As primarily swing traders, we are always susceptible to second guessing our positions, being wrong with our entry timing, and holding stocks too long and turning small losses into larger ones. Im just as guilty of all the same as anyone else, and the reason is simply human nature. In order to be successful long term as a trader you do have to employ strict discipline and also make sure to forgive yourself for mistakes when you make them.
What we try to do at ATP is look for specific fundamental and technical patterns that may give us an unfair advantage over most traders. We are really contrarian traders if you will, looking in many cases to buy what others are selling, and then sell what they all want to buy within 24-72 hours later. Easier said than done I know, but its what we do every week or at least try.
Sometimes that doesn’t always work out so well, so we have our stops losses in place in the event a pattern is not going the way we projected. One of the benefits of using crowd behavioral patterns is we can project our gains in advance, but also know quickly when to take the loss and move along.
Samples recently include taking a 2% loss on DECK at $54, its now trading at $47.81 just 1 week later.
We took a 2-3% loss on ANV at 7.40 recently, its now trading at $5.75. Protecting your trading capital is always key.
This also works the opposite way, where we sell a stock and take the profit and watch it fall back hard afterwards. There are also going to be numerous times when you sell a stock and day later it goes higher and higher, sometimes even minutes later. Learn to delete that stock from your watch list so that you do not continue to mentally beat yourself up for selling too soon. Also, take your lumps and understand even the best traders are wrong 30-40% of the time whether it be selling too soon or holding too long, or entering a position poorly.
What we try to do at ATP is alert our traders to advantageous entry points where we can deploy attack capital with lower risk of entry, and higher likelihood of gains in a short period of time. We move swiftly to take our profits and lock in our gains whenever possible.
Samples recently include buying the 1 day oversold reaction sell-off in SZYM under $10.80 (From 12.62 the previous day) and selling it the next morning at 11.40 for a 5-6% swing inside of 24 hours. The stock then dropped back over the next 24 hours to 10.60 area.
We bought and sold AMBA for 5-7% gains in a few days and then in the following week watched it drop from $18.10 to $16 ranges after we sold.
We bought and sold DXM for 7.7-8% gains within a few days and then watched it drop from 19.20 to 16.70 days later as well.
We overlay our macro technical views of the market indexes to determine when best to sit more on our hands, or be more aggressive. This means maybe going a few days with no positions, or maybe going with 5-6 open positions. When we are wrong we take our loss and quickly move along both physically and mentally. The bottom line is we look for conditions that give us a lower risk aggressive entry using a buy the dip mentality, and then look to exit on the reversal rip as traders come into a story. We notice its common that traders do not like to buy big dips in general, preferring instead to chase stocks higher… work on doing the reverse and watch your results soar.
Join us at ATP and get real time Text and Email alerts and posts on 3x ETF’s and Stocks for swing trades. www.activetradingpartners.com