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How to Develop Simple Swing Trading Strategies

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How to Develop Simple Swing Trading Strategies lays the foundation for developing short- to intermediate-term overnight trading strategies. ► Subscribe to our YouTube channel: http://bit.ly/2kLE2Pz SKIP AHEAD: What is the Goal of Swing Trading? 1:57 Why Develop a Trading Strategy at all? 3:59 STEP 1: Build Your Trading Foundation 6:59 STEP 2: Create Trading Strategy Rules 13:58 STEP 3: Backtest Trading Strategy 19:31 STEP 3B: Backtest Equivalents for Discretionary Traders 27:00 STEP 4: Start Over or go Live 30:13 STEP 5: Maintenance & Strategy Improvement 31:44 Trading is Not Always Smooth 35:06 Risk Management & Position Sizing is King 39:17 RELATED STRATEGY ARTICLES ON THE TRADE RISK: https://www.thetraderisk.com/learning-center/ How Moving Averages Can Simplify Your Trading Trading Leveraged ETFs for Max Profits How Smaller Profit Targets Can Improve Your Trading How Market Internals Can Improve Your Trading Why End of Day Trading Is Superior Pros and Cons of Using Profit Targets Adapt to Dynamic Markets or Fail CONNECT WITH US: Learn More: http://www.theTradeRisk.com Newsletter: http://www.theTradeRisk.com/newsletter Trade Alerts: http://www.theTradeRisk.com/swing-trade-alerts Follow Us: http://www.twitter.com/evanmedeiros
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Text Comments (61)
Matt Huber (1 month ago)
So is hypothetical a rapid up and down market would be good to make small return to start
The Trade Risk (1 month ago)
Sideways rangebound up and down markets tend to be the best profile for quick mean-reverting strategies. Buy low, sell high, go for quick targets and don't chase extremes, fade them.
Kits Amores (1 month ago)
Thanks!
Anthony Flores (1 month ago)
wow, great organized information. finally someone who gets straight to the point and explains the strategy or at least an example of how to go about creating a strategy. Thank you for not wasting my time like most other videos!!
The Trade Risk (1 month ago)
Thanks for the nice comment Anthony, glad you enjoyed!
Slim G (1 month ago)
Thank you really helpful video but Woooow is it really necessary to test trade your strategy for 2 YEARS before using it comfortably ? I feel like 1-2 months should be largely enough if you take a trade every other day what do you think ? Thanks
The Trade Risk (1 month ago)
Right on, thanks Josh!
josh byington (1 month ago)
As a mechanical engineer who places my faith in certain designs based on statistical success and failures, I love seeing trading being explained this way. So much more clear than most people who seem to dumb it down for people, which never gets the true point across.
The Trade Risk (1 month ago)
Hey Slim, thanks for the comment and yea that's a good question. The short answer is, the more data you have the better. The truth is, even 2 years of data making a trade every other day is only going to give you a bit over 200 trades for your sample size. I know a lot of quantitative traders who would dismiss that all together and demand 1,000 or more occurrences before they even begin to think about going live with a strategy. It's hard to give an exact number, but certainly, you would want at least hundreds of trades to get some statistical confidence and a variety of market environments/conditions to truly asses the validity of a strategy. Could you start with less? Sure. Would more be better? Always. Hope that helps!
WoodgynTrooper15 (1 month ago)
Robustness
JPS Rajput (2 months ago)
Very Very Sensible and practical.Sounding lile a seasoned pro.Thanks
An Sert (2 months ago)
👍
Steeve Thibodeau (3 months ago)
The thing is that you know its an uptrend when at least 3 swings has occur. So, maybe there is no more gaz in the tank...
*Honestly day trading is nice and all but i prefer swing trading especially with the Blended Model strategy i have been using created by Dmitry Vladislav, you can search about it on google or email ([email protected] .cc). A whole lot of traders are making a lot of money with this* .
Frank (4 months ago)
Schwiinnnng!
