This document outlines different trading strategies and provides an overview of a swing trading strategy called Morpheus Trading (MTG) that aims to take advantage of momentum in the markets. The MTG strategy involves identifying the intermediate-term trend using daily and weekly charts, looking for proper trade setups with a breakout and pullback pattern, having a clear exit strategy, disciplined risk management by limiting losses to 1-2% per trade, and understanding how emotions like greed, fear and hope influence market movements. The strategy aims to "buy high and sell higher" by purchasing stocks trading near 52-week highs rather than bargain hunting for cheap stocks.

1. Swing Trading Success!
How To Swing Trade Stocks
For Consistent Profits In
Both Up AND Down Markets

2. Main strategy types for investors
Traditional “buy and hold”
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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. Main strategy types for investors
Position trading
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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. Main strategy types for investors
Swing trading (near and intermediate-term)
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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. Main strategy types for investors
Daytrading
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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. Overview of MTG core beliefs
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Swing trading in the near to intermediate-term timeframe is
the best fit for overall strategy
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Trading with the intermediate-term trend
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Momentum-based strategies work!
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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!
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Risk is defined upfront with every trade
Main market structure is base, breakout, pullback

8. Momentum-based strategies work!

9. Momentum-based strategies work!

10. Momentum-based strategies work!

11. Buy stocks at or near 52-week highs

12. Buy stocks at or near 52-week highs

13. Avoid “bargain hunting!”

14. Avoid “bargain hunting!”

15. Avoid “bargain hunting!”

16. The proper way to invest and trade is with
momentum of the trend...

17. Risk control is everything!

18. Risk control is everything!

19. 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

20. 1) Identify the trend

21. 1) Identify the trend

22. 1) Identify the trend

23. 1) Identify the trend

24. 2) Identify proper trade setups

25. 2) Identify proper trade setups

26. 2) Identify proper trade setups

27. 3) Have a clearly defined exit strategy

28. 3) Have a clearly defined exit strategy

29. 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

30. 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%

31. 5) Understand the psychology of trading
Price movements in all markets are driven by 3 primary emotions
1) Greed
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Powerful emotion that can drive stock prices well beyond “reasonable”
valuations.
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Creates a state of euphoria within individuals and the market (a group)
that has a “blinding” effect on rational thought
2) Fear
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Another powerful emotion, even more so than greed
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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)
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Fear of losing money puts investors into a panic, sending the market
sliding out of control
3) Hope
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The most dangerous of the three emotions, as it can paralyze market
participants
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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.
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Consequently, traders can become paralyzed and avoid taking action to
eliminate a losing trade

32. 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:
http://www.MorpheusTrading.com/blog
To receive our top “cherry picked” swing trade stock picks, you may wish to
check out our premium nightly newsletter, The Wagner Daily, at:
http://www.MorpheusTrading.com
Narrated video version of this presentation
is available on our YouTube channel at:
http://youtu.be/PqNnEjnbwaI