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How To Swing Trade Stocks For Consistent Profits


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Since 2002, Morpheus Trading Group has been sharing its proven strategy for swing trading stocks and ETFs with thousands of traders around the world.

In these slides, you will learn what swing trading means, discover how to trade breakouts and pullbacks, and find out more about how to manage trading risk.

Overall, our trading methodology is based on profiting from the momentum of small and mid-cap growth stocks (not penny stocks) and ETFs breaking out above tight ranges of price consolidation on increasing volume.

Trade candidates must also be exhibiting clear relative strength to the broad market and meet several other basic technical filters.

Average holding period of our swing trades ranges from 2 to 2 month (depending on market conditions). We use common chart patterns and basic technical analysis indicators (volume, support/resistance levels, moving averages, trendlines) to determine the most ideal, predetermined entry and exit points.

Successfully trading stocks for consistent profits in both up AND down markets can be a reality, but only with a clearly defined and rule-based trading system that works.

Published in: Economy & Finance, Business

How To Swing Trade Stocks For Consistent Profits

  1. 1. Swing Trading Success! How To Swing Trade Stocks For Consistent Profits In Both Up AND Down Markets
  2. 2. Main strategy types for investors Traditional “buy and hold” • • • • • Holding period of several years to decades Balanced portfolio of 20 or more stocks Based on fundamental analysis Pros – Very passive, minimal work required Cons – Limited to no flexibility – Potentially large drawdowns and long periods of time with no appreciation – Dependent on market to always move higher, with no consideration of trend
  3. 3. Main strategy types for investors Position trading • • • • Holding period of 6 months to several years Narrow selection of stocks with concentrated positions Pros – Designed to achieve big gains from riding strong trends Cons – Large drawdowns in choppy markets – High volatility in profit and loss (P&L)
  4. 4. Main strategy types for investors Swing trading (near and intermediate-term) • • • • Holding period – Near-term trades are several days to weeks – Intermediate-term trades are 3 to 6 months Flexible, well-balanced strategy with solid rewardrisk characteristics Pros – Strong risk control due to market timing – Flexible enough to take advantage of shorter-term trends in both directions Cons – Active management requires more monitoring and solid market timing
  5. 5. Main strategy types for investors Daytrading • • • • Holding period of several minutes to 1 full day Takes advantage of intraday price and volume momentum in the markets Pros – Extremely risk-averse due to no overnight exposure and risk of outside events Cons – Requires very active management, sitting in front of monitor all day – Physically and mentally demanding (requires solid reflexes) – Quite time consuming, only suitable for fulltime traders
  6. 6. Overview of MTG core beliefs – Swing trading in the near to intermediate-term timeframe is the best fit for overall strategy – Trading with the intermediate-term trend – Momentum-based strategies work! • • – An object in motion tends to stay in motion Stocks trading near 52-week highs have the least amount of overhead resistance • Cheap stocks are cheap for a reason • We buy high and sell higher, not buy low and sell high • Human nature is to underestimate how long a trend can last Risk control is everything! • – Risk is defined upfront with every trade Main market structure is base, breakout, pullback
  7. 7. Momentum-based strategies work!
  8. 8. Momentum-based strategies work!
  9. 9. Momentum-based strategies work!
  10. 10. Buy stocks at or near 52-week highs
  11. 11. Buy stocks at or near 52-week highs
  12. 12. Avoid “bargain hunting!”
  13. 13. Avoid “bargain hunting!”
  14. 14. Avoid “bargain hunting!”
  15. 15. The proper way to invest and trade is with momentum of the trend...
  16. 16. Risk control is everything!
  17. 17. Risk control is everything!
  18. 18. Overview of MTG trading strategy 5 steps to becoming a master trader 1) 2) 3) 4) Identify the trend (with daily & weekly charts) Identify proper trade “setups” Have a clearly defined exit strategy Have a disciplined money management strategy 5) Understand the psychology of trading
  19. 19. 1) Identify the trend
  20. 20. 1) Identify the trend
  21. 21. 1) Identify the trend
  22. 22. 1) Identify the trend
  23. 23. 2) Identify proper trade setups
  24. 24. 2) Identify proper trade setups
  25. 25. 2) Identify proper trade setups
  26. 26. 3) Have a clearly defined exit strategy
  27. 27. 3) Have a clearly defined exit strategy
  28. 28. 4) Have a disciplined money management strategy Money management rules to live by – memorize these! 1) Never risk more than 2% of total account value on any individual trade (no matter how “great” it looks!) 2) Average risk per trade when conditions are optimal should be 1 – 2% 3) New traders should risk a maximum of 0.5% per trade 4) Do not take capital exposure of more than 10% of account value on any individual trade 5) Risk control should always be a trader's foremost concern
  29. 29. 4) Have a disciplined money management strategy Why risk control matters A 50% loss requires a 100% gain just to break even! Amount Stock Drops Gain Needed to Break Even 5% 5.26% 10% 11.10% 20% 25.00% 30% 42.86% 40% 66.67% 50% 100% 60% 150% 70% 233.33% 80% 400% 90% 900%
  30. 30. 5) Understand the psychology of trading Price movements in all markets are driven by 3 primary emotions 1) Greed  Powerful emotion that can drive stock prices well beyond “reasonable” valuations.  Creates a state of euphoria within individuals and the market (a group) that has a “blinding” effect on rational thought 2) Fear  Another powerful emotion, even more so than greed  Fear is the reason markets trending steadily higher for years can erase all those gains within just a matter of days (which is why stops are crucial)  Fear of losing money puts investors into a panic, sending the market sliding out of control 3) Hope  The most dangerous of the three emotions, as it can paralyze market participants  Human nature is to analyze and justify the reasons why a stock should not fall any further. Humans don't like to admit being wrong.  Consequently, traders can become paralyzed and avoid taking action to eliminate a losing trade
  31. 31. To learn more about our strategy for swing trading stocks and ETFs, check out the plethora of educational articles and videos on our blog at: To receive our top “cherry picked” swing trade stock picks, you may wish to check out our premium nightly newsletter, The Wagner Daily, at: Narrated video version of this presentation is available on our YouTube channel at: