Swing Trading Intensive - Swing Trader's goal

Swing Trading is a wave trade - so the goal of the swing traders is to catch the bullish or bearish wave of the market to make a profit.

You all know that the market moves not in a continuous up or down pattern, but in a pair of waves: including corrective push-waves, and these wave pairs only appear when the market is trending...


In an uptrend, we will have a push wave of a strong and long uptrend, and a corrective wave of a smaller, weaker, and shorter downside wave. On the contrary, in the downtrend, we have a push wave that is a large, strong, and long downward wave, with a correcting wave of the small and weak uptrend.


Thus, the aim of a swing trader is to capture push waves - upside waves in an uptrend and a downside wave in a downtrend. So they will exit when the market goes out of the wave and will re-order when a new push wave continues. This is different from Position traders (position traders) when they will keep their orders when the corrective wave takes place, while the swing traders will exit when the push wave ends.

Swing trading is like a trading form between short and long-term trading. Short-term traders (scalpers) are players who like to get in and out quickly, catch short waves and take profits early. And the long-term position trader (position trader) will hold the position for a long time until the full trend breaks, they will exit.

The preferred time frame for the swing traders is D1 (day). As such, they still have the comfort of trading, and still, be able to make a big profit.

Swing Trading Intensive - Market Stages

Before trading, swing traders will usually determine what stage the market is in to have a sound strategy. Actually, position traders will also do this, even more often.
The market has 4 phases: accumulation - increase in price - distribution - decrease price.


The basic wave structure is a framework of the way the market moves, which tends to repeat on all timeframes and all different markets. All markets tend to move in a structure of 5 waves including the push wave phase and the corrective wave phase. With swing traders, the period of a push wave is when we will aim to make a profit.


The push wave phase of an Elliott wave cycle consists of 5 waves. You can see the waves marked from 1 to 5. This phase is similar to a small uptrend.

The corrections are marked as Wave A, Wave B, and Wave C. This is the period when the market corrects after the bull run. This will be the time when we stand outside the market looking for new trading opportunities.

Wave 1: This wave breaks the previous downtrend and initiates a new uptrend. This is the beginning of the uptrend. The best trading opportunities are when this wave 1 corrects, called entry at the first pullback trade. This is a trading setup that is believed by swing traders to have the highest probability because it is only at the beginning of an uptrend when the momentum is still strong.

Wave 2: The first corrective wave. This is when we look for an entry opportunity as mentioned above. The Setup to enter the order can be a candlestick pattern, the price retest the MA line, or re-touch the 50% / 61.8% Fibonacci regression point, etc.

Wave 3: The longest and strongest wave of 5 waves. That is why we must try to enter when wave 2 ends, or at least when wave 3 starts.

When you buy stocks that have just entered wave 3, try to hold the position for a while. You will be grateful for yourself when you keep the command long and ride a long wave. Why? Because you guys already have 1 big win - a reward for good swing traders.


Wave 4: Pretty bad if you buy at this wave. The market will move more slowly, increase weaker, and are signals that the best part of the trend is over.

Wave 5: The last rally before a correction begins, often weak and easy to lose momentum.

Wave A, B, and C: The correction phase turns to a downtrend. Wave A is a bull trap, wave B cannot overcome the top of wave 5, and wave C is the third wave in a downtrend.

Lesson 4: The 3-step technique of catching the top bottom with the win rate of 80%

Here are 3 easy steps to catching the top of the market bottom with an 80% win rate. This three-step bottom-fishing method is that of Trader Victor Sperandeo as instructed in the book “Trader Vic - Methods of a Wall Street Master”. You can use these 3 steps to trade trend reversal or to take profit on profitable positions, in any case, it is also extremely effective.

The three steps include:
  1. The trend line is broken
  2. Price retest (retest) resistance and then fall further
  3. The price hit the bottom before
These 3 steps apply the exact opposite of the bearish to bullish reversal.

