading and swing trading. So even though I was swing trading NVIDIA, I was still day trading in and out with my other account. This is the best way I find that you do not kind of cut your winners too short in terms of your swing trading. And you do not confuse your day trading with like trying to hold longer. This is a pro tip. It definitely helped me so much. So for me, I have no problem managing both my swing trades and day trades since they are in separate trading accounts most of the time, unless I do overnight. But I can see a future where if I get really busy in my day to day life, and I just swing trade. Because you saw, as you see from this Nvidia trade, like you only need one swing trade a month or one or two a year for some people to make this work. Thank you guys so much for watching. Make sure to check out the swing trading crash course over here if you want to learn more.

If you've been watching my trading videos on the channel, you know that I'm predominantly a day trader. However, as I get older over the years, sometimes you just... can't handle the intraday volatility up and down anymore.

Right? As traders, we can only handle a GameStop every two or three years. That's why I've been allocating another trading account dedicated to swing trading. And I've been scanning for swing ideas on weekly or bi-weekly.

basis. I like to keep my swing trading process relatively simple especially when compared to day trading. In this video, I'll walk you through my favorite event-driven swing trading strategy using my recent swing trade executions on Nvidia to demonstrate how I made this total profit in one swing trade that took a span of over four days.

Yes, yes I understand that the five figure or six figure profit. may seem exciting to you. But as always, my goal is to explain my entire trading process to you rather than focusing on the profit figure. Remember, if you give a man a fish, you can feed him for a day. But if you teach him how to fish, you can feed him for a lifetime.

For me personally though, I choose to be fed with ramen delivered by Lamborghinis. Thank you very much. Okay, all jokes aside, I'm very grateful.

So whether you want to be fit for a day or for a lifetime or even just a few months or a few years, that's completely up to you. I just hope these video lessons I make will help you in your personal trading journey. Of course, your gentle smash on the like button is always the biggest motivation for the channel. Okay, so in this video, you're going to learn the events-driven swing trading strategy criteria. Technical analysis and chart pattern for this particular setup How to plan your entry, exit, and risk level in this particular strategy And finally, how to manage your winning trades and maximize your profits If you just pay attention to this trade planning process, you'll be surprised at how simple and repeatable this events-driven swing trading strategy can be Once again, just another reminder, this is swing trading These setups don't happen every single day, but when they do, every couple of weeks or months, you can get really big potential moves like these.

So I would totally recommend this strategy for beginners or part-time traders who want to grow their small accounts, especially if you don't have too much time for active day trading. Okay, let's start with this events-driven swing trading strategy criteria. A consistent trading strategy should always have a set of defined criteria, whether that's for day trading or swing trading.

As traders, our goal is to find the best opportunity given by the market. The majority of our time should be spent researching and planning for the right entry timing. So let's start with my stock selection criteria for this events driven swing trading setup.

So the scanning criteria and stock selection process for the swing trading setup It's the same as my day trades for trend join law. You are essentially scanning for the top gainers on the day with high volume. So we're now on my scanner. I use every single day pre-market for swing trading and day trading.

So this is Stocks.io, my proprietary stock scanner. So you can see once you're here logged in, you can see a lot of pre-built scans. The one I use for large cap scanning for gappers, for trend join law. and a lot of my day trading strategies and for this particular swing trading setup i use this one so you can see i'm scanning for price above a dollar per share dollar volume i'm using 1 million for pre-market volume gap percentage i need i'm scanning for stocks gapping out more than three percent market cap we're looking for more than 800 million market cap now you can see that for For this one, I'm scanning for dollar volume of $1 million.

So dollar volume is calculated by the average price times the actual volume traded on the day. Essentially, you're looking at how much money has been traded in the stock during pre-market session. So for me, I use a million, but you can probably scan for similar results using a different one, using actual volume. So 20,000 shares, that's more than enough for pre-market for large cap stocks. So if you look at the screenshot from that, particular day Nvidia gapped up.

You can see this in pre-market was trading almost gapping at 7% on the day. Volume was trading 2.8 million shares during pre-market. So the dollar volume for that is $1.4 billion.

So that's how much money has been traded pre-market for Nvidia. So that's another thing you want to see. Not only do you want to see a high gap up percentage, more than 3%, you also want to see a lot of dollar volume traded for this particular stock, for this swing trading strategy. And also very importantly, as we talked about in our last swing trading crash course, I do not swing trade small cap stocks anymore.

So that's the reason we're scanning for a market cap of at least above $800 million. Okay, so now after we use this very simple scanning process to help me narrow down the stocks that fit my criteria and all the filters, here comes the most important step in my swing trading planning, researching the news catalyst. By the way, this is Stocks.io, the scanner I developed. Stocks users already have access to all these swing trading scanners and many other built-in scanners that you see on screen here. These are created based on my own trading strategies, for small caps and large cap stocks.

