3-4 Days Swing Setup
3-4 Days Swing Setup
Requirement – Candlestick chart/Bar Chart with MA(150), Stochastic Indicator (6,3,3) and RSI (3).
Brief Introduction – This is a typical forex system setup which works well in the stock markets as well. I dont quite remember but I think I saw this setup once on Alexander Elder's DVD presentations. This setup works well in trending market and like all other systems, fails in range bound markets. The advantage of this setup is that it assumes a maximum loss of 1.5-2.0% (you can use your own momey management rules) on a trade and hence can loose less. If there is a gap up or gap down against your trade, then like other systems, even this system would give you losses. Usually when the trade goes right, the returns are good and in a span of 3-4 days. This pattern does not work well on all stocks. On some stocks though, it works like charm.
Trade Setup (Buy) - Pick a stock which is trending upwards with the slope of 150 day SMA being up. We enter a stock WHEN the stochastic (6,3,3) gives buy signal (cross) below 30 and with rsi(3) being below 20. All these conditions have to be validated before entering the setup. .
Example - In an example shown below, YesBank has been in an uptrend since early May. There are two signals chosen of this stock. In one case the stock did give the signal, but got stopped out. Eventually though in 2 days time it did move up significantly. In other case, the stock gave a buy in December at 246 and moved to 272 in a matter of 3-7 days. Why I chose Yes Bank? Well, I love this stock. Pretty active and gives good set-ups for swing trades.
STOPLOSS - This set-up usually picks out bottom/top of a trending stock. I usually use a stop loss of 3-4%. Which might be huge for some traders, but it suites my risk appetite. You can use a stop loss of 1.5 - 2.5%.
Usage - This pattern can be used on DAILY charts for 3-5 day swing trades.
Example:
3-4 Days Swing Setup
Requirement – Candlestick chart/Bar Chart with MA(150), Stochastic Indicator (6,3,3) and RSI (3).
Brief Introduction – This is a typical forex system setup which works well in the stock markets as well. I dont quite remember but I think I saw this setup once on Alexander Elder's DVD presentations. This setup works well in trending market and like all other systems, fails in range bound markets. The advantage of this setup is that it assumes a maximum loss of 1.5-2.0% (you can use your own momey management rules) on a trade and hence can loose less. If there is a gap up or gap down against your trade, then like other systems, even this system would give you losses. Usually when the trade goes right, the returns are good and in a span of 3-4 days. This pattern does not work well on all stocks. On some stocks though, it works like charm.
Trade Setup (Buy) - Pick a stock which is trending upwards with the slope of 150 day SMA being up. We enter a stock WHEN the stochastic (6,3,3) gives buy signal (cross) below 30 and with rsi(3) being below 20. All these conditions have to be validated before entering the setup. .
Example - In an example shown below, YesBank has been in an uptrend since early May. There are two signals chosen of this stock. In one case the stock did give the signal, but got stopped out. Eventually though in 2 days time it did move up significantly. In other case, the stock gave a buy in December at 246 and moved to 272 in a matter of 3-7 days. Why I chose Yes Bank? Well, I love this stock. Pretty active and gives good set-ups for swing trades.
STOPLOSS - This set-up usually picks out bottom/top of a trending stock. I usually use a stop loss of 3-4%. Which might be huge for some traders, but it suites my risk appetite. You can use a stop loss of 1.5 - 2.5%.
Usage - This pattern can be used on DAILY charts for 3-5 day swing trades.
Example:
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