What Is Swing Trading

Swing trading is buying low and selling high in a short span of time. Some traders do it Intraday called as day traders and some take position for a few days.

Swing trading combines fundamental and technical analysis in order to find the stocks direction from the current position. Swing traders do not look for only up direction, if they feel the stock may go down they short them. All they are looking for is short momentum.

When they see the stock is not poised to move they do not take the trade. The benefit of swing trading is efficient use of time and money and higher returns. However their are drawbacks as well like high brokerage commission and high losses if their trade goes wrong.

Swing trading can be difficult for the average retail trader who is not equipped with either technical or fundamental knowledge. Some of the good technical indicators are Bollinger Bands, Candlesticks, moving averages, Average True Range – ATR etc.

The professional traders have more experience and information. They always trade in brokerage houses with lower brokerages. On top of that they get better margin.

Large institutions trade in very big lot sizes. They usually get in an out quickly. Some automate their trades. This is called algorithmic trading.

Knowledgeable retail traders can take advantage of these things in order to profit consistently in the marketplace. In this article, I will lay out what should be daily routine for traders like you and me. Its not that hard to be successful.

How To Do Swing Trading

Before reading this article I suggest you read this article on Swing Trading Rules.

Pre-Market Research:

You must read newspapers to know what has happened in businesses when you were sleeping. Look for any major news that may move the markets. This will help to find potential opportunities to trade.

Keep An Eye In The Following

Traders must be thinking why Nifty is running up like mad? This is a Budget 2018 Rally nothing else.

Its called Expectation Rally.

Do not forget that after GST implementation this is the first budget of this government.

Hope has no limit.

The rally will end once the budget is out.

But all this is tension of a speculative trader.

You may be long or short I do not know but if you are not making profits 70% of the times you trade then you are for sure losing money.

When there are strategies where you need not predict market direction yet make money then why are you still losing money?

Its better to be a conservative trader looking for small but consistent profits rather be an aggressive trader looking for a home run which never happens.

If you will be happy with 2-3% of profits on margin block per trade then do my course. You need not read newspapers and speculate on hope after you do the course. You will not need tips providers either who rarely give great tips to make money. You will get a proper plan to trade – you are paying to learn that plan not just a random strategy..

You can pay for the course here – click to read what you get and about support.

EOD (End of Day 22-Jan-2018), INDIA VIX is up by 10.09% this is due to upcoming budget on 1-February-2018. This will increase until budget and will fall after that. Market direction will depend a lot on budget announcement.

INDIA VIX EOD 22-Jan-2018

But when INDIA VIX moves a lot option premiums moves a lot too.

If you do not know INDIA VIX has a lot of effect on option premiums. They are directly proportional. When INDIA VIX rises option premiums will also rise. When INDIA VIX drops option premiums will also drop creating a lot of problems with option buyers. When INDIA VIX rises option premium rises creating a lot of problem with option sellers.

Trade with caution until the budget is out.

Hedge your trades. Do not let a single trade wipe out your account.

Do not forget your stop loss, profits targets.

For conservative, cautious and new traders its highly recommended to hedge your trades. Do not let a single trade wipe out your account.

If you do not know hedging you can learn hedging strategies and never be bothered again about market direction, options premiums etc. You can trade, make profits every month and and live a peaceful life.

You can see here how traders are performing after doing the course.

Pay for the course here.

New traders and even the experienced ones fall for greed or show no patience and book profits early in a profitable trades but let losers ride for more losses in their trades. This leads to more losses and small profits. Ultimately their financial year ends in a loss.

I have told this many times in my blog not to speculate and trade but how many listen? Buying options as a pure speculation is gambling not trading – it will not make money. This falls under greedy trading not well planned trading.

Greed is your bigger enemy than fear in trading

Lets compare trader Greedy Trader A and Conservative Trader B.

Both start with 10 lakhs and decide to meet after 10 years. Greedy Trader A keeps doing speculative trading and makes a loss of 9 lakhs in 10 years. Conservative Trader B makes just 1.5% a month and here is what he ends with – Rs.5,969,322.87 (Rs. Fifty Nine Lakhs 69 Thousand 322.87).