I launched this scanner about three weeks ago, and I've made video lessons on how to use a stock scanner to elevate your trading performance. So feel free to check them out if you're interested in using my stock scanner. Okay, so now let's talk about the catalyst for NVIDIA. What caused this huge gap up over $1,000 and now trading at around $1,100? Nvidia had an amazing Q1 earnings report, and the stock immediately gapped up following the news.

With this incredible growth in revenue, a lot of analysts upgrade, and the company also announced 10 for 1 forward stock split. Overall, this is a very bullish sentiment on a stock that has already been on a long term uptrending chart. So that's another crucial thing you need for this event-driven swing trading strategy.

I mean, it's called event-driven after all, right? So you need an extremely bullish catalyst and ideally one that's forward-looking. So you're looking at a growth in the next quarter or next two or three quarters or even next year.

So you might be asking now, Shay, what kind of catalyst are you looking for then for swing trading? In a nutshell, I usually look for these three kinds of catalysts for swing trading. The first one is a huge earnings beat and growth expectations, which is one you saw for Nvidia. Usually these catalysts are paired with raising guidance. A second one, this is also one we talked about before in a previous video, sector hype.

This can be meme stock hype, which unfortunately was short-lived, or crypto hype, which lasted months and actually the entire 2021. The third one, this one is the most short-lived out of all the catalysts, IPO hype. So these will be examples like the Reddit stock, DXYZ that I traded before. This will be more suitable for those overnight swing trading strategy.

Sounds simple enough? Like I said earlier, I keep swing trading process very, very simplified and enough for me to manage it like a part-time trader. If you're following along my thought process so far, please remember to like the video down below.

So now that we talked about the strategy criteria, let's move on to talking about the technical analysis and chart pattern for the swing trading strategy. Remember, knowing the right timing to execute your trade is just as important as finding the right stocks to trade in the first place. So now that you learned to find and scan for potential swing trade opportunities.

let me explain to you the entry criteria of this events driven swing trading strategy pay attention now because i'm about to share with you some golden trading tips first of all how do you use technical analysis to identify key entry levels and how do you recognize a chart pattern that's setting up for your potential entry okay now we're looking at the daily chart for nvidia Earlier, we talked about how to scan for these gappers on the day, right? The potential stocks to swing trade. So once you have the gappers, you want to look at and analyze the daily chart. to see if they're suitable. A stock can have all the right catalysts we talk about and be on the gapper list.

But if the daily doesn't look good, then it's not an ideal swing trade. I wouldn't take it. So let me show you what exactly am I looking for on a daily chart.

So daily chart, I want to see an uptrend. So that's very general, right? So essentially, I want to see a stock.

If you zoom out on NVIDIA daily, right? This is a huge uptrend. Even just in 2024, like...

We talked about many times you already know the stock came from 500 all the way to a thousand now it's on a huge uptrend you don't want to see this kind of chart right the stock is is trending down you know it's gapped down multiple times this is a downtrend an example of a stock not to swing trade on the long side and now let's talk about indicators i use i use the 200 sma You can see it here 200 SMA on the daily chart kind of small SMA over here the blue line and daily 8 EMA and I want to see a stock above both EMA and SMA so that's why another thing AMC does not qualify. The stock is below both of these indicators. Now, if you go back to NVIDIA, not only is the stock uptrending, it's above 200 SMA and riding along the 8 EMA.

Now, 8 EMA is a momentum indicator, right? We talked about before, this is something I learned from my trader friend who taught me how to use it. And now I use it for the daily charts for swing trading as well.

Essentially, you want to pick stocks that are riding along the ATMA and has a history of reclaiming that indicator. So without looking at the catalyst, you can see this stock. Yes, Nvidia, you can see sometimes it sells off the ATMA. reclaims over that gaps over reclaims. You can see pulls back to the ATMA once again, and then no breakout pulls back right along the ATMA and breakout.

Yes, you can see it does sell off when the entire market trended down, failed. to reclaim, break down, but now it's reclaiming once again. I think this run is running into earnings. Now the actual earnings day is this particular day.

So those are just the general indicators I look at for swing trading. And that's regardless of whether I'm using this events driven strategy or the other technical breakout strategy or the overnight long that we talked about. So now we talked about the daily chart, right? You can see the day we're talking about here, the day I took the entry was this day.

when the stock gapped up to new all-time highs. Now whenever a stock gaps up to new all-time highs that's also another very bullish technical factor for this events driven strategy because technically speaking if a stock gaps up to new all-time highs especially if you have these catalysts you technically don't have any ceiling right you don't have any resistance that's proven prior to sell off right the prior resistance before the earnings was here around 970 now after earning stop gaps over on that day there's no ceiling for the stock technically you don't have you have uncapped upside obviously i'm not saying it's gonna double in one day but just saying like technically speaking you know this is very bullish That's the reason I do not short stocks. That's trading at all-time highs or near all-time highs. Okay, so looking at the intraday five-minute chart now, you can see the stock gapped up pre-market. That's where we saw on the scanner, right?

