How hard is it to swing trade for a living from home? Swing trading for a living is easier than you might think. Swing trading strategies are not hard but you need to know what the right tools are and how to use them.
With active swing trading where you need a constant income coming in from your trading to pay the bills, you must reduce unnecessary losses and increase your odds of winning at the same time.
Swing Trading Stocks
You can not apply swing trading strategies to all stocks listed on the stock exchanges. There are certain types of stocks that work really well with swing trading strategies and those are the stocks you need to find.
A big problem with swing trading books, and even the swing trading indicators you will be using, is that they show you the swing trading strategies and indicators but they don’t show you which stocks you should be using these strategies on.
So how do you find the best swing trading stocks?
The first thing you want to do is, in whatever real time stock screener you use, sort stocks by dollar volume. You want stocks that trade at least $1 million worth of volume every day. Good small cap stocks that are ready to swing need to trade at a minimum $1 million worth of volume a day because that attracts the bigger players like institutional traders.
The next criteria you want to use is that you want stocks that trade between $0.01 and $10 per share. Anything over $10 per share and it’s not in that sweet zone that most successful stay at home traders like. Remember, you do not want to reinvent the wheel. You want to learn what other successful guys that trade at home for a living look for and just duplicate what they do.
Your next criteria should be companies with a market cap of between $100 million and $2 billion. The reason that you want swing trading stocks with a market cap greater than $100 million is that institutional traders buy these types of stocks. Look folks, retail traders like you and me are too small and do not have the purchasing power to really move stocks. We need to trade stocks that attract institutional investors. Stay away from penny stock pumpers. Filtering stocks with a market cap greater than $100 million should keep you away from these pump and dumps.
Frequently Asked Questions about Swing Trading For a Living From Home
What are institutional buyers?
Institutional buyers are corporations that fall within the “accredited investor” category, and that invests at least $100 million in securities; for a broker-dealer the threshold is $10 million.
Institutional investors are banks, insurance companies, retirement or pension funds, hedge funds, investment advisors and mutual funds.
Amateur traders who trade at home for a living don’t move markets or put stocks into sustained uptrends. Institutional traders are the only ones with the purchasing power to do that.
Swing traders and day traders can move quicker than institutional investors and thus “feed” off of their buying and selling.
I posted the video below on how to track institutional buying.
What does swing trading mean?
Swing trading is any stock play where the hold time is between 1 and 5 days and the goal is to profit from a “swing” move up or down.
The most common pattern that swing traders trade is the oversold pattern.
Many swing traders go for a 5% to 10% move and then they exit the market quickly.
TradeWins1 published the excellent video below by Oliver Velez, the CEO of Velez Capital Management, called Oliver Velez: Swing Trading.
What are the best technical indicators for swing trading?
The RSI (relative strength index) is used to help swing traders time either oversold or overbought entries. An RSI above 70 signals a stock is overbought and an RSI below 30 signals a stock that is oversold.
PSAadmin posted the great educational video below called Trading with the (RSI) Relative Strength Index.
The MACD (moving average convergence/divergence) is used by swing traders to identify trend changes and the strength of momentum.
MFGlobal posted the excellent video below called Swing Trading Using the MACD.
In the video below, you’ll hear my teacher talk about institutional traders and what impact they have on the market and the short term swing trader. My teacher, Jason Bond (JB), quit his day job at teaching in the New York public school system, and does swing trading for a living from home.