Swing Trading Success!Swing Trading Success!

How To Swing Trade StocksHow To Swing Trade StocksFor Consistent Profits InFor Consistent Profits In

Both Up AND Down MarketsBoth Up AND Down Markets

Main strategy types for investors

Traditional “buy and hold”

• 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

Main strategy types for investors

Position trading

• 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)

Main strategy types for investors

Swing trading (near and intermediate-term)

• Holding period

– Near-term trades are several days to weeks

– Intermediate-term trades are 3 to 6 months• Flexible, well-balanced strategy with solid reward-

risk 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

Main strategy types for investors

Daytrading

• 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 full-time traders

Overview of MTG core beliefs– Swing trading in the near to intermediate-term timeframe is

the best fit for overall strategy

– Trading with the intermediate-term trend

– Momentum-based strategies work!

• 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!

• Risk is defined upfront with every trade

– Main market structure is base, breakout, pullback

Momentum-based strategies work!

Momentum-based strategies work!

Momentum-based strategies work!

Buy stocks at or near 52-week highs

Buy stocks at or near 52-week highs

Avoid “bargain hunting!”

Avoid “bargain hunting!”

Avoid “bargain hunting!”

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

Risk control is everything!

Risk control is everything!

Overview of MTG trading strategy

5 steps to becoming a master trader

1) Identify the trend (with daily & weekly charts)

2) Identify proper trade “setups”

3) Have a clearly defined exit strategy

4) Have a disciplined money management strategy

5) Understand the psychology of trading

1) Identify the trend

1) Identify the trend

1) Identify the trend

1) Identify the trend

2) Identify proper trade setups

2) Identify proper trade setups

2) Identify proper trade setups2) Identify proper trade setups

3) Have a clearly defined exit strategy

3) Have a clearly defined exit strategy3) Have a clearly defined exit strategy

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

4) Have a disciplined money management strategy

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%

Why risk control matters - A 50% loss requires a 100% gain just to break even!

5) Understand the psychology of trading

Price movements in all markets are driven by 3 primary emotions

1) Greed Powerful emotion that can drive stock prices well beyond “reasonable”

valuations. Creates a state of euphoria within individuals and the market (a group)

that has a “blinding” effect on rational thought

2) Fear Another powerful emotion, even more so than greed 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)

Fear of losing money puts investors into a panic, sending the market sliding out of control

3) Hope The most dangerous of the three emotions, as it can paralyze market

participants 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. Consequently, traders can become paralyzed and avoid taking action to

eliminate a losing trade

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 tocheck 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