Summary of "Time for patience! -Swing Trading School first hour or so-"
Time for patience! - Swing Trading School first hour or so
Markets & Macroeconomic Context
- The market is currently in a “shopping period”, trading near highs but lacking strong momentum or clear setups.
- Moving averages play a critical role in trading decisions:
- When the 10-day moving average is below the 20-day moving average and both slope downward, breakout trading tends to be ineffective; better to stay out.
- When the 10-day moving average is above the 20-day moving average and both slope upward, it is an ideal time to trade aggressively and grow accounts.
- Patience is emphasized: waiting for the right setups during sideways or weak market periods is crucial.
- The presenter discourages trading slow, low-volatility stocks, especially those with low Average Daily Range (ADR).
Trading Strategies & Methodologies
Swing Trading Setup Criteria
- Focus on stocks with high ADR (preferably above 5).
- Use a dollar volume cutoff of at least 5-10 million USD daily volume to avoid illiquid stocks.
- Look for clean price action setups involving tight consolidations near key moving averages (10-day, 20-day, 50-day).
- Avoid choppy, slow, or “random” stocks without clear trends.
- Entry typically occurs early in a breakout, ideally as the stock breaks out of its range.
- Use strict stops and obey them to manage risk.
- Recognize when breakouts are unlikely to work (e.g., during down-sloping moving averages).
- Use multiple timeframes (e.g., 60-minute charts) to confirm setups.
Shorting
- Shorting is harder and riskier than going long.
- Recommended only for traders with larger accounts (several million USD).
- Look for stocks with parabolic moves losing momentum and breaking support levels.
Volume & Liquidity
- Emphasized importance of scanning for stocks with sufficient dollar volume and ADR.
- Suggested method to set up scans in TC2000 with filters for dollar volume, ADR, and ranking gainers over 1, 3, and 6 months.
Moving Averages
- Use 10-day, 20-day, and sometimes 50-day moving averages as dynamic support/resistance.
- Stocks “surfing” these moving averages and building tight bases are potential setups.
Risk Management
- Use tight stops especially on volatile stocks like Tesla.
- Avoid trading slow movers or stocks with low liquidity.
- Stay out of the market during non-ideal conditions (moving averages sloping down).
Position Management
- Adjust position size based on market conditions and stock behavior.
- Add to positions on confirmed setups; reduce or cover when momentum fades or stops hit.
Trading Tools
- TC2000 recommended for scans and charting.
- ADR formula shared for custom scanning.
- Free or low-cost versions of TC2000 available (~$25/month).
Performance Metrics
- ADR (Average Daily Range) is a key metric to identify volatility and tradability.
- Dollar volume filters ensure liquidity.
- Ranking stocks by gainers over 1, 3, and 6 months helps identify momentum leaders.
Examples of Stocks & Sectors Mentioned
- Tesla (TSLA): Main watch; strong momentum; gap up on stock split news; short and long setups discussed; tight stops used.
- Square (SQ), Fiverr (FVRR): Weak momentum; potential pullbacks; short positions on Fiverr.
- NVAX (Novavax): Short candidate with large downside potential; significant recent volatility.
- Overstock (OSTK): Short with expectations of pullback to $60-$70; monitoring for breakdowns.
- Pinterest (PINS): Potential long setup forming; strong volume after earnings; possible breakout next week.
- Spotify (SPOT), GSX, MRNA, Peloton (PTON), Amazon (AMZN), Apple (AAPL): Various momentum and setup notes.
- Biotech stocks: Generally slow and risky; avoid small/micro-cap biotechs unless large account and liquidity.
- Other tickers mentioned: TQQQ, NVAC, Tiger, Workhorse (WKHS), Silo, TTD, SCGD, PDD, and more.
General Advice
- Trade setups, not opinions.
- Avoid low ADR and low volume stocks.
- Use moving averages to time entries and exits.
- Be patient; not every day or week will have good setups.
- Avoid scalping; it’s inefficient and mentally draining.
- Focus on momentum stocks with strong earnings and revenue growth for longer-term holds.
- Shorting requires experience and larger capital.
- Understand the market environment before trading breakouts.
- Use stops religiously to avoid blowups.
- Trading is simple but not easy; requires discipline and patience.
Explicit Recommendations & Cautions
- Avoid trading stocks with ADR less than 5.
- Use a minimum dollar volume cutoff of 5-10 million USD in scans.
- Sit out when the 10-day moving average is below the 20-day and both slope down.
- Use tight stops on volatile stocks like Tesla.
- Shorting is for experienced traders with large accounts.
- Do not trade slow or choppy stocks.
- Breakouts only work in strong momentum environments.
- Patience is key; wait for setups.
- Scalping is discouraged.
- Use TC2000 for scanning and charting.
- Read the presenter’s blog and swing trading schools for detailed methodology.
- Not financial advice; trading involves risk.
Methodology / Step-by-Step Framework for Scanning in TC2000
- Set dollar volume filter > 5-10 million.
- Create custom ADR condition (formula shared by presenter).
- Scan for ADR > 5 (or 6 for smaller accounts).
- Rank stocks by % gainers over 1 month, 3 months, and 6 months.
- Adjust filters to get 40-60 candidates per scan.
- Focus on stocks with clean setups near 10-day and 20-day moving averages.
- Look for tight consolidations and breakout points.
- Use multiple timeframes to confirm setups.
Disclosures / Disclaimers
- The presenter emphasizes the need to do personal work and study patterns.
- This is not financial advice.
- Trading involves risk and potential for loss.
- Shorting is riskier and not recommended for small accounts.
- The presenter has experienced multiple blowups early in his career.
- Viewers are encouraged to obey stops and risk management rules.
Presenters / Sources
- The video appears to be a live or recorded session from a swing trading educator/trader (name not explicitly stated).
- Mentions “smiggy” (community member or chat participant).
- References “daveydaytrader” as a market indicator.
- The presenter uses TC2000 and shares personal trading examples and positions.
Overall, the video is a detailed swing trading session focusing on market context, scanning methodologies, specific stock setups, and risk management, emphasizing patience and discipline in trading.
Category
Finance
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