Swing Trading FOR DUMmIES

 Swing Trading  FOR  DUMmIES

In Swing Trading For Dummies, I introduce you to the strategies and tech-

niques of the swing trader. Moreover, I cover topics given short shrift in

some trading textbooks — topics that largely determine your swing trading

success. For example, whereas many textbooks focus on chart patterns and

technical indicators used in buying or shorting stocks, this book goes one

step further to cover the importance of money management, journal keeping,

and strategy planning. Although these subjects are less glamorous than look-

ing at charts, they’re actually more important — because even exceedingly

skilled chart readers will fail if they devise a flawed system, take unnecessary

risks, and don’t learn from their mistakes.

Here are some of the subjects this book covers:

 Calculating investment returns: This is one of those unglamorous

topics, but if you don’t properly calculate your returns, you’ll never

know whether you’re doing any better than the overall market. The

process is simple if you’re not adding or taking away funds from your

account, but the procedure can get more complex if you frequently with-

draw or add funds.

 Keeping a journal: The word journal seems to be a lot less offensive to

people’s sensibilities than diary. A journal is like a trading coach, telling

you what you did wrong or right in past trades and helping you to avoid

repeating mistakes you made previously. Just knowing the symbol,

price, and date of your trades isn’t going to cut it. This book shows you

the key features of a valuable trading journal.

 Managing your risk: The most important chapter in Swing Trading For

Dummies is Chapter 10, where I explain how to manage your portfolio’s

risk. As remarkable as this may sound, even if you get everything wrong

except your risk management, you can still make a profit. Van K. Tharp,

a trading coach, once said that even a totally random entry system can

be profitable if your risk management system is sound.

 Focusing on fundamentals: This book differs from other swing trading

books in its emphasis on the fundamentals of securities. All too often,

swing traders pay attention only to the chart and disregard the company

behind the chart. You don’t need to spend 20 hours a day analyzing a

company’s financial statements — swing traders don’t have that kind of

time on their hands. But it’s essential to find out the basics and apply

the most important measures in your trading.

 Paying attention to the popular (and easy) chart patterns to trade:

Dozens of chart patterns appear from time to time in securities’ price

patterns, but not all of them are sound or based on investor psychology.

That’s why I focus on the tried-and-true chart patterns to give you the

critical ones to look for Outlining your swing trading plan: A trading plan must outline when

you’re in the market and when you’re not. It must detail your criteria for

entering and exiting securities. Your plan should also cover what to do

when a trade doesn’t work out, as well as how much you risk and how

you handle your profits.