swing trading - please help!!

[#1]

Hi all. I have backtested virtually every strategy I know, and none of htem seem to work. My definition of swing trading is short term, 2 days to 2 weeks (or more if a good rally). Does anyone have a consistent strategy that manages losses successfully? The only way that seems apparant, is to take a good calculated guess at which way the market is going to go, short/long accordingly, and set a healthy stoploss, to absorb volatility and last ditch efforts of breaking support.

[SimonPB]

skaaptjop, worry less about how to enter. Rather focus on the selling, that's were you limit losses and make profits. Fancy systems are just there to give courage to enter a trade.

[#3]

Hi Simon, thanks for the advise, but I am struggling to understand what that means. it is the risk / reward ratio that I am grappling with, ie managing my losses so that the gains can more than compensate

[Electrox]

Simon is spot on, you can make money with random entries but definetely no with random exits. Point is how you finish the race.. if you find that your risk(stop loss) is too large (that being more than 2% of your account size) then you are over exposed. Try to find a comfortable position size for a trade to be able to withstand a 10% stoploss that is only relative to 2% of your Total account size, from there use a simple T.A system to find good entries(Risk

[ws]

Excuse my ignorance,trying to learn about stop losses. So if you have say R100k in your trading acc,and you do a trade for say R10k, do you work on a stoploss of R1000 (10% of R10k) or R2000 (2% of R100k)?

[Electrox]

Correct WS, so the next thing to do is look for good Risk:Reward trades that fall within those stoploss paramaters. THis way you will have to make 40(if you include slippage +comission) loss trades in a row before your account is wiped out. But with lets say a 2:1 reward risk ratio, you only need to be right 4/10 times and you will still make money if you stick to protecting your acount size to max 2% per trade. hope this helps what you were asking.

[ws]

Thanks Electrox, so in my eg you work with a stoploss of between R1-R2k. If you were only correct 4/10, then you would require a 30% return on those 4 trades to breakeven?

[#8]

Thanks ws, you worded my question perfectly. Is 30% an achievable target 4 times out of 10?

[CrownA]

Luister Skaap. If you think any system will work in this volatile market, you are dreaming. This is now a purely betting game, if you want you can chose to go long/short overnight, because we just pop/sink first thing the next day. Go and get your swinging kicks outside of the market!

[Electrox]

WS, lets say you have 10 tades that you enter with a 2:1 reward risk analysis for entry. 6 bad trades = R12000 (2% account size) but when you are right, you make a minium of 2X 2% of account size. So that means out of the 4 times you are right, in the long haul you can still profit R8000.00(, thats R2000 per 10 trades made profit over a long period of time.) does this make sense? you can even look for 3:1 reward risk ratio's. but minium is 1.5:1.

[#11]

Crown, I am not asking for an entry strategy in this market. I am trying to understand how swing traders manage their losses. If you are prepared to accept a loss of 10% per trade (and your trade is only 10% of your portfolio) AND you win 4 out of every 10, then you need to win by over 20% minimum each time. Is that normally possible?

[Electrox]

Excuse me, the last sentence should be 2X R8000(4trades X 2%account size risk) = R16000 for 4 trades that you are righ with. That gives you A net R4000 profit out of ten trades..

[venice]

Sorry there is no fail safe method everything is in the spirit of so if you see a double bottom or bullish pennant or divergence on the rsi or what ever, you need to take the trade and get out quickly when you are wrong and let the profitable trades run. If you wait for confirmation all the time you will be too late every time and worse you will get whip sawed

[ws]

Thanks E, I think get the drift of your system.Over 10 trades on avg, 6 losses @R12k, 4 wins @R16k, net win R4k. That does mean a 40% return on each R10k win trade! That seems a bit hectic? I suppose the way around that is to commit more capital to each trade and look for a smaller return, but then you also run the risk of being stopped out sooner. Who said this was easy!

[asylum]

correct me if iam wrong but you say to use 2% of youre capital on any one trade isnt that a bit small.

[Electrox]

I wouldnt risk 20% of a R10000 trade to gain R4000(40% gain.) Bottom point being not to let any trade eat up more than 2% of your total account size. whether thats 2% stop on a R100 000 trade or a 10% stop on a R20000 trade.

[asylum]

ok makes sense and you say you can can have 4 wins out of 10 and still make a profit, now what % is that for the wins. My maths isnt that great.lol

[BRE]

no, he risks 2% of his total capital. In other words, if he has 100,000 he only risks 2,000. So, if he uses 10,000 to trade, his stop is when his 10,000 is reduced to 8,000; if he trades with 20,000, his stop is when it reaches 18,000. Risk is between buying price and the stop.

[Electrox]

Hi Asylum, there is no Fixed % for the wins.. If you focus on controlling your losses to a minimum the profits will take care of themselves.. what a blady cliche but what I was saying is that if you are gonna enter a trade, work out the Reward:risk analysis to be greater than 1.5 : 1

[ws]

I have been learning the hard way by not using stop losses (because the whole emotional story of cutting losses etc etc, Chartist has been through it in detail) but have been lucky I think so far by being in good quality shares eg Sol. I was down some R70k at one stage,then averaged down and now down to R20k loss. I think I will survive this one,but hence the need for proper stoploss strategy. It has been said before here,but it is hard to take a loss especially for me as a beginner but it seems that it is part of the game and the secret seems to be to stick to an original viable plan/strategy.