New Swing Trader

B

BearToBull

Hey guys, I got a paper account on thinkorswim a couple days ago and I've been forward testing stocks(I'm only going to be trading stocks, nothing else). My goal is not to earn lots, I'd be happy with a couple hundred dollars a month. I'm currently forward testing for an hour and a half from the time the market opens. I also screen only tech stocks because of their volatility. Being a swing trader, I don't want to trade everyday, 1-2 times/week is optimal. I'm currently screening for price only because I have no idea what to do. Then I pick 1 stock that will likely have an uptrend for the next couple days/weeks and hunt for a good price to buy based on resistance and breakouts. My mistake today was trading in/out too fast, like a day trader; so again my goal is to set it and forget it for at least a couple days, not staring at quotes an hour and a half every day. Here are my questions:

1. What are the most effective attributes I should use for stock screening, so that I only get max 15-20 stocks after screening?

2. I'm currently using 9-day, 15-day, and 50-day EMA's for my overlays, I would like to know if these are logical. So far the cross above/below 50-day is getting good signals.

3. For my indicators, I'm using a 14,3,3 slow stochastic; is this a good setting? Should I adjust the setting depending on the range of my chart? Or if the stochastic is too slow for swing traders, what should I use a fast or full one? Should I use MACD or RSI?

4. What should swing traders be doing pre-market other than screening stocks and drawing(e.g. labeling support and resistance levels)? Reading/watching the news?

5. What is a logical stop loss, how do you guys determine it? Is it a percentage of the buy price? Is it point-based? Is it based on support/resistance? I believe the latter makes the most sense.

6. How exactly does a trading strategy look like? Does it tell you when to buy and sell? What else could it include? Trading psychology?

8. I know I said I'm only sticking to stocks, but I might trade cryptocurrency. Would your answers for the questions above apply to crypto as well, or is it a completely different animal?

I know I sound intimidating, but once I'll receive answers, I'll forward test more, using the knowledge I've acquired. I'll develop and exceptional trading strategy which I'll then backtest. This process will probably take 2-3 months. Thank You.
 
no idea how to swingtrade ... it took me 14 years to learn how to daytrade ... who knows the road to swingtrading might be shorter but I could be wrong
 
Here’s a link that I like.

https://www.marketlifetrading.com/

Sign up free, you can ignore the premium newsletters and videos.

Look under “Education” and the “course”. Think he’s still in the process of adding to it.

He re-did these videos in the past year. The old course had more so assuming he’s adding.

https://adamhgrimes.com/ his blog has some great entries.

I also check bettersystemtrader podcast and chatwithtraders podcast. Don’t have to copy everyone but I find I get little tidbits and methods to think about with my system development and trading.
 
BearToBull said:
Hey guys, I got a paper account on thinkorswim a couple days ago and I've been forward testing stocks(I'm only going to be trading stocks, nothing else). My goal is not to earn lots, I'd be happy with a couple hundred dollars a month. I'm currently forward testing for an hour and a half from the time the market opens. I also screen only tech stocks because of their volatility. Being a swing trader, I don't want to trade everyday, 1-2 times/week is optimal. I'm currently screening for price only because I have no idea what to do. Then I pick 1 stock that will likely have an uptrend for the next couple days/weeks and hunt for a good price to buy based on resistance and breakouts. My mistake today was trading in/out too fast, like a day trader; so again my goal is to set it and forget it for at least a couple days, not staring at quotes an hour and a half every day. Here are my questions:

1. What are the most effective attributes I should use for stock screening, so that I only get max 15-20 stocks after screening?

2. I'm currently using 9-day, 15-day, and 50-day EMA's for my overlays, I would like to know if these are logical. So far the cross above/below 50-day is getting good signals.

3. For my indicators, I'm using a 14,3,3 slow stochastic; is this a good setting? Should I adjust the setting depending on the range of my chart? Or if the stochastic is too slow for swing traders, what should I use a fast or full one? Should I use MACD or RSI?

4. What should swing traders be doing pre-market other than screening stocks and drawing(e.g. labeling support and resistance levels)? Reading/watching the news?

5. What is a logical stop loss, how do you guys determine it? Is it a percentage of the buy price? Is it point-based? Is it based on support/resistance? I believe the latter makes the most sense.

6. How exactly does a trading strategy look like? Does it tell you when to buy and sell? What else could it include? Trading psychology?

8. I know I said I'm only sticking to stocks, but I might trade cryptocurrency. Would your answers for the questions above apply to crypto as well, or is it a completely different animal?

I know I sound intimidating, but once I'll receive answers, I'll forward test more, using the knowledge I've acquired. I'll develop and exceptional trading strategy which I'll then backtest. This process will probably take 2-3 months. Thank You.
More...