For example:

Step 1: the trend line is broken

In the example we see the trend line has been broken and the candle closed below. However, as learned in the previous lesson, breaking the trend line does not mean trend reversal, it is just an early sign for us to be more cautious about holding positions. With traders reversing this is the first sign to look out for.

Step 2: Price hits resistance again and then falls again

We know that in an uptrend there is a higher high-low; when the price hit resistance again and turned down it was unable to make a higher high. Thus, it is possible to place a big question mark for this uptrend. We just question that the trend will reverse only, there is no confirmation signal.

Traders who are currently in a profitable position can close half the position; Reversing traders prepare their position to enter.

Step 3: The price broke the previous bottom

At this time, we confirm that the trend has reversed to bearish. Why? Because the price was unable to make a higher high AND made a lower low. A lower high and lower low is a clear definition of a downtrend.

Now that the trader has a position that should be completely closed, the reversing trader can immediately short-sell with the stop loss above the nearest swing High peak.

Reverse example:

Price breaks the downtrend line -> re-touches support and moves up -> breaks previous top, confirming trend reversal.

It seems that all trend reversals on all markets go through these 3 steps, and its correct rate is 80%. The remaining 20% is when price creates a complex pullback wave, in which the recovery wave is also a complete trend (small trend inside a big trend).

Intensive Swing Trading - Uses moving average crossings

For example:

MA 10 is about to cut MA30, which is a sign of trend reversal. A confirmation signal appears when the price breaks down to the nearest swing low.

Lesson 5: Using MA to catch big waves of the market like Pro Swing Trader

Use 2 MAs to signal waves

Two different periodic moving averages have a cross that will signal the market has a new wave. In fact, this signal always goes slower than the price, ie the market has waves, then the new MA line will cross, but it is still a little slow but still better.

Use an intersection between MA 10 and EMA 30 to create an intersection:


We have a bullish crossover which means the market has started a new uptrend. The principle of following the market wave is very simple: only buy when the MA 10 is above the 30 EMA; sell only when MA10 is below 30 EMA.
Note that moving averages only work well when the market is trending, when the market accumulates or trades sideways, the MAs will have a random intersection.

Here are the guidelines to keep in mind for BUY orders with high probability:
  1. MA10 must be above 30 EMA
  2. There must be a relative gap between these two lines (ie these two lines are not twisted together, usually the market is then going sideways and there is no trend).
  3. Both roads must be facing up
Swing Trading Intensive - MA 200

The MA 200 is an extremely important and special moving average. It is the boundary between a bull market and a bear market. As long as you comply with the MA 200 principle, you already have quite a few advantages over other traders.


Rule: Buy only when the price is above MA200, sell only when the price is below MA 200, on all timeframes.

Especially for the stock market, the MA 200 is the most important line. It shows whether a stock is in a bull market or a bear market.

Intensive Swing Trading - Avoid trading when the price is too far away from the MA

Any MA shows the average market closing price, roughly the price at which the market is in the normal state, without being stretched.

When the price is too far above the MA, the price is being overbought; when the price is too far below the MA, the price is being oversold.


Rule: Don't buy when the price is too far above the MA; not sell when the price is too far below the MA.

Lesson 6: Pro Swing Trader uses Resistance Support to increase the probability of winning

1. Support will turn into resistance after being broken and vice versa

For example

Price moves below 1 resistance and above 1 support. After breaking resistance

The previous resistance became price support and a good entry point

2. In an uptrend, the support created by the lows is stronger than the support created by the highs

In a downtrend, the area of ​​resistance created by the highs will be stronger than the resistance created by the lows.

This property is quite easy to understand, simply because an uptrend exists only when we have higher highs, so the lows on the chart will be the strongest supports. These lows are the last stop for the bulls, as long as a lower bottom appears, the uptrend will no longer exist.

Similar to a downtrend, peaks will be the strongest resistances, because as long as a higher high appears, the downtrend will no longer exist.

Intensive Swing Trading - Pro Swing Trader uses resistance support

1. Enter orders at previous highs in an uptrend and previous lows in a downtrend

For example

Price tends to pull back to previous highs during an uptrend. Those are good positions to buy up.