See this:

Rs. 10 lakh compounded For 10 years @ 1.5% return a month

Greedy Trader A wanted to make one crore in 10 years with 10 lakhs whereas Conservative Trader B wanted to be in profit even if it means making 1.5% a month. After 10 years who is a better trader Greedy Trader A or Conservative Trader B? The answer is obvious.

Can you see even 1.5% return a month is much better than losing money trading options, stocks or futures? You can do my conservative option course and make much better return than this.

The biggest problem with traders is they do not let the winners run in their trades. Here are some tips on How To Let The Winners Run In Stock Trading.

The Basics Of Trading

Your trading should consist of small losers and big winners. To do that you have to make sure your winners ride. Letting your winners run is very important to long-term success in trading. If you have a 50% win rate then letting the winners run is very important for you. Just taking the profit out because you fear losing out does not make sense in the long run.

Here is what you can do to let the winners ride:

Keep Three Profit Targets – Your Stop Loss Should Be Less Than Your First Profit Target

Divide your money in three equal parts. When your first target is hit, take profits out from 33% of your money in the trade and bring stop loss cost-to-cost. When your second target is hit, take out the next 33% of your money in the trade and bring stop loss to the first target. When your third target is hit, take out the last 34% of your money in the trade and start looking for next trading opportunity.

Moving Averages Are Important

Here is an article on moving averages. However moving averages is a vast topic and cannot be covered here. That said Moving Averages are a great tool to know the support and resistance of a stock of few days (for short positional trades) and even months (for longer positional trades). Use them extensively in your trades.

For example if a stock has broken its 9 EMA (exponential moving average, or EMA, is a stock chart tool investors use to watch trends in the price of a stock) either in the buy or the sell side its a great signal to trade and there is a lot of chance that the trade will be profitable.

Think About the Opposite Trader

If you are short on a stock think when the buyers may try to enter. This will help you to make the right targets 1, 2 and 3. This will allow you to stay patient with your trades. You will get a clear sign that the trend is over, and it is time to take profits.

Do Not Care For Minor Intraday Fluctuations or Mark To Market – MTM

MTM (Mark to market) creates the biggest fear in traders mindset to press the panic button and exit. Do not fear MTM if your stop loss is in place. For positional trades it is highly recommended that you hedge your postilions properly else overnight some news may come which will be bad for your trade and next morning your trade may exceed stop loss make huge losses for you. Do not let that happen and learn to hedge your positional trades. This is very important.

HNIs never take naked positions. They invest millions of dollars and make sure they hedge their positions so that they don’t lose millions in a single day or trade. They never do and almost always make money. Trade like HNIs even if you are a small trader.

If you are a small option trader and losing money trading options you can do my course to make a small 2-3% average per month, monthly income. You will learn some good well researched hedging methods not many retail traders follow.

See this amazing Nifty rally (Bull Run) of the year 2017:

Nifty Rally 2017

Biggest question in traders mind is When It Will Stop or What To Do Now?

Who is asking this question? Speculative traders.

Speculative traders have a bad life. They are hanging between BUY or SELL, Call or Put, which stock to buy Intraday etc.

This is not the way you should be trading.

You must have a highly successful plan in your trading tools, not think about what to trade next day. Speculation will take you nowhere.

Check this thinking of a speculative trader:

Speculative Option Selling

The chat:

I have one clarification and need to know, if I am selling naked Nifty Feb put option of strike price 10600 @150 and can we buy the same put option later and can be adjusted.

If yes how much we need to invest or margin required.

And is there any high risk and is it advisable?

My reply: Naked option selling is risky but yes it can be bought back. Margin blocked will be Rs. 45,000 (my broker block that margin for 1 lot Nifty as on Jan-2018 Lot size Nifty now is 75)

His reply: Ok thanks but buying also I am feeling risky because please don’t take mistake, if we are selling the put option of strike price around 10500 and if the market is coming down to even around 10500 I think we might not be loosing anything.

Is it correct or wrong?

Please let me know.
===============

He was planning more dangerous speculative which is not disclosed here.

Please DO NOT copy the above trade its just his opinion. He may be in profit or in loss, but if Nifty falls heavily in next few days he will be staring at a huge loss.

This is the reason you should never speculate and trade.

Even when investing in stocks you must do research before investing. In stocks you have a life time waiting period, but in options and futures you do not have much time. You have to be right before that time or lose money.

How many times will you be right trading like this? And can you continue this type of trading for life?