BeartoBull, you're asking questions that no one can properly give you in a post reply. Years of accumulated wisdom takes years to learn. However for a few pointers I'll offer the following.

Firstly, I consider myself expert in technical analysis, but still developing skills in options trading which is where I wish to play.

Suggest with your level of skills you become more of a position trader than swing trader i.e. analyse and trade in weeks and months, not days and weeks. Longer timeframes are less volatile (which is what you need) and easier to interpret charts and trends.

Point1) With limited experience, suggest you pick only a handful of stocks and one's where you know what they do and understand their business, then trade them mostly so that you intuitively get to know their volatility and how well they trend. Better to know a few stocks really well when starting out than any form of filtering that picks random stocks for you. You can do that when more experienced.

Point 2). I don't use Moving averages. I suggest they are fairly ineffective for trading, but a lot of people use them, so if you don't know anything else you can work with them until you do. I expect MA's more likely to work better if trading longer timeframes.

Point 3) Indicators. Throw them out. Waste of time. All of them. Any time I see a chart with any of those technical indicators along the bottom I just assume the trader is not making money, or at least not from the indicators.

Point 4) Do all of your analysis pre and post market. Decide what you wish to trade and why. Then just place the trade at a similar time each day to avoid getting confused by intraday swings.

Point 5) I don't use stop losses. Too big a topic to discuss why, but I consider them to have a negative edge, i.e. you just lose money slowly instead of all in one go without them. But you need experience and skills to find other ways to offset risk and they are defensive, so suggest its essential to you use them until more experience. Different traders have different ways to set them, but whatever it'll be a balanced between getting whip-sawed in and out versus level of adverse moves you can absorb.

Point 6) A trading strategy is a set of rules, a sector of market and approach you are going to use. But its the same as asking what a Business Strategy looks like, could be one page, could be a textbook size, and different levels of analysis, effectiveness and experience/judgement behind it.

Point 7) Stocks are hard enough, but you have a chance. Forget the cryto-currency (unless your an IT guru with some unique insights into that sector).

"I'll develop and exceptional trading strategy ........ This process will probably take 2-3 months" It will probably take 20-30 years.
 
Welcome BeartoBull. I so hope this endeavour goes well for you.

I'm not qualified to reply in full to your points. These don't make up the full picture on swing trading anyway, the subject is so complex that no single 500-page textbook, let alone a few forum posts, could fully explore it. However, for what its worth, using your sequence -

1. there's a hundred ways of doing this but the illusion is that enough filter criteria de-select so many stocks that the ones you're left with have a considerably higher probability of success. This won't in reality perform better: many criteria will effectively duplicate the main characteristics of another you are using and many de-selections will therefore be random. don't get bogged down with elaborate filtering

2. MA crossovers are not good entry signals, they are set-up signals. So, when the 9 is above the 15 which is above the 50 you're almost certainly in an uptrend. But you should look hard at price action to get a more meaningful entry.

3. Whatever settings are used should coincide with your strategy so don't use a short-period indicator to initiate a long-term position. Reducing the periods basically just spews out more signals, increasing them generates fewer. Neither change makes the signals ore or less reliable.

4. I never watch financial news. I can't learn anything from it sooner than the big players and I can't analyse better than the talent they employ. But its good to watch sector and market indices. I have lost a ton of money buying stocks when indices were falling.

5. You could use s/r such as repeatedly touched price levels or swing highs/lows or you could just put a stop so many ATR's away from entry. I don't think anyone has proven either is much much better. More important that a) you always have a stop-loss, and b) if the stop is hit, it only takes out a small % of your account capital.

6. Enter and exit yes. Also when to stay in cash on a given stock. Also when to stay out of the market altogether. All this from the stock's chart plus the indices.

8. You can trade crypto using conventional TA. However, there are the added risks of unexpected regulatory involvement, thin trading liquidity, plus unexpected price moves not based on conventional FA or suggested by TA.

Demo and practice. Demo and practice. Then demo and practice.
 
Metamega said:
Here’s a link that I like.

https://www.marketlifetrading.com/

Sign up free, you can ignore the premium newsletters and videos.

Look under “Education” and the “course”. Think he’s still in the process of adding to it.

He re-did these videos in the past year. The old course had more so assuming he’s adding.

https://adamhgrimes.com/ his blog has some great entries.

I also check bettersystemtrader podcast and chatwithtraders podcast. Don’t have to copy everyone but I find I get little tidbits and methods to think about with my system development and trading.
More...
these are amazing, thank you so much!
 
Epicurus said:
BeartoBull, you're asking questions that no one can properly give you in a post reply. Years of accumulated wisdom takes years to learn. However for a few pointers I'll offer the following.

Firstly, I consider myself expert in technical analysis, but still developing skills in options trading which is where I wish to play.