Conversely, in a downtrend, it tends to pull back to the previous lows, which are good positions to sell down.

2. Buy at 50% of the large bullish bar length

For example

The price usually pulls back about 50% of the length of the big bullish candlestick, which is a good position to buy. Similarly, prices also pulled up about 50% of the length of the large down bar.

3. Buy at 50% price gap length

The price gaps are usually filled at around 50% and then the price will then resume the trend, which is a good place to buy in an uptrend.

4. Notice the circular number areas

Round numbers are the natural support and resistance because they affect the psychology of the crowd trading in the market. The sideways round number resistance support is, by default, stronger than the normal resistance level.

Lesson 7: 10 specialized Pro Swing Trader candlestick patterns to catch the long wave sóng

The candlestick patterns below are divided into 2 groups: bullish and bearish patterns. These are all reversal patterns that can reverse a bearish pullback in an uptrend, and reverse a bullish wave in a downtrend.

Intensive Swing Trading - Bullish Pattern


1. Candle engulfing (engulfing)

A bullish reversal pattern consists of 2 candles: candle 1 is a small bearish candle showing that sellers are still in control with low volatility. Candle 2 is a large bullish candle that covers the entire body of the previous candle, or "submerges" the entire previous candle. At this point, the buyers have completely dominated and the price is likely to continue to rise

2. Hammer candle

The price opened, then at some point, the sellers suddenly overwhelmed and pushed the price down. By the end of the day, however, the bulls had bounced back and had enough strength to close near the top of the bar. The hammer candle will cause quite a few stop-loss orders (sell orders) to be matched, that is, big hands have bought in large quantities by matching these stop-loss orders.

3. Candle mother holding a baby (harami)

This candle shows that the previous bearish momentum has stopped and is no longer so strong. Candle 1 is a large bearish candle showing that bears are still in control, but candle 2 is just a small candle and bullish, showing that volatility has decreased a lot and sellers are not as aggressive as before. The level of reversal of this pattern is also not high because the price can completely fall further after the harami pattern.

4. Piercing Candles

The bullish reversal pattern consists of 2 candles: candle 1 is a large bearish candle that closes near the bottom, showing that sellers are still in control. Candle 2 has a bottom that penetrates the previous bottom but grows and closes about 1/2 the length of the previous candle, indicating a bearish-to-bullish reversal. This is a pretty strong pattern because the previous bottom was penetrated but the price reversed to the upside, causing many short traders to stop losing, causing the price to rise sharply.

5. Doji candle

Doji is a candle with a body so small that it is almost only a horizontal line, which means that the opening and closing prices are nearly equal, showing indecision and slowing down. Dojis can reverse a bearish wave to an uptrend, but usually indicate a slowdown, not a reversal.

Intensive Swing Trading - Bearish Pattern


Contrary to the above models

Intensive Swing Trading - Kicker Model


A bullish kicker pattern consists of a chain of bearish candles, suddenly there is a bullish candle that gapes upwards. This is a very strong reversal pattern.

In contrast with discount kicker

Lesson 8: Pro Swing Trader style Doji and Hammer trading

We will learn in depth how to trade 2 famous patterns: doji and hammer in the style of Pro Swing Trader. Our goal is to take advantage of these two patterns to catch a market swing.

In-depth Swing Trading - Pro Swing Trader trades doji candles

Doji occurs when the opening and closing prices are close to or equal to each other, which means that the real body of the candle is extremely small.

The reality is that this model doesn't tell us much. It just says that the previous up/down momentum has leveled off, not sure if it will reverse or continue. But we'll have a way to take advantage of this model.

First, the Doji pattern only makes sense after an up wave (with sell orders) and after a down wave (with buy orders) and must be at an important support and resistance area.

Example: (D1 frame chart).


The above doji appeared after a rising wave at 1 support (the previous swing low) has now become resistance, and this area also has the 10 mag line going through. But how can we tell if the price will reverse or continue to rise after this Doji bar?