It was almost up 7% on the day. Pre-market, it sets up a low of around this area. Let's just call it 10-10 area, 10-10. Pre-market, it consolidated a bit. And at the market, it just breaks out.

over pre-market highs of 1020 it makes you know trended out and makes new highs on the day even though it did pull back near the end of the day you can see still held most of that gap for the intraday breakout so for me for this particular swing trade I want to get long on the stock after it's able to break above pre-market highs. So pre-market highs, I just call it 1022. You can see on the five-minute chart, it breaks out. It pulled back a little bit to VWAP and continued to uptrend. trend.

So if you look at my execution chart, I'll put it somewhere on the screen, I actually got in you know once the stock broke out from 1022 to 1040 and pulled back to VWAP area. I think I got in around like 1030 or 1028 something like that here. That's why I got in on the swing trade. And then intraday you know I traded this also as a trend join long setup.

I sold into some of the day trade gains so that's the reason if you look at a chart I believe I sold some into the 1045s, maybe a little bit more. and I added some more at the end of the day, I think around like 1040. So even though I didn't catch it right at 1022, when it dipped down, I caught it at around 1030. That's pretty good. So the way I take a lot of my swing trades is, if I have a good position and intraday it moved up quite a decent amount, so from 1030 to 1050-ish area, that's a decent 20-point move, I will lock in some profit for day trading. And then I keep my good eye. average for multiple days.

So even if the next multiple days the stock sells off, I'll always have locked in some profit. So as you can see on the chart, I ended up riding the swing trade for most of the next couple of days. I did sell some the next day.

So if you zoom out on the 15-minute chart, you can see the stock held a very, very nice uptrend after my entry on the first day. If you see at 15 minutes, you can see the trend line here and even gapped up even more the week after. And you can see all the way here, it's riding all the way to actually today, actually, it's riding a nice uptrend on the daily chart.

I locked in a lot of my profits around the 1048 area, 1046, 1048. Actually. still have a small piece so today you can see it's selling back down a little bit but the only reason i can stay in for so long without getting shaken out is because i have a good average from this first gap update over here my thing my average about 10 30 so i'm already in the money about you know right now it's no longer 100 points but at one point i was up in the money money 100 points so yeah this is the time frames i use for swing trading in particular uh daily chart and execution I'll use use a five minute chart intraday on the first day. And after that, I'll try to zoom out, use the 15 minute charts, you know, to stay in to see the big uptrend or the hourly chart.

I don't use it as much. Sometimes it gets messy, but you can see on the hourly chart, it kept a very nice uptrend all the way until today. okay so now that we talked about the entries for this swing trading setup let's talk about the exit and the risk levels in this events driven swing trading strategy because as you know in day trading oftentimes you're just looking for like 20 cents 50 cents a dollar two dollars per share profit but in swing trading if it works you're aiming for the big move up because your risk is all so much of greater as well, right?

Sometimes you can be risking $5 or $10 per share. So you want to make sure that you have the potential of aiming for 3x, 4x, 5x your risk for the potential upside. So I essentially held this position for 1, 2, 3, 4 days. It definitely helps a lot just to look at the daily chart. And if you are itchy, you have itchy fingers, you want to look at intraday, then look at the 15-minute chart.

That's what you saw earlier with a huge uptrend or the hourly chart. Because remember, when you're swing trading, you are letting the stock work for multiple days. Hopefully it's a multi-day breakout. So you don't want to cut your profits short.

You want to hold on to your winners for a long time and cut your losers quick. So those are the tips for holding on to your winners longer, especially in swing trading. Use higher timeframes. And another thing is you can sell small partial positions intraday or in the second day breakout.

You don't want to sell too much. Like for me, each sell was only about 10, one 10th on the first two days. You want to try to maximize your profits. It definitely helped a lot that this event driven swing trading strategy is just an extension of my, one of my day trading strategies, the trend joint long. So I can still kind of theoretically day trade it.

And then I let the rest of the stock ride. Because the entries on the trend join long and the swing trade is extremely similar. Keep it simple right?

So how did I know that Nvidia the stock was going to go higher? Well the answer is I didn't know. Not for 100% certain of course. The truth is nobody knows for sure where the stock is going to go in the short term.

