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Lesson
#1 --- Lesson #2
--- Lesson
#3 --- Lesson #4
--- Lesson
#5 |
Lesson
#5 -- The 11 Commandments of Swing Trading
My, we sure have come a long way since our first
trading lesson! For starters, I'd like to thank you for giving me the
opportunity to teach you a bit more about my trading methodologies and
technical analysis as I practice it, as well as a chance to introduce you to
my premium weekly investing newsletter -- the StreetAuthority Swing Trader.
In today's final lesson I'm going to begin with a recap of
Lessons #1 through #4. After that, I will provide you with a final lesson
that should prove to be the most comprehensive and valuable yet -- The
11 Commandments Of Swing Trading.
1. A LOOK BACK AT OUR PREVIOUS
TRADING LESSONS
2. THE 11 COMMANDMENTS OF SWING
TRADING DEFINED
3. THE 11 COMMANDMENTS EXPLAINED
4. CONCLUSION AND A LOOK AHEAD
(1.) A LOOK
BACK AT OUR PREVIOUS TRADING LESSONS
In Lesson
#1 I introduced you to the relationship between swing trading and
technical analysis. The better you become at technical analysis, I noted,
the more efficient and profitable your swing trades will be. I showed you
how important it is to recognize the trend in the time frame you are
trading. I used the example of Silicon Image (SIMG) to show you what a
great swing trading set-up looks like and how with trades like this one you
could reap profits of 50% or more in just a few trading days/weeks.
As a journalist and educator, I noted that my commitment
to you was twofold. First, I would scour the markets and share the best
trades I could find with you each week. Second, I would teach all that I
knew from my more than 30 years of technical analysis study.
In Lesson
#2 -- The Power of Trendlines -- I began to fulfill this
teaching commitment as well as to show you how I uncover profitable trades.
Although there are many, many tools in the technician's toolbox, the simple
trendline, I asserted, is still one of the most powerful.
You were shown how to recognize an uptrend -- a series of
higher highs and higher lows -- by labeling peaks and valleys. When this
pattern reversed itself and became a series of lower highs and lower lows --
a downtrend -- it was time to nail down profits. You then became better
acquainted with the trendline and received clear directions on how to draw
both simple and complex trendlines. My goal was to present this information
to you in a clear, easy-to-follow, step-by-step way (something that is very
difficult to find either in books or on the web).
I then showed how just by using this one tool, the swing
trader could harvest significant profits in a short period of time. For
those interested in honing their skills, I presented a practice chart for
KLAC-Tencor (KLAC) and asked you to interpret its trend. In my subsequent
lesson I provided an "answer" to that chart by defining two
profitable trades on KLAC based upon the very simple principle of buying on
the break of the downtrend line and selling on the break of the uptrend
line. In the first trade I went long; it yielded profits of more than 55% in
just over a month. The second trade I went short and gained 33% in about 30
trading days.
In Lesson
#3 -- A Swing Trader's Secrets of Support and Resistance
-- I showed you how you can use support and resistance to earn substantial
profits. I began by demonstrating how support and resistance come from a
variety of sources, such as moving averages and trendlines. However, I noted
that they are mainly detectable at horizontal levels above or below the
present price.
Next, you learned about how an uptrend consists of a
period of sharp movement -- the reaching of a peak -- and then the drifting
back toward the previous price level as profits are taken. Finally, I
explained that the uptrend can resume only by breaking through the peak that
had at first turned it back. You saw how this insight could be both
profitable and could create low-risk entry points for you.
I then showed you the difference between simple and
significant support and resistance -- a distinction I have not seen made in
any other technical analysis works. In weak markets, I argued, you can
initiate profitable and safe swing trades on the break of support. In strong
markets, you should buy on the break of resistance, particularly when the
volume signature supports the trade. I then introduced you to just two of
the dozens of classical technical analysis price patterns, and you saw how
recognizing and trading on these patterns could help you multiply your
trading capital many times over.