It is to open the lower timeframe to see what is happening inside that Doji bar. Open frame H1:


The market on the lower time frame is forming a diamond top reversal pattern and has 2 long candlesticks showing that sellers are very aggressive around this price.
We can sell when an H1 candle breaks below the diamond pattern, stop loss is placed above the 2 long tails.

Result:


The price fell sharply after the doji bar. It's a way to take advantage of a seemingly useless bar like a doji.

Another way is to sell stop at the bottom of the doji, stop loss at the top. This way is simpler, but the probability of winning is sometimes lower.

Intensive Swing Trading - Pro Swing trader trading hammer candles 

Hammer is a pin bar-like candle. Hammer is a bullish pin bar, essentially the same. However, seeing any Hammer trading is sure to make a loss.

Steve Nison wrote that:

“The longer the lower shadow, the shorter the upper shadow, the smaller the real body, the more meaningful the Hammer bar will be.”

Let's add a few more properties to increase the advantage of this classic model:
  • Hammer must appear after a bearish wave (bearish pullback). If it occurs after an up wave, it is no longer a Hammer but a Hanging man - a bearish pattern.
  • Must appear at 1 critical support or MA line.
  • The shadow of the candle must occupy at least 2/3 of the length of the bar, if the shadow is too short, the probability of success will be very low.
  • Is the full length of the candlesticks larger than the lengths of the neighboring bars? If so, it would be more reliable, indicating that there was a big move in this bar.
  • Did the volume increase compared to the previous day? If yes then interest is increasing with price.
For example:


Hammer has no upper shadow, very long lower shadow. The volume increased, appeared at the previous pullback area, the length was longer than the neighboring bars —> Very good hammer.

Lesson 9: Professional Swing Trader guides step by step chart analysis

Today we will learn how professional swing traders analyze charts step by step. The chart analysis steps in swing trading are no different from other trading styles, but there will be slight variations to match the swing Trade goal of catching most of the market's up / down waves.

To become a swing trader, you must know how to make an entry decision with a chart in the fastest time without doubting your analysis. There are several factors one can use to make this decision with a high enough probability to make a profit in the long run. Those factors are:
  • What stage is the market in?
  • Is the market trend bullish or bearish or sideways?
  • Is the market at the beginning, middle or end of the trend?
  • Is the trend strong?
  • Can trend lines be drawn?
  • Which wave is the market on in that trend (push or correction)?
  • What are the moving averages (EMA 21, ma 50, ma 200) saying?
  • Is there a breakout nearby?
  • Is this graph smooth? Or move in an uncomfortable and unpredictable way?
  • Is there a chart pattern forming?
  • Are there any large long-body candlesticks that are in line with the market trend?
  • Are there any gaps in the trend?
  • Is there buying and selling force of any big hand (shark)? Is it shown on the trading volume?
  • Where are the most important support and resistance zones right now?
  • Is the market in any Fibonacci retracement area (50%, 61.8%, 38.2%).
  • What story is the volume showing?
You can print the above lines on a piece of paper to paste on the transaction screen for easy remembering. Once you have memorized and practiced every day, the analysis steps will become automatic, no need to apply machines anymore. You will be able to make a sound trading decision, having the advantage of looking at a chart within minutes, sometimes seconds.

In-depth Swing Trading - Real examples 

WFT breaks out of an accumulation phase and is rising in a strong and good uptrend. Applying the above analysis steps, we can confirm.

WFT is in phase 2 (bullish) of the bull cycle. You remember the market stages include: accumulation - increase in price - distribution - decrease in price.

WFT is moving in an uptrend. It is not difficult to determine this when we clearly see higher highs - higher lows, or we see the ghost line sloping up.

WFT is in a strong uptrend. 45 degree slope indicates that this is a sustainable uptrend

WFT is in Elliott wave #4. Wave 1 is the first up wave, wave 2 is a bearish correction, wave 3 rallies to $17.33. Thus, there is 1 more bullish wave.

