I asked a question about trend following earlier and decided against it, however the swing trading strategy ive been using with success is almost random. I literally just pick a stock and look at its chart and use technical analysis like bollinger bands.
I look for band trading or breakouts or new highs. Each trade is different depending what i think. I also do a simple fundemental look and look at headlines and upcoming events. I basically take an educated guess from past performance.
Most of the time like 6 or 7 out of 10 times im right. Call me lucky lol. When im wrong i simply cut my loses and look for something else. I also trade the same stocks most of the time like my favorite is AUY i trade this stock all the time. I dont hold on to stocks for more than 2 weeks usually unless there is no movements. Im also not a daytrader. I usually buy or sell one day then in a few days or a week ill sell or cover.
I also like to trade rallies in the market or crashes only once i recognize whats going on. What is this strategy called? But keep in mind i know money management and i never put more that 20% in a trade and since i have under 10K i can take risk and since im only 19. If a stock dosent do what i think it may do i get out period. What are your thoughts on this strategy?
Ive been doing this for almost 5 years now and never had a “bad” year when the market crashed back in 08 i lost about 20% but then shorted the stocks and quickly made it back then i went long and make much more.
i average 70% a year for the past 4 years this year im up about 13% so far.
I read in a trading book that says what ever works for you do it dont do what everyone else is doing if it works use it and thus far the way i trade is working but lately im think will it in the long run?
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Jim L 19th March 2010
With AUY I’ve heard that strategy called "riding the range." You find a stock that you understand and know from experience that it moves up and down within a relatively predictable range. Then you buy it near the bottom of the range and sell it near the top. Over the years I have done that with maybe a half dozen stocks. Nothing lasts forever and sooner or later something makes it break out of the range and act too unpredictably for this to work.
You are also doing some market timing when you say you trade rallies and downswings in the market. I have also done that in the past but I think that is a losing strategy. No one can pick tops and bottoms accurately. Having said that, it allows you to cash out when the market starts going down, and I think that is why you have been successful in avoiding "bad" years other than 2008, and no one could avoid all of that.
Overall, the proof is in the results and it seems like you are doing well.
James S 19th March 2010
It sounds like it could be okay, however hard to tell. I just spoke with my trading friend and he said he would like to talk to you about it to learn a bit more. If you want to talk to him, he is a very experienced trader and could help you out with your method. See this link:
http://www.123learntotrade.com/misc.php?do=form&fid=1