I have been Swing Trading Stocks for over 10 years and I still continue to make a lot of mistakes. I have tried to figure out why it is so difficult to make and keep gains that I have made and I believe it comes down to just a few simple rules:
1) Make sure you trade with the trend! If the stock index’s are above the 50 and 200 MA then you should not be shorting stocks. Just look to buy the strongest stocks.
2) Use stops. When you buy a stock, your stop loss should be put in as soon as you get your fill. You should know where you are going to get out before you even get in! You have to have an exit plan and know how much you are willing to lose.
Your exit should be based on a LOGICAL exit, meaning a support area and not some random % amount. If the stock drops below the area of support, then your reason to own the stock is no longer valid and it should be sold.
Don’t do what I have done and hold a losing stock and then say to yourself, well this is an investment and I am going to hold it for the long term. I personally have too many of these dead stocks sitting in my account.
Some are down 90% percent; I know they will never get back to where I bought them. Most likely they will go out of business and they will be 100% losses. I just keep them in there now as reminders of what not to do.
3) This is a big one and worthy of an entire book by itself and that is position sizing and money management. In a nutshell my biggest mistake is buying way too large a position for my account size based upon a “feeling” that this was a winner.
So even though my win percentage is very good, I would lose much more on the losing positions than I would make on my winners. Doing this has been MY biggest flaw that I seem to keep doing over and over again.
So there you go, follow these simple rules and learn from my mistakes and you will do very well. So the question I get asked all time is where do I find the stocks for swing trading? Well some I find on my own (Click Here For Some Strategies)but honestly the best advice I can give is use the services of a professional stock picking service.
Please see my reviews on recommended Stock Picking Service Newsletters:
Regardless of which Stock Picking Service you use or if even if you choose to go it alone, please download my free eBook: “The 7 Habits of Millionaire Traders”
– Robert Walsh