You can learn some good non-speculative strategies in my course or research yourslef but please stop speculating in the hope to make a lot of money but lose money.

Every trader’s journey starts with loses. Some huge, some very huge and some unbelievable loss.

But the fact is large or small everyone starts with a loss. Including me.

We all try to get back our losses trading the stock markets. Some succeed, some do not. But unfortunately only 5% traders succeed. 95% of traders remain losers for life and retire with much less money that they earned.

Some Ideas on How To Get Back Your Huge Trading Losses

Loss is a bad experience. But problems with traders is that they think 2000-3000 loss is small, but they forget that if this keeps repeating then it can go up to lakhs. Some do not even track their losses. They call me and say they lost more than 3 lakhs.

Note: Keep track of your profits and losses. This will help you to know exactly how you are faring in the business. I personally know some small-business owners who do not track their cash flow. If you do not track cash flow you will never know what is your profit or loss for the month. You should know your profit or loss down to the rupee every month.

Reasons Of Losses

Loss in trading comes from speculation, tips, over-exaggeration of a news, reading a trade in a website, experts opinion on TV channels, friends/relatives/brokers recommendation etc. Can you see one thing is missing there RESEARCH.

Most of the people take a trade based on hope like – I bought this call option because I thought that the stock will go up. The world does depend or move on your thoughts. If you are doing a business you have to know why you are doing it and what can be the result.

Another big reason of loss is not respecting the trading plan. If you have decided a plan then stock to it.

Averaging down a losing trade instead of getting out of it is another reason for loss.

We all blame it on bad luck – but read the above – where is luck involved in a loss? Why blame your luck.

99% of traders have experienced huge loss. Its not that difficult to be 1% of the traders who make money trading but first you must not live on the hope that 10% a month is possible in stock markets because you see one option or the other doubling every other day. You saw that option getting doubled only after it doubled – did you have any idea before it doubled that it will double?

Some Important Advice TO Help You Recover Your Trading Losses

Reduce Trading Size

You are losing money so what makes you think that if you increase the lot size you will recover your losses? First prove yourself that you are a good trader, then increase the lot size. If you are undisciplined, become disciplined first. In trading take the ladder to success not a lift. One fatal crash can get you out of business.

By increasing the lot size you are trading emotionally to get back your losses which can prove to be fatal

Be Very Strict With Stop Loss

Stop Loss is as important as profits. Just because you think the trade will recover it will not. Respect your stop loss else it will punish you.

I have written two articles on stop loss that you can read:
Best Ways To Keep Stop Loss For Intra Day Trading
Which One is Better Stoploss or Hedging The Position

If you fear taking a stop loss then hedge your position. You can do my course to learn some good hedging strategies. This will help you for life.

If Something Worked For You Stick With It

Many traders make profits in few trades then they think very smart of themselves and take unnecessary risk in other trades. This is a huge mistake. If you are good in some kinds of trades then stick to it. If you want to deviate then paper trade and research first. Do not hop from one trade to another because you made profit last month. Stick with your best plan until you find a better plan. Trade less but trade on only the high quality trades. Slowly increase lot size once you gain confidence.

Take Time Off To Recover

After a massive loss month its time for rest and looking back on what went wrong. Write the big mistakes on a paper and stick near your trading desk. Make sure that mistake never happens again. Do not get into the revenge trading mode – this will ensure more losses. Instead after a massive loss take some rest and study your worst trades and refine your trading strategies.

Do A Course To Learn More

My conservative option course will help you to make trading setups where no speculation is required. Its like set it and forget it and when time comes take profits out. Moreover it will help you to learn a lot of hedging methods. It is a course for people who want to keep their capital safe and are happy with a small monthly income.

If you want to do the course you can enroll here.

Historically there is huge volatility during earning result season. Companies report their performances every quarter. This is the time even stocks see good liquidity in options and futures trading.

Note: In India compared to developed countries liquidity in stock options and futures is very low. Therefore is is recommended to trade only popular stocks during results season as volume spikes during this time. It is also highly recommended to hedge your future or option position to avoid huge loss in a highly volatile market. You can learn hedging options and futures by doing my course.

During result season there is a sudden spike in volume because every type of trader with jump into trading to make quick money. Whether they are positional, intraday, swing traders, long term investors also for the time being become traders, HNIs etc, everyone will try to make a quick buck trading.

