Learning to swing trade the market is an art that is perfected over time and from listening to others who have had success in implementing their own strategies. The StockTwits blog occasionally does interviews with successful traders on their platform, which gives good insight into the world of swing trading. The blog recently spoke with Evan Medeiros, a professional swing trader, about his swing trading strategy. Here are five highlights you should see if you’re just now getting into swing trading and you’re looking for tips.
What’s the Simplest Strategy that Actually Works?
Medeiros says investors should look for a weekly or monthly time-frame in an up-trend. Then use the daily chart to buy any pullback from the 20EMA to ride the highs. Medeiros says this strategy works best in a bull environment.
What’s Your Average Holding Period?
Part of being a successful swing trader is knowing when to sell-off your position to maximize gains. Medeiros says his average holding period falls into two separate categories. The first are trades he only holds for between two and four days. These are referred to as tactical swing trades. The second type are trades he holds between two and four weeks, which he calls core swing trades.
What are the Three Best Trend Indicators?
Learning to spot trend indicators is one of the best talents you can have as a swing trader. As a beginner trader, you will frequently miss these until you become more acquainted with the market. Medeiros says he favors using the moving averages before looking at higher highs and lower lows and calculating the swing lengths between both.
What is Your Favorite Screener?
Setting up a screener with your specified variables should be one of the first things you learn to do as a trader. Numerous services offer screeners both free and paid. Look at Wallmine if you’re looking for a robust and free screener to use. Medeiros prefers TC2000, which comes with more of a learning curve.
How Do You Prepare for the Week of Trading?
Medeiros says his stock selection is done on a weekly basis, rather than setting himself up for new stock picks each day. He says he creates his watchlist on the weekend for the week ahead and looks at anywhere from 50 to 100 stocks during the week for setups. While it may seem like you need a lot of start-up capital to swing trade, that’s not true if you use a service like Robinhood. Brokerages that charge $7 in commission per trade aren’t really designed to be used by swing traders. Robinhood offers commission-free trading at the cost of not having an expansive list of tools as some of the more popular brokerages.
What’s Your Biggest Loss?
This question comes up time and time again for professional traders. Medeiros says his biggest loss came when he was still day trading. His friend called him up for lunch, and he forgot to cancel resting limit orders. When he came back from lunch, the stock was crashing on bad news and filling through all of his orders. He admits it was a completely boneheaded mistake to make while trading, but that it could happen to anyone who isn’t paying attention. In terms of financial setback, Medeiros says he lost over a year of progress. To overcome the emotional aspect of the loss, he says he started trading again right away.