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Swing Trading Strategies and Guidelines

The document outlines guidelines for swing/cash trading, emphasizing a time horizon of days to months and the importance of risk management. It advises on capital allocation, stock selection, and the significance of support and resistance levels for trading decisions. Additionally, it highlights the unpredictability of stock movements around earnings results and suggests exiting trades prior to such events to mitigate risk.

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ritikbajpay70
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16 views2 pages

Swing Trading Strategies and Guidelines

The document outlines guidelines for swing/cash trading, emphasizing a time horizon of days to months and the importance of risk management. It advises on capital allocation, stock selection, and the significance of support and resistance levels for trading decisions. Additionally, it highlights the unpredictability of stock movements around earnings results and suggests exiting trades prior to such events to mitigate risk.

Uploaded by

ritikbajpay70
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Understanding my analysis

• None of my analysis is for intraday or for trading in futures and


options. It is for swing/cash trading with a time horizon of a few
days to a few months.
• Whenever I nd a stock that seems good for long term investing
I mention the same. I often mention the term ‘accumulate’
which is for those investors who already have the stock and can
add more at certain price levels. There is never any stop loss for
investing, and true investing has a time horizon of at least 7-8
years.
• For every analysis I mention a price (or price range at times) for
the stock. That is the price at which the stock can be bought.
• Support is a price to which a stock may fall and then bounce
back up. One should use supports to determine levels to exit
trades. If a stock is about to give a closing of around 1% below
a support or has given a closing below it must be exited.
• Resistance is a level at which price could stop in its rally. It is
used to place targets.
• Booking Pro ts: Exiting trades in pro t is completely your
decision. If I mention a resistance you can exit at that level.
Often times I don’t mention a resistance. In such a case you
can exit in a 7-15% pro t range. You can either book entire
pro t in that range, or, book half quantity and put a stop loss for
the rest at 5% pro t. Manage this aspect on your own.
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Trading suggestions
• Before you start trading you must have a de ned capital in mind
that you will use. Ideally not more than 30% of your total capital
should go into trading. Rest should go into investing.
• You should have 10-20 stocks in your trading portfolio. No
more, no less.
• The capital allocation to a single trade should be 5-10%.
• The usual risk for a trade is 6-10%. Whenever you read my
analysis calculate the risk percentage. Based on how many
shares you are going to buy you can calculate the absolute risk.
If you’re not comfortable with the risk don’t trade.
• Ensure proper risk and money management. I cannot manage
these aspects for you. Don’t trade if you can’t take volatility or
risk.
• Do your own due diligence before acting on my analysis and
maintain a manageable risk-reward ratio.
• Results most often move a stock signi cantly in either direction.
The magnitude of the movement is also unpredictable. Often
times good results can cause stocks to fall, or, bad results can
cause stocks to move up. This is why you must keep a check
on whether any stock you hold for trading has results coming
up. Ideally those trades should be exited before results to
eliminate risk and unpredictability. You can check results on the
following website: [Link]
Forth_Results.html.
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