In Lesson
#4 -- Swing Trading By Candlelight -- I explored another
aspect of technical analysis by showing you how I use candlesticks in
short-term trading. By recognizing a handful of candlesticks, you learned
how to potentially call every major turn in the S&P 500 in a
six-month period. At every major turn, I showed you how candlesticks
provided an early warning indicator, one that foreshadowed a change in trend
even before the trendline broke. Even though we covered only a few of the
many technical tools available in this trading course, I demonstrated to you
how the principle of multiple indicators could assist you in making safe and
profitable trades.
In today's final lesson, my goal is to provide you with an
in-depth look at my trading strategy, tactics, principles and attitudes. I
use these exact same strategies to uncover profitable trading opportunities
for my StreetAuthority
Swing Trader newsletter each and every week. By studying and
incorporating them into your existing market framework, they should also
help you execute your own winning swing trades. I call these my "11
Commandments of Swing Trading." Here they are...
(2.) THE
11 COMMANDMENTS OF SWING TRADING DEFINED
1. Always align your trade with the overall
direction of the market, which is best measured by the S&P 500.
When trading "industrial' stocks, do not fight the major trends.
A strong stock will typically make little headway in a weak market.
Meanwhile, a weak stock will often underperform even in a bullish period.
With this in mind, you should always clearly determine the market's primary
and intermediate trends before you pick any individual stocks to trade. (And
by an "industrial stock," I mean those highly correlated with the
S&P, such as manufacturing, financial or retail issues. On the other
side of the coin, "resource" stocks such as gold or oil are often
inversely correlated with the major averages.)
2. Go long strength. Go short weakness.
Once you know the overall trend, do not fight the tape. Look for long trades
during periods of bullishness. Find appropriate short trades when the bear
is on the prowl.
3. Always trade in harmony with the trend one
time frame above the one you are trading.
Sure, we've all heard the cliché -- "the trend is your friend."
But which trend are people referring to? Use moving averages to be in tune
with both the short- and intermediate-term trends, even through as a swing
trader you are only trading for the short term.
4. Never trade only on the short-term chart of
the swing-trading time frame. Be sure to SYNTHESIZE the messages that the
weekly, daily and even hourly charts are telling you.
Use your telescope as well as your microscope when you look at charts. Too
small a lookback period -- using the microscope only -- can be very
deceptive and costly.
5. Strive to enter the trade near the beginning
of the trend, not near the end.
It is never too late to hop on the elevator. If the market is headed from
the 95th floor down to the 78th, you can still profitability climb on board
(short) on floor #83. But the quicker you recognize that a trend has begun,
the more profitable your trade will be and the less risk you will assume.
6. Always apply the rule of "multiple
indicators." Do not trade on any one technical tool or concept in
isolation.
Highly profitable trades usually occur when all available technical tools
give the same message. Candlesticks, volume, moving averages, and indicators
such as stochastics and MACD occasionally all align to communicate the same
message -- the stock is about to sharply rise or fall.
7. Keep your eye on the ball. Track a consistent
group of stocks.
As a swing trader, it is easy to flit from hot stock to hot stock. Although
it's okay to follow the action, you should also have a core group of stocks
that you track daily and learn the personality of.
8. Always enter a trade with a clear trading
plan. The four key elements of the plan are a target, a limit, a stop loss
and an add-on point. And when you sell, you should immediately determine a
re-entry level.
Swing trading can lead to impulse buying. Sometimes your impulses can turn
out to be profitable, but other times they may not be. Remember: without a
clear plan you are merely gambling, not trading.
9. Strive to put the odds in your favor. Ask
yourself, "Does this trade have a 2:1 risk/reward ratio?"
Don't risk a dollar to try to make a dime. On good trades, your chart
analysis should always show more upside possibility than downside risk.
10. Be a "techno-fundamentalist," not
just a technician. Integrate fundamentals into your technical analysis.
Day traders in positions for 15 minutes to an hour have little need for
fundamentals. Swing traders, on the other hand, may often hold positions for
several days to several weeks. As such, they can greatly benefit from a
better understanding of each company's fundamental, inherent value.