No, not me, not the banks, not your financial advisors, and definitely not Jim Cramer. You can only make educated decisions based on chart pattern recognition and experience. So while I didn't know for sure 100% that this NVIDIA's trade is definitely gonna make me money, but I traded the swing trading setup many times over the years to know the catalyst and ideal chart pattern that should work out well. But what if it doesn't?

Let's say my thesis was completely wrong. That's where risk management really comes into play. So you need to plan your stop loss area based on the key technical levels that we identified earlier on the intraday chart.

So let's go back to that intraday chart for Nvidia. On the first day it gapped up. As we identified earlier, pre-market lows was around this 1010 area. The key level confirmation was over 10 22 my entry around 10 30s so there are many different ways to place your risk for a particular swing trade a very popular method is that a lot of people use the the low of the day on the candle that they place the trade on so on this intraday if you place an entry here a lot of people used to use like to use a lower day price so in this case will be 10 16. And that's valid.

But for me, I like to be a little bit more conservative. In this case, it's around the same area. But for Nvidia, whenever there's a gap up and I take the gap up to continue up higher, I don't want the stock to sell off the pre-market gap.

So a lot of times for the swing trade, I'll set my risk for the swing trade at pre-market low area. So that's what we saw earlier at 1010 over here. So remember, my entry was 1030, confirmation 1020. and the risk is down below at 1010 so that means i'm risking 20 per share on this particular trade so now that we identify the risk level which in this case is 10 10 that we talked about then from there i'll decide on the amount of share size to put on the trade in order to keep the potential loss the risk of this trade within my account tolerance so let me use this nvidia trade to to show you how to calculate. your proper position sizing so we talked about earlier entry was 10 30 and the risk is 10 10 so that means your risk per share is 20 per share so now that we know this is the amount of risk per share you plug that in so this is 20 per share risk let's say you know i'm trading uh let's say I'm trading a $100,000 account. And if I'm...

more aggressive, I will use anywhere from 3% to sometimes even 5%. If you are more conservative, then you should use something like 1% on a day. So I'm going to use 3% for this example.

That means I can risk up to $3,000 per trade with my 100K account. Okay, so you can see it automatically calculates at 3000, which is your max loss per trade divided by risk per share and you get 150. So that's a formula you can see 150. 150 is the maximum amount of shares you can take for this NVIDIA trade according to your account. So that shows you, you know, 1 to 1 risk award, 1 to 2 risk award, and 1 to 3 risk award. What the potential upsides are for this trade. And once again, if you are really new to trading, you know, you should be trading with a smaller account hopefully, but you definitely don't want to be risking too much.

So I would recommend something like 1% risk or even 0.5% risk. The idea of using this risk calculator to calculate every single trade you take is so that you are keeping your risk constant, whether it's day trading or swing trading, depending on the strategy. But you don't want to be taking like a thousand shares on a penny stock and a thousand shares on Nvidia.

You're going to have like varied amount of risk. So I've demonstrated this proper risk management calculation process in previous videos. And if you want this calculator, then you can sign up to my weekend email list down below. you're gonna get the calculator in the attachment on the second day.

So I hope by now you guys realize how much emphasis I put on trade planning and risk planning, even though this is a relatively simple swing trading strategy. And I definitely want to give a shout out to Kalamaki. I met him last year at Traders for a Cause. He only swing trades and his talk at Traders for a Cause definitely inspired me. to tweak a lot of the little nuances about my own swing trading setups.

I do not use as big of a risk as well as a stop loss area as him because I don't have the same risk tolerance. I kind of like make it a little bit tighter for my own personal style. But yeah, he definitely inspired me a lot about letting winners run. If you're interested in learning more from my swing trading crash course video here on YouTube, then you can check out this video. I go over two other swing trading strategies there.

They're all kind of similar to this current one you're watching right now, but different in terms of the nuances. Make sure to comment swing trading down below if you prefer this style of trading. And if you want to see more swing trading content on the channel.

Or comment day trading if you still prefer day trading over swing trading. I get it. Some people just like the intraday volatility.

Another pro tip to writing out your swing trades longer to maximize your profits, you should have separate accounts for day trading and swing trading. So even though I was swing trading NVIDIA, I was still day trading in and out with my other account. This is the best way I find that you do not kind of cut your winners too short in terms of your swing trading. And you do not confuse your day trading with like trying to hold longer.

This is a pro tip. It definitely helped me so much. So for me, I have no problem managing both my swing trades and day trades since they are in separate trading accounts most of the time, unless I do overnight.

But I can see a future where if I get really busy in my day to day life, and I just swing trade. Because you saw, as you see from this Nvidia trade, like you only need one swing trade a month or one or two a year for some people to make this work. Thank you guys so much for watching.

Make sure to check out the swing trading crash course over here if you want to learn more.

Transcript for:Effective Swing Trading Strategies Overview

Transcript for:
Effective Swing Trading Strategies Overview