Swing Trading: High Profit and Low Risk

Most of my profits in investing are made using the strategy of Swing Trading. Defined by me, Swing Trading is holding the bought stocks for about six months. At the end of the holding period, evaluate the stocks again to determine whether you want to sell it or keep it longer. Last year, most of the [...]
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Most of my profits in investing are made using the strategy of Swing Trading. Defined by me, Swing Trading is holding the bought stocks for about six months. At the end of the holding period, evaluate the stocks again to determine whether you want to sell it or keep it longer. Last year, most of the stocks are kept for about a year, so they are qualified for the better tax treatment as long-term capital gains in my taxable account. These stocks should be fundamentally sound (i.e. value stocks). Hence they need at least six months for the market to realize their values. Select the holding period that fits your objective. After six months, the fundamentals of the company, the sector that the company belongs to and/or the market may change. Hence, we need to evaluate and decide the 'buy/hold' decision. Sometimes, you may want to raise cash to buy another stock that has more appreciation potential than a stock you own. Churning the portfolio improves the quality of your portfolio. Most chapters of this book are copied from my other book, Debunk the Myths in Investing. It is a simplified version of that book concentrating on swing trading. This book provides all the tools to be a successful swing trader / investor. When the market is going to plunge, do not buy stocks. I have a simple chart to identify market plunges (Chapter 3). It depends on stock data, so it will not identify the peaks and the bottoms precisely, but it will spare you for further losses and will instruct you when to reenter the market. It worked for the last two market crashes. It will detect the next crash, and hopefully it will give us enough time to react as the last two. After we have decided that the market is not risky (Section I), screen stocks for further evaluation. I use fundamental metrics to screen stocks. Then look for intangibles and do a thorough qualitative analysis on each screened stock (Chapter 14-15). There is no magic formula, but due diligence will pay off in the long run. This book does not promise overnight wealth as promised by many others. Other topics include how to set order prices, stop loss, tax considerations and a trade plan (Section III). Periodically review your big losers and big gainers to see whether any lessons to be learned (Chapter 25-26). This book is intended for a retail investor and I am one myself. It is not written by a journalist who may never make a buck in the market. I have conducted exhaustive simulations to back-test these strategies over the past 12 years. Recently, I have been creating many new strategies to adapt to the current market conditions and challenges we now face as retail investors. It is my passion to find the best ways to profit from the stock market at the least risk by using market timing and stock evaluation. In market lingo, I am looking to max my alpha while reducing my beta. I enjoy sharing my passion with others, which is why I have written this book.