Anatomy of a Swing Trade

If you are trading stocks, then it is mandatory that you know how to take a swing trade because sometimes there simply is not enough volatility to merit day trading.  In the low volatility environments, we also see cheap option pricing.  The pricing of options is something I actually know very little about because I am most concerned with timing my swing and knowing two key price levels:

MY FIRST TARGET AND WHERE I AM WRONG (Stop loss)

My typical swing trade lasts from 2-12 days with my most recent successes being in shorter duration swings.  Since my holding period is this long, I like to use a 9 period exponential moving average for reference.  This tells me what the average price was over the last 9 days while skewing slightly to the most recent data.  I feel like old news is exactly that, which is why the exponential moving average which weighs more recent price action (or news)  heavier is more effective.  I also use the 33 ema because through extensive testing on multiple timeframes and instruments it proves time and time again to be the center of the universe.  This gives me an idea of the longer term swing.

Finally, I like two run two CCI channels to gauge momentum.   A longer duration CCI tells me the direction of longer term momentum and the turbo CCI helps identify pullbacks.  Most of the time I look to buy pullbacks in the direction of the trend, but lately I have been looking for bases in beaten up momentum plays because they offer a simple consolidation to base risk upon.  Take my recent ANGI long:

Remember, these types of trades work best when the broad market is trading in your favor, especially the Nasdaq.  When we had large ranges, big chop, and violent down days, swing longs were dismantled one by one.  You have to know when to change gears and go back to day trading.  It is much like riding a roller coaster.  The slow, anxiety ridden ride up is great for swings, the fast plunge down is day trade mecca, as is harsh chop.  Stay cool out there.