In this article you will read some tips to Intraday (day trade) stocks during earning season:

Do Not Start Trading As Soon As Market Opens – Wait For The Trend to Form

The first ten minutes the stock whose results were out yesterday will be very volatile – within minutes the stock will go up and down by a few points – it will hard to know what the final trend will be. So it is recommended to wait at least 15-20 minutes to follow the trend.

Ignore Gap Up or Gap Down Openings

Gap up may lure you to go long and gap down opening will lure you to short the stock – do not do this mistake. Gap up and down are just reaction to the news – the final trend does not depend on it. Di not get lured by gap up or down of a stock.

On this day you will see that some stocks will gap up and then go down, some stocks will gap down and then go up. If you do not want to ignore this its better to check daily chart of the past couple years on that stock. You must see what happens to the stock after gap up or down. If in more than 60% of the days it usually follow through the opening then you can follow the Gap up or down opening, else ignore.

High Volume in Call and Puts May Confuse You

Next day to earning day the stock will see higher than average volume, this is usual and must be ignored. You may see more open interest in the CE (Call) side and less in PE side and you may think the stock is headed up, well that may not be the case. Similarly more open interest more in the PE (Put) side does not mean the stock is headed lower.

Trend on this day is most important that any other factor.

Do Not Book Profit In Full Trade

It is seen that the earnings usually keeps the trend for about a week. So if you have decided to trade a stock, try to book partial profits on the same day and leave some stocks for the rest move for a move well beyond it’s average true range. You can then exit with bigger profits within a week. Keep a trailing stop loss to your buy position for the rest of the stock, so that you do not make a loss in the trade.

What You Can Do If You Want to Trade Stock Futures With Hedging

In my conservative options and future course there are two strategies that deal with how to trade futures with low risk with hedging and unlimited gain. This will make sure you lose less and make more over time making sure your trades results in more profits than losses.

We start dreaming big as soon as we open a demat and trading account. Demat account is different than a trading account. Demat account is like a bank account where we keep our money to buy shares or trade options/futures. Trading account is where we are allowed to buy shares, or trade options/futures.

The problem with novice traders is that as soon as they open a trading account they start dreaming big, bring lots of money to their demat account and start trading first “whatever they feel like”, then what their brokers or friends say, then whatever they see or read in any website or magazine, and then when nothing of the above works – they go for tips providers.

When all of the above fail they either stop trading or start learning – reading books, doing a course, self research etc.

Please notice that the most important part which is educating themselves they try last. Before that they have already lost a lot of money. Hell even I am one of them. This is human nature – when it comes to doing hard work we humans try to avoid and try to take a short-cut not realizing that the first thing we learned to achieve success is:

THERE IS NO SHORT CUT TO SUCCESS.

But we forget it and try to take short cut and who fills that gap? Tips Providers – resulting in more loses.

Back to 2008 almost one year after I started trading I remember that I thought to myself that I cannot do it alone I need help let me try “experts tip providers”. Hell my major losses where because of tip providers. 🙁

By 2010 I reached the last stage – SELF LEARNING and RESEARCH.

By 2012 life changed.

Which stage you are?

A lot of us believe that our brokers know a lot therefore they are brokers. Fact is share brokering is a business where they get paid for a service. It does not in anyway mean that they have all the knowledge of share market. This is independent of whether a broker has any knowledge of share market or not. Getting knowledge in share trading is neither limited to brokers or limited to any person.

Getting knowledge in share trading is open to all – its your will which is required to learn share trading.

So before your broker asks you to buy a stock make sure to do your own research – DO NOT follow them blindly. They ask you to trade because they make a living out of brokerage they get of your trading.

Traditional brokers give tips to their clients – Low cost (discount) brokers do not give. There is nothing wrong in giving free tips – but there is huge mistake to follow it blindly and invest your money. As soon as they ask you to buy a stock do your own fundamental research on them. Try to study their balance sheets of last three or four quarters, see their last one year performance, read news about the company. If everything looks good you can invest or ignore.

Brokers usually do not charge for their tips, but if your broker does do not pay tips.

Today morning at 7.15 am I got a phone call from an unknown person. He told me he wanted to trade India VIX Futures and wanted to know where he can trade. I told him there is no liquidity in India VIX Futures and moreover its very dangerous to trade as the lot size is very high.

