A Short Term Swing Trading Strategy

Today, I wanted to give you a simple swing trading strategy that I learned from Kyle Dennis (Biotech Breakouts Stock Alerts). This strategy has a > 70% success rate if you follow all the simple rules and manage your position carefully. Too good to be true? That is what I thought – but trust me, after trading this strategy I am convinced of how amazingly profitable it is! If you would like to get FREE watch lists of the stocks that fit this criteria sent directly to your email on a weekly basis, just follow the steps that are outlined in my simple how-to-guide.

Introduction

I realized early in my trading career that we are not fortune tellers. We cannot see the future! If you think about it carefully, it is almost impossible to predict a big move upwards in the price of a stock the very first time it happens. This assumes that you are not an ‘insider’ and have news before it is announced. Trading a stock like this is of course illegal. So at best, you are speculating that some news will be announced and that you will be holding a stock when it does. This kind of works but it has a very low probability of success. What is a much strategy? Well you cannot predict the first big move with a high probability of success – but it turns out that you CAN predict a secondary move. Keep reading and I will show you how!

Fibonacci Retracement Swing Trading Strategy

This strategy is based on finding stocks that make big moves up in price on good news. The strategy is to screen for these stocks using Finviz (my settings are usually ‘top gainers’ and volume over 500k). These screening settings usually give you a list of 5-10 stocks. So here are the steps to follow:

  1. Use Finviz to screen for stocks that have made big moves in price on good news.
  2. Wait. This is very important! Stocks that make big moves are likely to pull back in price and it is important to wait for this to happen.
  3. Entry – you are looking to enter the stock during the day of the first GREEN candle on the daily chart. This is important because it gives you verification that the pull back is likely over. Additionally, the bigger the volume on this day the higher the chance of success. The stock may have pulled back 20% – 60% from the highs on the day of the news that propelled it upwards.
  4. Manage your position – set a mental stop loss at the bottom of the candle on the day you enter the stock. Look to trim some of the profits when the stocks moves upwards in price and approaches the highs of the ‘good news day’. Aim to set your profit target to be 3 times what your stop loss is. That way, if you have a 50% success rate you will still make money with this strategy.

Bonus Tips: Here is a chart of a recent successful chart that was traded using this F/B strategy. $MBRX shows two excellent examples of the strategy – both times there was a retracement in price after good news, then a single green candle and a continuation of the uptrend. A truly beautiful example of this strategy in action!

  • This strategy works best on a daily chart with a short to medium term swing trade but it can be used intra-day as well.
  • Usually stocks with average volume over about 500k have the highest rate of success (70%).
  • Don’t get greedy – take profits when the stock approaches the recent highs (resistance) that formed on the good news day.
  • Always keep an eye on the news in case bad news is released and kills the pattern.

 

swing trading strategy

Conclusions

I have given you the bare bones of a highly profitable swing trading strategy that is easy to implement and has a very high success rate. I really hope that it helps you in your trading journey and please share this post on social media to help other people benefit from the simple methods as well.

Wesley

P.S You can sign up for free stock watch lists (many of the stocks fit this strategy) to be sent directly to your email. Just follow my instructions here.


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2 Comments

  • R.R. says:

    The practice of trading used for the pursuit of money in the short term is a speculative activity in an unproductive activity of goods and services with attachment to the idea of money, a behavior that is necessarily to be avoided. There is a moral religious problem.

    https://sites.google.com/site/tradingonlineamoralproblem/

    • Wesley Nolan says:

      Hello – thank you for your interesting comment. I can understand why you may feel that stock trading is not a moral pursuit. I don’t agree of course but maybe some of the readers will…perhaps your comment will save a few souls from the corrupt world of money and stock trading.

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