11. Master the "inner game" of swing
trading. Great trading is psychological as well as technical.
Always keep a positive mental attitude about your trading. Do not let bad
trades affect you longer than necessary. Learn from your mistakes; poise
yourself to make your next trade.
(3.) THE
11 COMMANDMENTS EXPLAINED
1. Always align your trade with the overall
direction of the market, which is best measured by the S&P 500.
When trading "industrial' stocks, do not fight the major trends.
Every week in my StreetAuthority
Swing Trader newsletter, I begin by discussing the market's
primary and intermediate trends as measured by the S&P 500.
These trends provide the context in which every swing
trader must make short-term trading decisions. If you focus only on the
short term, then although your trade may be successful for a limited time
period, the larger trends are apt to reassert themselves. At best, your
profit potential will be limited. As such, you need to identify the
longer-term trends to make sure you go with the flow and not against it.
Over the years, I've observed that "surprises"
such as news announcements, analyst upgrades/downgrades and earnings
hits/misses almost always occur in the direction of the larger trends. Swing
traders should always be cognizant of where the S&P stands in relation
to its longer-period moving averages, such as the 40-, 30- and 10-week.
Below I've presented you with a historical chart of the S&P 500. Note
how except for very brief periods of time, the long-term trend (as measured
by the 30- and 40-week moving averages) and the intermediate trend (as
measured by the 10-week moving average) remains a downward one.
2. Go long strength. Go short weakness.
Let's assume for a moment that the bear is on the prowl.
The 40- and 10-week moving averages are both sloping downward and the
S&P is beneath both. In this scenario, you should always look for stocks
to go short, NOT to go long.
Always incorporate Price Relative to the S&P 500
($SPX) into your chart analysis. This indicator will tell you how the
individual stock is performing in relation to the overall market. During
bear markets you should seek out stocks whose relative strength line is
trending downward in relation to the S&P. Do the opposite during bull
markets.
Below you'll find a historical chart of H&R Block
(HRB). This short, which I recommended in early 2003 during a period of
market weakness, turned out to be a very profitable trade for StreetAuthority
Swing Trader readers. During a period of S&P decline, HRB's
relative strength was weakening in relation to the market.
3. Always trade in harmony with the trend one
time frame above the one you are trading.
Many short-term traders focus their technical analysis exclusively
on the short-term chart. However, this type of technical analysis will
always end up being partial or limited because these traders do not see the
big picture.
On the other hand, you should not focus exclusively on the
primary trend when swing trading. Even in a bear market, there are periods
where the intermediate trend turns positive and stocks soar. These bear
market rallies can be enormously profitable. Fueled by short covering, the
S&P 500 and other major averages can climb 20% or more in a period of
just several weeks. Meanwhile, volatile stocks with high "betas"
can move much, much more than this.
Even though you are a short-term trader, it is vital to
know when the intermediate-term trend is changing and a countertrend rally
is taking hold.
Below you'll find a historical chart of the S&P 500.
Coming off deeply oversold levels each time, you'll note that this chart
presented traders with three very tradable countertrend rallies. Each was
forewarned by certain "signatures" left by Bollinger bands,
stochastics, MACD, RSI and several other technical tools that I use on a
regular basis.
In my weekly StreetAuthority
Swing Trader newsletter, I always monitor these trends for you
and alert you when the intermediate trend is about to turn. Moreover, in
each weekly issue I dedicate several pages to teaching you how to better use
these tools yourself so you can make better independent decisions.
4. Never trade only on the short-term chart of
the swing-trading time frame. Be sure to SYNTHESIZE the messages that the
weekly, daily and even hourly charts are telling you.
My first step when analyzing a stock is to look at a
two-year weekly chart. I examine the shares in relation to a long-term
moving average and determine the overall trend. This weekly chart is ideal
for examining the big picture.
Next, I focus on the 6-month daily chart. Here, I can see
finer details that the weekly chart obscures. I use much shorter-term moving
averages to ascertain the stock's short-term trend.
