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Simple Stock Swing Trading Strategy

Leave a Comment / Trading Strategies / By adam

I’ve been looking to get back into the stock market for a while now for my 401K and IRA accounts – (of course right after we are hitting new highs ). I have been looking for something simple. I think simple is better and easier to stick with. I wanted it to be easy to scan for setups using TOS and with little analysis. I also wanted it to be based on technical patterns. So what did I decide on?

I have decided on trading pull backs.

What I will be looking for:

1. Stocks in a trend up or down

2. Stocks in a trend up or down in alignment with the overall market

3. Once we have that I will be looking for stocks that have pulled back into the area between the 8 EMA and the 21 EMA

4. Then I will be looking for a candle pattern and entry back into the over all trend of the market.

Scans I will run to look for candidates

1. 8 EMA 21 EMA cross

2. Stocks with price below 8 EMA and Above 21 EMA

Then I will go through those stocks looking for good entries with defined risk reward of at minimum 1:1

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In a research paper published in 2014 titled “Do Day Traders Rationally Learn About Their Ability?”, professors from the University of California studied 3.7 billion trades from the Taiwan Stock Exchange between 1992-2006 and found that only 9.81% of day trading volume was generated by predictably profitable traders and that these predictably profitable traders constitute less than 3% of all day traders on an average day.

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In a 2003 article published in the Financial Analysts Journal titled “The Profitability of Day Traders”, professors at the University of Texas found that out of 334 brokerage accounts day trading the U.S. markets between February 1998 and October 1999, only 35% were profitable and only 14% generated profits in excess of than $10,000.

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