Nicholas Robbins (4 months ago)
When day trading or swing trading, what is the best investment vehicle you use for tax efficiency purposes? I can imagine someone swing trading 10-20 times a month can take quite a hit for taxes. What’s the best account to balance out the capital gains taxes? Thank you, big fan! 👏🏼
The Trade Risk (4 months ago)
Hey Nicholas, great comment, yes you are spot on, active trading strategies can have a high impact come tax time. I just recorded a video on this topic, check this out: https://youtu.be/8dPat3gYFv8
rashad1saifullah (5 months ago)
Great video, nicely presented. How did you become so knowledgeable? Did you take a course or just piece together things from a whole bunch of different sources etc.?
The Trade Risk (5 months ago)
Thank you, glad it was helpful. No formal training or courses, just 10 years of really digging in deep nonstop on markets, trading, and all related topics. Lots of books, networking, research and most of all trial and error, and accumulating screen time.
Pablo Yarzon (5 months ago)
very well explained thanks
Nelson Mendez Jr. (6 months ago)
Excellent. The organization of the material is impecable. It obviously comes from an organized mind.
The Trade Risk (6 months ago)
Thank you Nelson, I appreciate the kind comment.
Mou San (6 months ago)
Good one !! Check this amazing indicator from TradeDesk24.com - https://www.youtube.com/watch?v=gfAjmUAtqKQ We provide GREAT EA and Fund management services too !!?
Hai Yu (6 months ago)
Thanks for your video, in the EMA20, do you use high, open, or low?
The Trade Risk (6 months ago)
Thanks! In this video we are just using the EMA calculated on closing prices.
Nav Jot (7 months ago)
Hey Broo Please Share Your Own Money Management And Own Strategy.
The Trade Risk (7 months ago)
I do have a breakdown of my own strategy including a list of every trade taken (entry, exit, etc.) since 2015. Check out these two pages: https://www.thetraderisk.com/swing-trading-framework/ and https://www.thetraderisk.com/trading-performance/
krishnazee061 (7 months ago)
fantasic presentation.
The Trade Risk (7 months ago)
Thanks Krish
Chri A (8 months ago)
you call this simple?
Jason Goossens (28 days ago)
This is incredibly simple. If it isn't to you, you need to spend more time studying TA and looking at charts.
The Trade Risk (8 months ago)
I would consider the rules and conditions we share for a sample strategy simple. But yes, the process of backtesting and actually validating those rules, does require work. There's no easy shortcuts that I am aware of unless you have some strong programming chops or access to expensive backtesting software.
S F (8 months ago)
Certified legit
Ezekiel Polite (8 months ago)
You lost me during the end :(
Kris Feng (9 months ago)
I been doing 20% of whole capital... because 3% of $10,000 is $300, there should be a min to pay off your trading fees or trading commissions, I pay $20 trading fee for a round trip, so $20 is 6.7% of $300, to break even I gotta get over 6.7% If you make a lucky 30% gain you make $390 minus $20 for trading fee is $370 You loose 6.7% If you invest $10k and get 30% that's $3000 and minus $20 for trading fee, is $12,980 so your only loosing .02% on fees
jmsmilin (9 months ago)
what is ATR what is EMA standfor
jmsmilin (9 months ago)
sweet thanks
The Trade Risk (9 months ago)
Good question, ATR is Average True Range which is an indicator that measures a stock's volatility. ATR tells us what is the expected movement (range) of a stock given its recent trading history. EMA is Exponential Moving Average. This is an indicator that plots a weighted moving average of a stock based on its recent closing prices. I wrote a guide explaining what moving averages are and how they can help you trade here: https://www.thetraderisk.com/how-moving-averages-can-simplify-your-trading/
ramesh sharma FB (10 months ago)
super
ramesh sharma FB (10 months ago)
excellent
Amabelle Cesar (10 months ago)
Just wonderful, been searching for "trading systems forex" for a while now, and I think this has helped. Ever heard of - Anokeen Trading Tetaniformula - (just google it)? I've heard some awesome things about it and my neighbour got cool results with it.
jimbush80528 (10 months ago)
Sir, you need to work on being more succinct.