Finally, I often hone in on the hourly chart to discern
the prevailing trend over the last couple of weeks. Again, moving averages
are extremely helpful here.
My final step is to synthesize all of this analysis. Is
the stock telling me a clear, relatively unambiguous story? Are the shares
breaking out from resistance or breaking down from support with confirmation
from volume and other indicators such as RSI? Is this story sufficiently
similar in all three time frames? Have I interpreted the story early enough
so that I can go short or long with solid profit potential and minimal risk?
In the two historical charts (weekly and daily) below,
note that Dentsply (XRAY) formed a double top in late October 2003. This
made a very profitable swing trade for those who recognized this formation.
Had you shorted on the break of support at $37.50 and covered at the next
support level down ($32.50), then you could have made an impressive +13.3%
in just one short month!
Not all stocks communicate quite this clearly though. In
fact, some remain in extended periods of sideways consolidation. A
symmetrical triangle formation, for instance, is almost impossible to
predict and trade. Similarly, an MACD that gives signal after signal in a
short period of time is a totally unreliable indicator.
5. Strive to enter the trade near the beginning of the trend, not near
the end.
The earlier you pick up on the change in trend, the less
risk you will take and the greater your profits will be. The most important
step here is to pay close attention to the overall market averages. When
they are overbought or oversold, they are usually prone to reversal.
Researchers and analysts have developed a variety of
indicators to detect when the broad market is prone to a reversal. Some of
these include the McClellan Oscillator, the Arms Index, the Volatility Index
and the Put/Call ratio. When the market tests a major zone of support and
resistance it is very useful to look at new highs and new lows and the
advance/decline line. I often discuss and interpret these indicators in my
premium StreetAuthority
Swing Trader newsletter. If you chose to sign up for a
longer-term subscription to my newsletter, then you'll certainly benefit
from further in-depth discussions of these indicators in my weekly
"Inside The Black Box" column.
Most "industrial," or non-resource (papers,
metals, oil, gold) stocks are highly correlated with the direction of the
overall market. Therefore, when the market turns they are likely to turn as
well. Candlesticks and momentum indicators such as RSI and stochastics are
what I describe as early warning lights. They often anticipate or lead a
turn in the stock.
By contrast, trendlines and moving average crossovers are
lagging indicators that merely confirm the message of the early warning
signals. Depending on your willingness to take risk, you can trade on either
a leading or a lagging indicator. When both types of signals have been
given, you generally can enter the trade with a high probability of success.
6. Always apply the rule of "multiple indicators." Do not
trade on any one technical tool or concept in isolation.
On a leading swing trading website, I found the following
advice under the heading of "20 Golden Rules for Traders" --
"Buy at support, sell at resistance." Take
another look at the XRAY chart above. Do you really want to buy at support,
see it decisively broken, and take a bath?
Unfortunately, I've found that most swing trading
information is long on gimmicks, but short on useful, well-thought-out
information. Remember: THERE IS NO MAGIC BULLET FOR PROFITABLY TRADING
THE MARKET. As I noted in my very first trading lesson, technical
analysis can only increase the probability of your making a correct
swing trading decision. Nothing is 100% accurate, and there is no such thing
as "free money."
Great trading opportunities, however, do have signatures.
For starters, many indicators all give the same message within a short
period of time, such as two or three days. Below I have reproduced the
Silicon Image (SIMG) chart from my very first trading lesson.
You should now have learned enough about technical
analysis to better appreciate this opportunity. The October $2.20 low
occurred as the market turned violently upward. The bottom candle was a
long-legged doji and occurred at a very oversold level.
The next large, white candle dramatically confirmed the
trend had reversed. Volume picked up on the rally and declined on the
pullback. CCI, RSI and stochastics all gave buy signals. In five trading
days, the downtrend line was broken. Even buying later in the trend, on the
break of the downtrend line at about $4.25, yielded a spectacular return if
you held on to the peak above $7.
This is what I mean by applying the rule of "multiple
indicators." This trade was not signaled by applying any one tool.
