Only in theory. In practice, it never works that way. If what you say is true, whenever AAPL moves up, then so will the Dow. But the Dow and S&P move in tandem and when one of them swoons so will the other. I've looked into the way index and its component stocks work (or even the relationship between SPX and its futures like ES) and NOBODY knows or can tell me exactly how they actually work. Take Flash Crash for example. it was said to be caused by the plunge in ES, which in turn caused SPX to fall. That in turn caused other indices to follow. Then all the stocks tanked. After that the bonds and currencies followed. WTF??!!
Who Thinks Swing Trading is Dangerous? Any kind of leveraged trading is potentially financially dangerous. What would the outcome have been if your trade was in the opposite direction with the same stop? Would that have been a winner or still a stop-out? I'd say this isn't the easiest environment for swing trading index futures due to the fact that there's a lot of range bound movement within huge ranges and even a minor retrace within a larger move is quite juicy. That said, if you're entering near extremes and not in the middle of a range, you should be able to enter with a much tighter stop than 60 points. If your target on a swing trade is say 100 points, you can easily take multiple small stop-outs and still get paid well on a low win rate system. Lose 50 points on 5 x 10 point stop-outs and net 50 points if your next trade is a 100 point winner. The problem with using large stops is that they eventually get hit. At the same time it can be troublesome if the stop is too small getting you stopped out on noise or normal oscillations. So, if you use a 60 point stop-out and it gets hit twice in a row, well, you now need a 120 point winner just to breakeven. That's a tough one. Generally, in my own trading, I find that it's better to take a small or medium sized loss and re-enter immediately (or shortly after) if I still feel my original trade idea is in play. Typically, if my stop is hit and price slows down or reverses. If price bursts through my stop, well, then my hypothesis may have been invalidated and I'll wait or consider reversing. In principle, there's no difference between taking a 10 point loss and re-entering there if you still have the same price target in mind as the profit potential is now greater (you are buying/selling with a 10 point price improvement on original entry). I hate losing, so it's still something I don't always respect myself as it can be psychologically hard to cut a loss, but I usually always regret it. 3 entries with 2 initial stop-outs yesterday afternoon.
Atta boy! SWING TRADING IS BY DEFINITION ONE OF THE LEAST RISKY WAYS TO TRADE STOCKS. The reason: You structure the trade around realistic goal posts<------ and this is a huge difference from momentum trading. When I choose a swing candidate I have an entry price based off TA and an exit price based of TA and my own weakness of selling everything that moves $10.. that's a tale for another time. But the point is you are always managing the view that hey I'm going to make so and so and then hand this off to another kind of investor... To make comparisons to baseball... a stock gets 3 innings in and you find it and you say I'm holding this from the 3rd inning through the 7th and then someone else can assume the risk of closing. ~stoney
I'll give you the Swing trade I am looking at now... please be advised I'm going off memory and some chicken scratch I have here on an index card. SONY- 5/10/22 $80=$82 bottom June - Aug 22' trades consistently at $83 Comes back from Oct low that everyone had and goes right to $82 ->mini dip to $76 and recent move to $91 All time high $128 What I see happening (hopefully) stk is $85 now. I want to buy this name as close to $83 as the market will allow and sell this name at that $91-$95 area//
How are you going to do that? Are you planning on a limit order or will you watch the market in real time? Selling in the 91 to 95 range; what is the plan to accomplish this? Let it hit 91 then place a trailing stop?
biggest risks in swing trading stocks: - earnings misses --> big gap down - headline news impacts price i like swingtrading etfs since no earnings misses risk