The Complete Techniques of Swing Trading: Accumulating Profits Over Days to Weeks

Introduction

“Buying because it seems good” and “selling because I’m scared as it drops”—when I first started swing trading, these were my only two criteria for making decisions.

What was the result? When I had unrealized gains, I would get scared and take profits immediately, and when I had unrealized losses, I would hold onto them without any basis, thinking, “It should bounce back eventually.” In the end, I spent years repeating the worst possible pattern: winning small and losing big. I would panic-sell when prices rose and hold on while praying when they fell. Looking back, those were years where I entrusted all my emotions to price movements. I remember how, every time I opened my charts on the weekend, I felt a little afraid of Monday coming.

With day trading, you get an answer within the day. The positions you buy are let go by the end of the day, for better or worse. But swing trading is different. After you buy, there is a “waiting period” of several days to several weeks before you get a result. If you start without knowing how to handle this waiting time, it will almost certainly become painful. I cannot count how many times I have struggled with how exhausting it is to spend the night holding an unrealized loss, or how many times I couldn’t sleep because I was worried, “What if it drops tomorrow?” even when I had unrealized gains.

I have 10 years of experience in swing trading. Now, even in the same situation of an unrealized loss, I can judge within seconds whether it is “within expectations or unexpected.” The difference is not talent or intuition, but simply whether or not I have a framework for decision-making. Both the amount of stress I feel while holding a position and my actual performance have changed significantly since I adopted this framework.

In this article, I have written down as concretely as possible the decision-making criteria for swing trading that I have organized over the past 10 years. This includes how to select stocks, the flow for selecting watchlists, entry timing, stop-loss and take-profit lines, the philosophy of money management, how to handle earnings announcements, how to read sector rotation, and how to deal with the most troublesome aspect: “mental state while holding a position.” Furthermore, to help you visualize the actual flow of decision-making, I have prepared concrete case studies using fictional stocks in each chapter, and added as much practical content as possible, including Q&A for frequently asked questions, a glossary of terms, and a template for monthly reviews.

When you finish reading this, your decision-making the next time you take a position should feel a little lighter than it does now.