Swing Trading Strategy

stock-market

TRADING INFORMATION FOR SUBSCRIBERS

First find what you love to do and pursue your passion.

  1. Don’t give up you day job unless you are fully ready to retire.
  2. Never trade with money you cannot afford to lose. (ie do not trade with money to pay the rent, mortgage, feed your family, pay your car bills etc.)
  3. Always employ a predetermined stop loss beneath support of the trade.
  4. Open a brokerage account with a reputable company. We use fidelity, TD Ameritrade and Tradeking.
  5. We trade with no more than 10% of our portfolio in one equity position.
  6. Generally when purchasing a long equity, consider doing this no earlier than 10am eastern time at a limit price of a penny above the trading price to limit the expense of the trade and reduce loss from the spread.
  7. When selling an equity position use a limit order 1 penny below the current price.
  8. When selling an equity short or buying  an inverse ETF consider doing this at 2:30pm on down days in the market.

At Northstar Active Equity Trading, our objective is to expect profits that outweigh expected losses by at least a 3:1 ratio. Losses are a part of the game, so you must respect them and keep them small. Therefore, only get in stocks on the move with the intention to ride them into profits and exit upon the loss of momentum.

This strategy is best achieved by buying stocks that are in an uptrend with increasing strength and volume. This type of move in a stock tells us that the previous area of indecision has been resolved to the upside and money is flowing into the stock (volume expansion). Volume is the fuel that pushes the stock upward once it begins to move. A lack of volume is a lack of fuel, and the move may be short-lived. Be wary of breakout (or breakdown) moves on light volume as they are prone to failure. Once again stop losses are a key.