Then I asked him why he wanted to trade India VIX? He said because his broker told him that India VIX will be above 100 in one month. I was SHOCKED. Then I asked him whats the reason he thinks so. There was no answer.

Here is the historical graph of India VIX since 03-Mar-2009. As you can see India VIX as highest on Tuesday, 19-May-2009. It was 56.07 up by 7.81%. And after that within three months in August 2009 it dropped below 40 and never went above 40 until now – Jan 2018.

Historical Highest India VIX

Source: http://www.moneycontrol.com/indian-indices/india-vix-36.html

You can read about India VIX future trading here.

It takes less than 5 minutes to know to some extend if the tip you got or your any broker who gave you a tip makes sense or not. If you cannot do any research then do not listen to any tip provider even if he is your broker.

It very important to learn and trade yourself.

If you want to learn options trading in a proper way without doing any kinds of speculations and proper hedge to protect your capital you can do my course.

You can see testimonials here.

Read to know how you can improve your trading skills and become a better trader in 2018.

If you do not plan well you will not succeed in anything that includes everything not just stock market trading. Your first job should be to learn from your mistakes.

1. What mistakes you did in the year 2017?
2. Was your money management skills poor?
3. Did greed overtook you and you traded more than you could afford?
4. Why you did not take the stop loss as planned?
5. Did you take tips? How much you lost on tips?
6. Any research you did on trading? If yes what was the result?

If you answer the above honestly you can improve your trading skills in 2018.

Here are some more ideas.

Do not forget that 95% of traders lose money. Only 5% of traders make money and make a living out of trading. They succeed because they have a plan – a tested plan that they stick on for a long time until it needs a change.

Here are some important things you must do before you start trading in year 2018 to get better results than 2017.

Review Your Top 5 Big Winning and Losing Trades You Took In 2017

If you want to know the big mistakes you need to study the big losers first. Remember that losing trades are your best teachers. Second best teachers are your winning trades. Try to go back to historical rates and analyze why you took those trades and why you lost. Be honest with your review else you will be wasting time.

Reasons can be speculative trade or tip trade etc. If you suddenly increased the lot size then why you did that. You may have fallen for greed but what was major reason for that. Write it down.

You might find common things in the winning trades and losing trades. Focus your research on the common things.

Common things can be like – correct lot size, correct entry time, India VIX was supportive, profit taking at exact pre-decided position, positional or intraday trading, hedge / no-hedge etc.

In 2018 Start To Write Trade Details for Every Trade

Details for every trade will give you insight of whats correct/wrong with your trading. Eliminate the wrong as soon as its confirmed that you are repeating that mistake. A mistake can be due your certain behavior. Learn to control that behavior. Quickly eliminate the destructive patterns of your behavior.

Write Your Trading Goal For Each Month Before You Begin Trading For The Month

To improve your trading skills you need to focus a month not every trade or each day so that you have 30 days to get results. To improve think about the bigger picture not the smaller picture. Trading journal of one month will give you ideas to improve your trading skills next month like it can be not to over trade and wait for opportunity.

Review Your Trades End of Week

Saturday and Sundays are non-trading days. Use weekends to review your trades done in the week and try to know your mistakes or the good thing you did that week in trading. This will help you to review entire month at the end of the month. Write down your trading flaws like indiscipline or any other thing.

Once you can identify the sources of your failures in trading you can figure out what to change to make you a successful trader.

Get Good Training In Trading

There are many people teaching good strategies. But you should chose a good teacher. You should know what you will learn and if their teachings can help you out. Do not forget that trading is very hard not an easy job to master as only 5 out of 100 traders make money in the long run. If you can do it on your own research skills its good, but there is nothing wrong in investing in a course made by people who are already a few steps ahead of you who have to help you become a better trader. A good course helps you to save time and money to do the research yourself. This will shorten your learning curve. This will give you someone to hold yourself accountable everyday, and give you someone to support you on a day you are losing.

My conservative option course has helped many traders trade successfully Nifty Index options and make a monthly income month after month since 2015. Its peaceful trading where lot of research is not required. Trade set up does not even need a lot of time. You can do the course by paying a small fee which is nothing compared to the losses you suffered last year.