| There are thousands of different trading strategies | | | | only lose $3. Then the swing trader waits until it |
| out there that can help you make money in the | | | | either hits his stop or resistance at $60. Let us look |
| stock market. If you are just starting out it can be | | | | at what could happen here. If you are right you |
| confusing. | | | | make $60-$51=$9 if you are wrong you lose |
| There are thousands of different trading strategies | | | | $51-$48=$3. |
| out there that can help you make money in the | | | | That means you have a 3/1 risk reward |
| stock market. If you are just starting out it can be | | | | ratio. If you win only 20% of the time with a 4/1 risk |
| confusing. You may be asking yourself a few | | | | reward ratio you still make money. Risk reward is |
| questions like, how do I make money and what is | | | | very important in swing trading most traders will not |
| the best trading system for me? Here I have | | | | take less than a 2/1 risk reward ratio. Also because in |
| composed a list of the best trading systems that | | | | a swing trading you will be wrong more than you are |
| have been proven to make money in the stock | | | | right you will need to only risk a small amount of your |
| market. Study them to find out which one is the | | | | money in any 1 trade. |
| best for you. | | | | 3. Break out traders; these are the |
| 1. Trend traders, these are traders that | | | | opposite of swing traders. They want to buy |
| simply buy up trending stocks and sell down trending | | | | stocks that break above resistance and sell stocks |
| stocks. An up trending stock is a stock that keeps | | | | that break bellow support. Let us say the stock in |
| making higher highs and higher lowers. What a trend | | | | the example above broke out to $62. It is now |
| trader would do is get into this stock at their low and | | | | above its resistance of $60 now old resistance |
| hold onto it until it stops making higher highs and | | | | becomes support and it will probably go higher. |
| higher lows. That is it. They do not necessarily have | | | | A break out trader would buy it here and |
| to look at the company’s fundamentals. If it is | | | | follow the stock up. They would a stop bellow $60 |
| going up it probably has good fundamentals anyway. | | | | and move it higher and higher as the stock goes up. |
| 2. Swing traders, these traders play off of | | | | Your trade ends when you get stopped out. How |
| support and resistance. Support and resistance are | | | | much higher to place your stop when a stock moves |
| imaginary tops and bottoms of stocks. For example if | | | | up depends on the trader. Some traders use a |
| a stock is bouncing between $51 and $60, $51 would | | | | trailing stop that can put a stop a certain percentage |
| be its support and $60 would be its resistance. | | | | below the stock’s price. Others, like myself, |
| What a swing trader would do is wait until this stock | | | | prefer to manually set the stop were they think is |
| goes down to $51 then buy it. They might place a | | | | best. It depends on the trader. |
| stop at around $48 so if it breaks lower they will | | | | |