Instead, many, many tools confirmed the same underlying message.
7. Keep your eye on the ball. Track a
consistent group of stocks.
One of the first things I do when I check the market in
the morning is focus on the financial news. I go to a variety of websites to
look up analyst upgrades and downgrades, earnings reports and guidance, what
is happening in the overseas markets and with the price of oil, gold and the
dollar, etc... I also look eagerly to see which stocks are active in
pre-market trading and usually add several of these to my regular tracking
screen. I LOVE volatile, heavily-traded stocks.
In addition to these, however, I always follow a core
group of regulars. I try to pick these from a large variety of sectors --
not just the volatile tech group. Several times a week, I look at their
charts and make mental notes about breakout levels, prices at which they
would make good trades, etc... Intraday, I watch how they behave and try to
get a feel for their personality.
I call this "keeping your eye on the ball." By
tracking a comfortable number of stocks in a portfolio package (we offer
free quotes and portfolio tracking on our "Resources" page at
StreetAuthority.com), regularly checking the charts, following the news and
analyzing company fundamentals, you will find yourself in a much better
position to make winning trading decisions.
8. Always enter a trade with a clear trading plan. The four key
elements of the plan are a target, a limit, a stop loss and an add-on point.
And when you sell, you should immediately determine a re-entry level.
Capital preservation is key in trading. Therefore, it's
always vital to establish a stop loss for each trade. The best time to set
one is right before you make the trade. If you are not watching the market
intraday, then you should set this stop loss with your broker. If you are
watching at all times, then I suggest you keep it as a mental stop, but
execute it ruthlessly.
As a general rule, the maximum loss I want to take on any
trade is 8% of the capital invested. If there is no technical analysis basis
for limiting the stop loss to this amount -- usually a support level or
nearby trendline -- then perhaps the market is informing you that your trade
is late. I have a lot more to say on the art of setting stops, including
using trailing stops, in my weekly "Inside The Black Box" column.
For most of my trades, I use market orders and normally
trade very liquid issues. And if I am watching the market, my order size is
not large enough for it to be worth my while to fight over a few pennies in
either direction. On the other hand, if I am not watching the market and
want to enter a trade based on overnight analysis, then a limit order is
vital. Of course, if the market gaps, then I don't want to pay too much and
be behind the eight ball from the start.
You'll often come across times when a trade is going
beautifully. You are watching the trade closely and have a very good
instinct for the trading action. You can almost feel the next price,
you are that attuned to the shares. In those circumstances, why not add to
your position? If you originally bought 1,000 shares, then you might want to
add between 200 and 500 more. When you add-on, don't pyramid though.
Remember: a sudden decline in the stock can quickly turn a healthy profit
into a loss.
As a last general rule, I think it's always a good idea to
determine an appropriate re-entry point each time you close a trade
(particularly when that trade was for a healthy profit). Are you selling
because the stock is in a strong uptrend, but you are concerned it will pull
back? If so, then where is there sufficient support to allow you to get back
in comfortably? Or if the market continues higher, at what price would it be
worthwhile to re-enter your original position?
9. Strive to put the odds in your favor. Ask yourself, "Does this
trade have a 2:1 risk/reward ratio?"
When you enter a trade you should always have a target
price in mind. Do not pluck this target out of the air though. It should be
based on your technical analysis using tools such as the measuring
principle.
I always strive to select trades whose target allows me
strong profits if I'm correct, but where my potential losses are fairly
limited. In general, I look for opportunities where there are 2:1 odds.
Sometimes market conditions make this difficult. For
example, toward the end of a large move in the overall market, a large part
of the gain or decline in a stock may have already taken place. If possible,
however, I seek to find set-ups where I can meaningfully set a stop loss of
8% in order to capture a profit of 16%. When I cannot find those
opportunities, I then look for potential 12% gains while risking just 8%.
Finding trades with 2:1 odds greatly increases your chance
of making money. For example, take the chart of SIMG above. If you bought on
the break of the downtrend line at $4.25 and then noted the completion of
the inverted head and shoulders formation (at about $4.65), you could have
set a target of $7.10 based on the measuring principle. Your upside
potential at that point would have been approximately 53%.