Suggest with your level of skills you become more of a position trader than swing trader i.e. analyse and trade in weeks and months, not days and weeks. Longer timeframes are less volatile (which is what you need) and easier to interpret charts and trends.

Point1) With limited experience, suggest you pick only a handful of stocks and one's where you know what they do and understand their business, then trade them mostly so that you intuitively get to know their volatility and how well they trend. Better to know a few stocks really well when starting out than any form of filtering that picks random stocks for you. You can do that when more experienced.

Point 2). I don't use Moving averages. I suggest they are fairly ineffective for trading, but a lot of people use them, so if you don't know anything else you can work with them until you do. I expect MA's more likely to work better if trading longer timeframes.

Point 3) Indicators. Throw them out. Waste of time. All of them. Any time I see a chart with any of those technical indicators along the bottom I just assume the trader is not making money, or at least not from the indicators.

Point 4) Do all of your analysis pre and post market. Decide what you wish to trade and why. Then just place the trade at a similar time each day to avoid getting confused by intraday swings.

Point 5) I don't use stop losses. Too big a topic to discuss why, but I consider them to have a negative edge, i.e. you just lose money slowly instead of all in one go without them. But you need experience and skills to find other ways to offset risk and they are defensive, so suggest its essential to you use them until more experience. Different traders have different ways to set them, but whatever it'll be a balanced between getting whip-sawed in and out versus level of adverse moves you can absorb.

Point 6) A trading strategy is a set of rules, a sector of market and approach you are going to use. But its the same as asking what a Business Strategy looks like, could be one page, could be a textbook size, and different levels of analysis, effectiveness and experience/judgement behind it.

Point 7) Stocks are hard enough, but you have a chance. Forget the cryto-currency (unless your an IT guru with some unique insights into that sector).

"I'll develop and exceptional trading strategy ........ This process will probably take 2-3 months" It will probably take 20-30 years.
More...
Thanks for the thoughtful reply. You're absolutely right that it takes a really long time to develop a trading strategy. For point 1, that's a really smart approach for a beginner like me, learning a few stocks really well is the way to go. Thanks again.
 
tomorton said:
Welcome BeartoBull. I so hope this endeavour goes well for you.

I'm not qualified to reply in full to your points. These don't make up the full picture on swing trading anyway, the subject is so complex that no single 500-page textbook, let alone a few forum posts, could fully explore it. However, for what its worth, using your sequence -

1. there's a hundred ways of doing this but the illusion is that enough filter criteria de-select so many stocks that the ones you're left with have a considerably higher probability of success. This won't in reality perform better: many criteria will effectively duplicate the main characteristics of another you are using and many de-selections will therefore be random. don't get bogged down with elaborate filtering

2. MA crossovers are not good entry signals, they are set-up signals. So, when the 9 is above the 15 which is above the 50 you're almost certainly in an uptrend. But you should look hard at price action to get a more meaningful entry.

3. Whatever settings are used should coincide with your strategy so don't use a short-period indicator to initiate a long-term position. Reducing the periods basically just spews out more signals, increasing them generates fewer. Neither change makes the signals ore or less reliable.

4. I never watch financial news. I can't learn anything from it sooner than the big players and I can't analyse better than the talent they employ. But its good to watch sector and market indices. I have lost a ton of money buying stocks when indices were falling.

5. You could use s/r such as repeatedly touched price levels or swing highs/lows or you could just put a stop so many ATR's away from entry. I don't think anyone has proven either is much much better. More important that a) you always have a stop-loss, and b) if the stop is hit, it only takes out a small % of your account capital.

6. Enter and exit yes. Also when to stay in cash on a given stock. Also when to stay out of the market altogether. All this from the stock's chart plus the indices.

8. You can trade crypto using conventional TA. However, there are the added risks of unexpected regulatory involvement, thin trading liquidity, plus unexpected price moves not based on conventional FA or suggested by TA.

Demo and practice. Demo and practice. Then demo and practice.
More...
Good to know I shouldn't be relying to much on MA's; never thought of using indices to determine when to exist so I'll definetly use them. Thank you so much for all the useful info.
 
Ok so I decided that I'm not gonna go into crypto and I'm not gonna screen stocks for now, just pick a few and really study them. I'm also going to focus a lot on price action and relying less on indicators. I'll keep practicing and will try to give an update soon on my progress.
 
BearToBull said:
Good to know I shouldn't be relying to much on MA's; never thought of using indices to determine when to exist so I'll definetly use them. Thank you so much for all the useful info.
More...


My rule on stocks is to exit all stock long positions if the Dow or S&P close below the 50EMA and the 50EMA is sloping downwards. Believe it or not, this would have got most traders into cash before the Wall Street Crash.
 
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