Swing Trading For Dummies
Take advantage of price swings in strongly trending securities and pump up your portfolio!Want to know the techniques of effective swing trading? This friendly guide covers the ins and outs of this risky but lucrative investing method, explaining all the fundamentals in plain English. You will see how to use the two investment approaches – technical and fundamental analysis – to indentify promising securities in strongly trending markets. In addition, this guide covers how to calculate investment re
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Swing Trading Globally and Multi-asset Classes,
I always thought “swing trading” referred to trading with a time horizon of a few days. This author, however, defines it as trading with a time horizon of a few days to a few weeks. So this book is geared to trades that could last a month or long–something I consider outside the realm of short term trading.
In any case, the book is split into five parts: Part 1 discusses the fundamental info (how markets work, what things to look for in a broker and deciding whether to trade using fundamental analysis or technical analysis). What I did appreciate in Part 1 is the author’s focus on multi-asset classes and global stocks. Most short term trading books I’ve read seem to believe that only one asset class exists in the world: U.S. stocks. This one takes a different approach. The author stresses the importance of looking beyond the traditional pale of U.S. stocks and examines international stocks, commodities (via ETFs) and currencies. By expanding your investment universe, you’re more likely to find securities with the right characteristics.
Part 2 has three chapters on technical analysis covering (1) charting, (2) indicators and (3) trading ranges or trends. Almost any technician knows how to interpret MACD or Stochastics, but how to use them properly is key. For example, the author stresses the importance of “only going on green”. That is, we often find charts or indicators with buy signals but you can only buy the day a signal is actually given.
Part 3 is all about fundamental analysis. I don’t use fundamentals that much in my trading so I read this part more with an eye to understand certain concepts. The discussion on debt and leverage was helpful given the current financial mess we’re seeing. The author appears to have been right on his call that Marvel was highly leveraged and not worth swing trading on the long side.
Part 4 is perhaps the most important part of the book (and why was it put last?). It discusses risk control, developing a trading plan, using intraday charts and walking through an actual swing trade. By far, the most useful chapter was the managing risk chapter (10) because it covered position sizing, placement of stop loss orders and how to limit losses at the individual stock level and portfolio level. The last two concepts seem to be similar to Alexander Elder’s “shark bite” and “piranha bite” concepts.
Part 5 is the “Parts of Tens” which is made up of two “top ten” chapters: Ten simple rules for swing trading and ten deadly sins of swing trading. If you’ve read Parts 1 through 4, you’ll already have covered both top ten lists. The sins include things like starting with too little capital, gambling on earnings dates, trading penny stocks and violating your trading plan.
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|Pleasantly Surprised,
I was pleasantly surprised when I picked up this book at a bookstore. I normally have low expectations for Dummies titles. Let’s be honest: you don’t usually find gems among “Dummies” or “Idiot” books.
But I can state that Swing Trading for Dummies is my favorite book on short term trading. The book is the only one I’ve found which provides proper coverage on all aspects of trading–from designing a trading plan (part IV) to managing risk properly (chapter 10) to performing intermarket analysis (chapter 6). While most swing traders shy away from fundamental analysis, the book covered the essential items traders should understand in a company’s financial statements and how to arrive at a ball park estimate for a company’s shares in a few minutes.
The book has several charts to illustrate trading examples and stresses the importance of simplicity in designing a strong trading system. There was also good humor throughout which made the book an easy read.
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|OK if you are a beginner but ..,
The first 60 pages focus on the absolute basics of trading. After that the author gets into basic aspects of technical analysis and discusses indicators such as the accumukation boxes,trend lines etc. One take I have is that the book advocates the use of the ADX indicator to enter stocks and trade with the trend. My experience has shown that by the time the ADX moves above 30 especially in volatile markets the trend tends to be close to mature. I have read other books that advocate looking for low ADX and using other indicators to assess accumulation and then enter before the trend takes hold and this have been more effective for me. Also the use of DMI+ and DMI- to exit trades may not be the best way since these indicators tend to whipsaw and crossover multiple times in a short period.
The book spends many pages on fundamental analysis on how to evaluate company balance sheets etc. While this is good if you are an investor it can bring your swing trading into a halt. I cannot count how many times my losing swing trades were in fundamentally solid companies since there are many other factors involved such as naked shorting,long squeezes,a large fund wanting to exit that can drive a sound company’s stock down.
On the other hand I do agree with the authors that you should trade stocks in technically strong sectors. In fact I have used this idea regularly with my trades before I read the book and recommend others use it . A recent examle is when CAB came out with good earnings I looked for other gun makers and traded SWHC for a good profit.
If you are a beginner, this book will introduce you to the necessities , but I would recommend you read other books to get different perspectives on the technical aspects of trading.
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