On the other hand, you could have set a stop at $4.00,
just under the highs of the consolidation immediately before the breakout.
In that case your maximum loss would be about 5%. If you can find trades
where you have at least 2:1 odds, then you will greatly increase your chance
of swing trading success. Each week I pour over hundreds of charts in order
to find the ones that I present to you in the StreetAuthority
Swing Trader.
A final word on targets. A swing trader should always
assess and reassess the chart. In many cases, you many need to take profits
before your target is hit. On the other hand, if your analysis leads you to
conclude that your target will be exceeded, then you may want to raise that
target. The key to trading success, as many successful traders have
proclaimed, is to cut losses short and let profits run.
Unfortunately, many untrained swing traders instead let losses run and cut
profits short.
10. Be a "techno-fundamentalist," not just a technician.
Integrate fundamentals into your technical analysis.
In my hometown I have organized a group of avid traders
called "Market Nuts." It is a free club that meets once a month
and is designed for active traders -- people who are nuts about the market.
Most of the people who attend have taken my TD Waterhouse seminar, and many
are dedicated technicians.
During our regular meetings, I will occasionally talk
about a stock's price-to-sales (P/S) or PE-to-growth (PEG) ratio. The
reaction I get from some of these club members is almost always the same --
"That's strange of you to mention! I thought you were a
technician."
If confronted, I will often acknowledge that I
"lied" in order to get the seminar instructor job. In actuality, I
consider myself a "techno-fundamentalist" -- someone who
integrates both technical and fundamental analysis.
Normally, technicians and fundamentalists are like the
boys and girls at a sixth-grade dance: they seldom speak to one another. Yet
both forms of analysis can help one make more effective stock market
decisions. After all, you'd be hard-pressed to find a technical analyst who
isn't in awe of legendary value investor Warren Buffett's incredible track
record of success.
If both forms of analysis are good, then why on earth
would anyone believe that a combination of both isn't better? After all,
when used correctly they do not contradict each other. Rather, they are
supplemental. Note, however, that I am a techno-fundamentalist, not a
fundo-technicalist (one person I know actually is). I make decisions first
and foremost based on chart patterns, not the other way around. Roughly 80%
of my analysis is chart based, while the other 20% is based on value.
11. Master the "inner game" of swing trading. Great trading is
psychological as well as technical.
Countless times I have heard traders beat themselves up
over a bad trade they've made. The name of their game is usually "woulda,
coulda, shoulda." I would have bought XYZ at the bottom, but I had a
doctor's appointment that morning. I should have sold. Why didn't I sell? I
could have been out right at the top, if only I had read the candlesticks
correctly. When am I going to learn?
Making a swing trading mistake can be painful. Not only
does it often result in a loss of trading capital, but it also hurt's one's
self-esteem. When this happens to me, I literally think of it as a form of
"grief." The most productive response I can have is to experience
the feelings of disappointment or hurt and then move on. After all, I need
to get mentally prepared to make my next trade.
One of the sports statistics I find most relevant to swing
trading is baseball legend Ted Williams' record-setting batting average. In
1941, he hit .406. 1941! .406! Think about it. While Ruth's home run record
has been bettered several times, Williams' record has not yet been beat.
The feat is more than 60 years old. He only hit .406. Put
another way, he made an out .594, or almost a full 60% of the time. The
lesson to learn here is that no one is perfect. Everyone makes mistakes. As
I said in my first lesson, technical analysis can only increase the probability
that you will make correct decisions.
That said, I always try to treat bad trades as a learning
experience. Was there something I didn't see on the chart that I should
have? Did I enter the trade too late? Set my stop too close? The winning
swing trader is marked by persistence: the commitment to getting better and
better through time.
WHAT SHOULD I DO WITH THE
INFORMATION IN TODAY'S LESSON?
