Short Swing Trades

M

Mettafort

Hi-

To introduce myself, I have been studying trading/investing for about 8 months solid now, and put on a few trades which mainly lost. They were golden losses, as I learnt a lot.

Right now, I am trying to find very short swing trades that have a high probability of earning around 1-1.5%. When I say very short, I mean 1 to 5 days. I am hoping someone can point me to some possible strategies which I can do my own indepth research with. Today I have been looking at the following;

1. Using RSI and picking out quick reverses from oversold. With a short RSI period this seems to work with high probability when something is trending up, but less so in ranges - to the point of being dangerous.

2. Using relative strength to spot something that has begun a short trend, an dumping on it for a very short trade. This has had some good success, and I need to study these principles more - it seems I often spot them RS too late.

3. Breakouts. These have better success, though occur less frequently than I would like (I am forced to trade ETF's because I work in finance and am restricted).

Humbly, I realize I have very little trading experience. I am hoping someone can at least point me towards information and strategies which I can use to study and learn more.

Thank you,

MF.
 
drop all indicators and focus only on price. if you're trading etf's sort them by category (country, sector, commodity, etc) and volume. all else equal trade the highest vol etf. find the point where there's a min 2/1 reward/risk. then place your stop and manage the trade from there.
 
I agree with Frank. I have never had luck with RSI. I traded it for several months and just couldn't get it right. I ended up flat, which I would have done by just random buying and selling. With RSI I recall, the difficulty is finding the right time frame for the averaging.

I have found that raw price movements give pretty good signals.
The issue is that small moves tend to return to mean and larger moves typically don't. You need to know where the line is. You can do this with a fairly simple statistical analysis of past price moves, or use the free tool from algorithmscience.com .

Be aware that buying on the downswing and selling on the return to mean usually works, but on the occasions it doesn't, it can wipe you out. After buying you should put in a stop sell and a limit sell trigger. For example a stop sell at -6% and a limit sell at +1.5%.

Myself I prefer to catch the upswing and ride it out until the sell signal comes along. Much safer and you accumulate winners not losers. But I encourage you to base all your buy and sell points on sound numerical analysis.
 
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