Nova (10 months ago)
i always risk my whole bankroll. I love to gamble
Trevor Pace (12 days ago)
I like this new strategy, you should make tutorials
I don't know (1 month ago)
Gambling is a one shot deal. You either win or lose at the roll of a dice or a card or a horse or a game. Trading almost never loses as long as you stay in. It's like investing in let's say apple. I guess they could file bankruptcy but that's not likely. Can the stock go down ? yes But as long as you don't sell you lose nothing and it will return . That is proven. So gambling is not really the right word.
Adler Sands (1 month ago)
The point of learning how to trade is to make the risk factor less, make it as little of a gamble as possible. You clearly don’t know the fundamentals of trading so you’re willing to get into anything that will MAYBE make you money. It’s okay you’ll learn.
absoluttchamp (2 months ago)
You trade your troll account? :D
silverback17 S (2 months ago)
I don’t know why this comment made me laugh so hard! Haha
Jhov Suico (11 months ago)
This is glorious, I have been researching "best stock programs" for a while now, and I think this has helped. You ever tried - Panincoln Swinger Blueprint - (do a google search ) ? Ive heard some awesome things about it and my neighbour got cool success with it.
Rylan DeAngelis (1 year ago)
Hiya, I have another question: At the moment i have a relatively small trading account so i am trading small size but find i am quite limited in the stocks i can buy. My idea is to save £1,000 a month and put it into my account every month ( money i can afford to lose /risk ), but have now encountered a dilemma. At the moment i am -2.7% of my overall account. What happens if i add money into my account, i will be up positive percentage? How will i know if i am up on the year/or performing well or not if i keep adding funds? Is there a way round this....Thanks :)
The Trade Risk (1 year ago)
Hi Rylan, this will be broker specific, but everyone i've worked with has the ability to generate performance reports that do not factor in deposits/withdraws into the results. In fact, this is necessary come tax time for them to know what your actual gains/losses were based on pairing up your trades. So short hand answer is to keep a spreadsheet yourself every time you deposit, otherwise, contact broker and/or figure out how to generate trading reports online.
Rylan DeAngelis (1 year ago)
Hi , What does it mean by - Never enter more than 20% of total capital per trade? Is that the same as risking 20% per trade? On the slide @42min it says - Never risk more than 1% per trade & Never risk more than 20% of total capital. I have heard this before a few times but never understood what it mean....... Any examples will be appreciated! Thanks and Great Video
Nataly Jackson (7 months ago)
This is glorious, I've been looking for "trading for beginner" for a while now, and I think this has helped. Have you ever come across - Annahiy Stockify Sabinianus - (just google it ) ? Ive heard some interesting things about it and my m8 got great success with it.
Miss Valentino (7 months ago)
Rylan DeAngelis 20%?? WHOA. Dont u mean no more than TWO Percent. 20% would be ok i guess....assuming you have several million in capital 😅 KIDS, DONT RISK MORE THAN 1-2% PER TRADE!
Rylan DeAngelis (1 year ago)
The Trade Risk : Thank you for a great explanation :)
The Trade Risk (1 year ago)
Rylan, thanks for writing and good question. Yes, there is a difference between the amount of risk you’re willing to take on a trade versus the amount of capital invested in the trade. Here’s an example. Let’s say you have a $10,000 trading account and you want to risk 1% per trade, and never more than 20% of capital allocated to any one trade. That means your risk per trade would be $100 and your total capital invested into any one idea would be 2,000. If you bought stock XYZ at $50 and put a stop at $49 that means to achieve your $100 in risk, you would need to purchase 100 shares. However, 100 shares at $50 would cost you $5,000 which would be 50% of your total account capital. By enforcing both rules you get a more well-rounded risk management process which can save you in the event you get stuck in some catastrophic overnight gap down in a single risky stock that you're holding onto. Hope that helps.
Magic11 (1 year ago)
Thank you! This was very helpful!
The Trade Risk (1 year ago)
Glad to hear it, thanks for the comment.

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