My Type of Swing Trade
- Rohit Musale, CFA
- Mar 5
- 2 min read
In my world, a swing trade is distinct type of trade.
For a swing trade, I focus on the following:
1) I will identify the trade (breakout from a base) on a daily timeframe chart.
2) I will execute the trade either on the 15 minute or the daily timeframe chart.
3) I would prefer the RS rating of the stock to be more than 80.
4) I would prefer the industry group rank to be less than or equal to 40.
5) I would never enter at a price which is more than 1% above my ideal buy point.
6) I would never enter on low volume (50 SMA)
7) I would not give too much weightage to the fundamentals of the stock.
8) I would begin with an initial stop loss of 5 to 7%
9) I would begin with an initial target of 10 to 15%
10) If I choose to ride the stock, I would focus on the 21 EMA
11) If I am in a weak market condition, I would close the trade at a break of 8 EMA
12) The 8 EMA and 21 EMA on the daily timeframe are my trigger levels for risk management.
13) Minimum reward to risk ratio = 2:1
14) I will only buy stocks with a buyer rating of A or B as per MarketSmith platform.
15) While entering on daily, I prefer: Price > 8 EMA > 21 EMA > 50 SMA > 150 SMA > 200 SMA
16) All moving averages on the daily, preferably sloping up.
17) Minimum volume required = 200,000 shares traded per day
18) No penny stocks
19) No restricted stocks
20) No red flag stocks
21) Preferably partial exit at: high volume close below 8 EMA
22) Full exit at: high volume close below 21 EMA
Regards,
Rohit Musale, CFA
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