Lesson 10: How to read a chart like reading a book

Intensive Swing Trading

The title is the market context - be it trends or chart patterns on a daily timeframe. Read the title, you will know if the book is attractive and interesting enough for you, as well as whether the chart is attractive to trade.

On the date frame, adjust so that the chart shows about 3-4 months - just enough to see the big picture.

For example:

The “title of the book” is telling us that this looks like a potential short-selling opportunity. The price is in a downtrend. The title just needs to be brief. Now we need a little more detail: how is the downtrend? Where are the support resistances? That is the chapter of the book.

Swing Trading in depth - Read the book chapter

For example:
Above is a chart a few days later. The book chapter here is: “price is pulling back in a downtrend”. This is a short selling opportunity for swing traders to profit from the subsequent drop. The price is pulling back up and hitting the resistance area of the 30 ema line, and this is the first reverse pullback after a strong bearish wave. The chapter tells us it's time to enter a sell order. But still something is missing.

Swing Trading in depth - Read every word in the chapter

The candlestick pattern is word for word in the book chapter. For example:
We see the bearish day candle following the bullish day candle - that is, there is a shift of strength from the buyers to the sellers. A bearish candle has a higher high (bullish continuation) but a lower low (bearish reversal). This is a reversal bar.
We see this reversal candle appearing at the 30 ema (strong resistance), and the previous low has turned into resistance. That is, this is a technical test. Sell at the bottom of the candle, stop loss at the top.

Result:
Most new traders don't read charts this way. They are often so focused on each word (candlestick patterns), that they forget the title of the book (market context) or the chapters (what the price is doing).

Or maybe vice versa, they only focus on the title (trend), the book chapters (support and resistance), but forget every word (enter without candlestick pattern). The result is still a loss.

Lesson 11: Complete Swing Trading Strategy to Catch Big Waves

Intensive Swing Trading - Strategy Overview

We don't want the price to decrease after BUY, just like after SELL, the price will increase, so we will wait for the price to DECREASE before BUY; as well as wait for the price to UP BEFORE SELL. Roughly waiting for the corrective wave to take place first, then enter an order according to the trend, also known as pull back trading.

That is the best way to catch the big wave, if the price goes right, we will catch the whole wave at the beginning - the highest goal of swing trading.

So we must have a way to determine when the pullback wave ends - when the price ends the downward pullback wave to return to the uptrend; or when the price ends the upward pullback to return to the downtrend. We will trade in Traders Action Zones (TAZ).

Intensive Swing Trading - Trader's operating zone

Trader's active zones are potential zones to buy when the bearish pullback ends; or to sell down when the bullish pullback ends.

There are basically 3 types of Traders in the market: position Traders buy when there is a strong breakout that starts an uptrend; momentum Trader will buy after the price has shown upward momentum (ie a bit slower than position Trader); and swing Trader will buy when the price pulls back down in an uptrend.


Point 1: position traders buy; point 2: momentum trader buys in; and point 3: swing traders' long positions are the active zone of the trader we're talking about.

The trader's active zone is the area between the 10 SMA and the 30 EMA. We will BUY SELL around this area.

Why these ghost roads? Since overall on all healthy trends there is respect for the 10 SMA and 30 EMA, the trend is too weak or too strong, we should avoid trading to keep the highest advantage.

For example:
Price bounces up after each touch of the TAZ vùng zone

For example:
Price reverses down after each touch of the TAZ . zone

Intensive Swing Trading - The first reverse pull wave

The first upside down wave after a trend change is the best BUY SELL position. The trend changes when there is a crossover between SMA 10 and EMA 30.

For example:

SMA 10 cuts to EMA 30 —> trend reverses to down —> SELL at the end of the first pullback wave

Similar to the next BUY bet

The first reverse pullback after the break out of the pattern/flat area is also a nice BUY SELL position.

For example:
Price breaks out of accumulation range —> BUY at first pullback wave

(CONTINUOS)