Rules for The Master Swing Trader

Swing trading can be a great way to profit from market upswings and downswings, but as

I’ve always said, it’s not easy. Mastering swing trading techniques takes considerable

time and effort. To help get you started, here are 30 rules to think about as you begin and

ultimately master the swing trading game.

Rule 1: If you have to look, it isn’t there.

Forget your college degree and trust your instincts. The best trades jump out of nowhere

and create a sense of urgency. Take a deep breath, and then act quickly before the

opportunity disappears.

Rule 2: Trends depend on their time frame.

Make sure your trade fits the clock. Price movement aligns to specific time cycles.

Success depends on trading the right ones.

Rule 3: Price has memory.

What happened the last time a stock traded at a certain level? Chances are it will happen

again. Watch the tape closely when price returns to a past battleground. The prior action

can predict the future.

Rule 4: Profit and discomfort stand side by side.

Find the setup that scares you the most because that’s the one you need to trade. Don’t

expect it to feel good until you take your profit. If it did, everyone else would be trading

it. Ancient wisdom from the East: What at first brings pleasure in the end gives only pain,

but what at first causes pain ends up in great pleasure.

Rule 5: Stand apart from the crowd at all times.

Trade ahead, behind or contrary to the crowd. Be the first in and out of the profit door.

Your job is to take their money before they take yours. Be ready to pounce on ill-advised

decisions, poor judgment and bad timing. Your success depends on the misfortune of

others.

Rule 6: Buy the first pullback from a new high. Sell the first pullback from a

new low.

Trends often test the last support/resistance before taking off. Trade with the crowd that

missed the boat the first time around.

Rule 7: Buy at support. Sell at resistance.

Trend has only two choices upon reaching a barrier: continue forward or reverse. Get it

right and start counting your money.

Rule 8: Short rallies, not selloffs.

Short-sellers cover profitable trades into market declines, so that’s the worst time to enter

new positions. Wait until these sellers get squeezed and shaken out, then jump on board

while no one is watching.

Rule 9: Manage time as efficiently as price.

Time is money in the markets. Know your holding period for every trade and watch the

clock to become a market survivor.

Rule 10: Avoid the open.

They see you coming, sucker.