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Swing Trading Strategies by Pradeep Bande

Nov 11, 2024

Lecture Notes: Pradeep Bande on Swing Trading Strategies

Introduction

  • Guest Speaker: Pradeep Bande, founder of Stockbee
  • Known for his focus on process, codifying momentum burst, and episodic pivot setups in swing trading.
  • Two main trading setups:
    • Catalyst-based trades: Aimed at large account increments (20-100%).
    • Momentum burst trades: Smaller increments (1-5%) but frequent.

Catalyst-Based Trading

Episodic Pivot (EP)

  • Definition: A significant catalyst (earnings, sales, etc.) that causes the market to re-evaluate a stock.
  • Examples: CRDO, SMCI, APP
  • Characteristics:
    • Often gaps up significantly on news.
    • Rare; may have high initial moves and then go sideways.

Delayed Reaction EP

  • Waits for a post-catalyst setup to enter at a low-risk point.
  • Works well on the short side (e.g., negative catalyst stocks).
  • Examples: Mobileye, BA

9 Million EP

  • Focused on extremely high volume breakouts (9 million shares or more).
  • Provides more frequent trading opportunities.
  • Examples: GME, MARA, Carvana

Story EPs

  • Focuses on stocks with "story" (e.g., AI, biotech) rather than hard earnings catalysts.
  • Often involves speculative stories, can yield very high returns.

Criteria for EP

  • MAGNA 53 + CAP 10 by 10
    • Magna: Massive acceleration in sales/profit, gap up, neglect, acceleration in sales.
    • 53: Short interest, analyst upgrades.
    • CAP 10 by 10: Capitalization below 10 billion, IPO less than 10 years.

Momentum Burst Trading

  • High price stock focus: More stable, smooth moves.
  • Sector Focus: Biotech, technology, and consumer discretionary.
  • Situational Awareness: Determines when breakouts are likely to succeed.
  • Tools: Market monitor, 20% study (oscillator based on market conditions).

Key Strategies

  • Anticipation: Predicted breakouts based on setups.
  • Two Lynch Criteria: Evaluates consolidation quality, volume, and price action.

Advice for Traders

  • Focus on Structural Elements: News and market reactions.
  • Develop Self-leadership: Critical for trading success.
  • Deep Dive: Study past market moves to understand patterns.
  • Copy Shamelessly: Learn from proven methods before developing own style.

Conclusion

  • Trading requires continuous learning and adaptation.
  • Situational awareness and self-leadership are crucial components for success in trading.

Pradeep emphasizes the importance of self-leadership and adaptability in trading, encouraging new traders to focus on structural market elements and to develop a disciplined approach to trading.

Full transcript