There you have it -- the 11 Commandments of Swing Trading. I
suggest you print
this information and put it somewhere near your trading area. Every once
in a while you might want to check this information to evaluate whether you
are violating any of these principles. The market is a hard taskmaster.
Violate the principles of effective swing trading and you will have your
knuckles rapped with the painful loss of trading capital.
(4.) CONCLUSION
AND A LOOK AHEAD
That brings us to the end of this five-part trading
course. I sincerely hope that your return on investment (in terms of the
time spent reading these reports) has more than been repaid by the benefits
you've gained in technical analysis knowledge and the ability to make better
trades.
For those of you who have decided not to join me by subscribing
to my weekly newsletter -- the StreetAuthority
Swing Trader -- today's lesson could mark the end of your
educational journey into swing trading. I'd like to thank you for giving my
newsletter a try. However, for those of you who have decided to continue
on the path to swing trading success, your journey is just beginning. There
is much more to learn and there are hundreds of potentially profitable
trading recommendations in your future! On the educational front, let me
tell you a little bit about my Special Bonus Report entitled -- "The
Technical Analysis Secret that Will Always Keep You on The Right Side of the
Market."
Perhaps that claim sounds exaggerated, but I'm convinced
that this tool will do just that. Being aware of this concept spared me the
ravages of the bear market that started in 2000. Since the information and
principles described within my Special Report have taken me years to develop
and I hold them very dear, I've only shared them few times in the past. The
most recent instance occurred at my local chapter of the Technical Analysis
Society.
I began my session by asking how many people in the room
had bought a tech stock in the last several years. Perhaps three-quarters of
the hands in the room went up. My next question was, how many people made
money on those tech stocks? Almost no hands remained held high.
At this point, it became perfectly clear that the
principle I intend will share with you in my Special Bonus Report is not
well known -- not even among reasonably sophisticated technicians. In fact,
it wasn't until about 1995 -- after 25 years of stock market study -- that I
stumbled across it. Even then, for about three
or four years I thought it was interesting, but not profound. But once the
bear market began, wow
did I appreciate its importance! This important principle now serves as my
starting point for analyzing any chart.
Let me be frank. This technique is not original to me. As
originally stated, in fact, it was actually targeted to investors, not
traders. Yet through a great deal of experimentation over the past several
years, I have now turned this concept into a swing trading tool -- the
single most powerful one in my arsenal. I have
taught the "investor's version" in seminars, but have divulged the
swing trading concepts only to a few close friends. Now you can learn this
secret.
In addition to this Special Report -- "The
Technical Analysis Secret that Will Always Keep You on The Right Side of the
Market" -- you'll receive the following with your paid
subscription to the StreetAuthority
Swing Trader...
Each week, I will keep you posted on key trends and levels
in the overall market. I will help you catch key market reversals and will
suggest several stocks that you can go long or short on when these reversals
occur. If you've been paying attention to my weekly newsletter, then you
have already seen the incredible profits that one can earn through swing
trading. Now these profits can be yours!
Furthermore, by examining my "Inside The Black
Box" column, each week you will continue to learn more about technical
analysis. There is so much more I want to share with you, including:
- What you need to look for on a chart when using moving
averages. What combination of moving averages works best for swing
trading.
- How the integration of the Western and Eastern
principles of gap analysis can be a powerful and profitable tool. (FYI
-- I have never seen gaps discussed this way in any technical analysis
books or on any web sites).
- How the swing trader can recognize flags, apply the
measuring principle and reap huge profits in just a matter of days.
- How to spot momentum divergence and why the rate of
change is such a valuable warning indicator of impending weakness or
strength.
- How to integrate all the "multiple"
indicators into a cohesive, profitable trading strategy.
And this list goes on and on...
I invite you to join me by signing up for a subscription
to the StreetAuthority
Swing Trader today! And if you sign up within the next 24 hours,
you'll be guaranteed to lock in our special, limited-time discount
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Thank you for taking the time to review my five-part trading course, and
best of success in the markets!
Dr. Melvin Pasternak
Editor
The StreetAuthority Swing Trader
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