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Swing and Day Trading: Evolution of a Trader

ISBN: 978-1-118-46422-9
320 pages
January 2013
Swing and Day Trading: Evolution of a Trader (1118464222) cover image
Comprehensive coverage of the four major trading styles

Evolution of a Trader explores the four trading styles that people use when learning to trade or invest in the stock market. Often, beginners enter the stock market by:

  • Buying and holding onto a stock (value investing). That works well until the trend ends or a bear market begins. Then they try
  • Position trading. This is the same as buy-and-hold, except the technique sells positions before a significant trend change occurs.
  • Swing trading follows when traders increase their frequency of trading, trying to catch the short-term up and down swings. Finally, people try
  • Day trading by completing their trades in a single day.

This series provides comprehensive coverage of the four trading styles by offering numerous tips, sharing discoveries, and discussing specific trading setups to help you become a successful trader or investor as you journey through each style.

Trading Basics takes an in-depth look at money management, stops, support and resistance, and offers dozens of tips every trader should know.

Fundamental Analysis and Position Trading discusses when to sell a buy-and-hold position, uncovers which fundamentals work best, and uses them to find stocks that become 10-baggers—stocks that climb by 10 times their original value.

Swing and Day Trading reveals methods to time the market swings, including specific trading setups, but it covers the basics as well, such as setting up a home trading office and how much money you can make day trading.

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Preface ix

Acknowledgments xv

CHAPTER 1 INTRODUCTION TO SWING TRADING 1

What Is Swing Trading? 1

Who Should Swing Trade? 2

A Swinging Example 3

Looking Ahead 5

CHAPTER 2 SWINGING TECHNIQUES 7

Quick Review: Support and Resistance 8

Trendline Trading 9

Trading Using Channels 15

The Three-Bar Net Line Setup 17

First Thrust Pattern for Swing Trading 26

CHAPTER 3 SWINGING CHART PATTERNS 31

Which Chart Patterns Work Best for Swingers? 32

Trading the High and Tight Flag 33

HTF Trade in Insteel Industries 40

Fishing for Inverted and Ascending Scallops 42

Scallop Trading Tips 43

Twice Is Nice: Eve & Eve Double Bottoms 44

Trading Eve & Eve 46

Top Seven Frequently Traded Chart Patterns 47

My Favorite Chart Patterns 53

Swinging Throwbacks and Pullbacks 56

Trading Example 59

CNO Throwback Entry 60

Measuring Swings 62

FTO Trade 64

CHAPTER 4 SWING SELLING 69

Selling Ideas 70

Top 20 Chart Pattern Performers 71

Diamond Tops and Bottoms 73

Complex Head-and-Shoulders Top 77

The Eight Best Exit Signs 80

Ten Favorite Sell Signals 84

Trading Example: The Teradyne Exit 90

Trading Example: Exiting Forest 92

Trading Example: Swinging CNO 94

CHAPTER 5 EVENT PATTERN SETUPS 97

Common Stock Offerings Setup 97

Surviving a Dead-Cat Bounce 102

The Inverted Dead-Cat Bounce Setup 106

Trading Dutch Auction Tender Offers 108

Earnings Surprise Setup 111

Earnings Flag Setup 118

Stock Upgrades and Downgrades 120

Stock Splits 125

Setup: Trading Reverse Splits 129

CHAPTER 6 SWINGING TOOLS AND SETUPS 133

The Chart Pattern Indicator 133

The Swing Rule 137

Pump Up the Volume or Not 142

Selecting Winners Using Index Relative Strength 145

Three Swing Trading Setups 147

Trading Setup: Simple Moving Average Tests 157

The Smile and Frown Setup 158

Trading Smiles and Frowns 160

Smile and Frown Trading Tips 162

CHAPTER 7 INTRODUCTION TO DAY TRADING 167

What Is Day Trading? 169

Why Day Trade? 169

Is Day Trading for You? 170

What Are the Problems of Day Trading? 172

CHAPTER 8 DAY TRADING BASICS 177

Managing Expectations: How Much Can You Really Make? 178

Building the Home Office 179

Office Setup Cost 184

Pattern Day Trading Rules 185

Wash Sale Rule 186

Eight Tips for Picking Stocks to Day Trade 187

Price Reversal Times Revealed! 191

What Time Sets Intraday High and Low? 193

Inside Level II Quotes 195

Heartbeat of the Market: Time-and-Sales Ticker 197

Pre-Market Checklist 198

After-Market Analysis 199

CHAPTER 9 OPENING GAP SETUP 203

Opening Gap Test Data 204

Setup: Fading the Opening Gap 204

Sample Trade 217

CHAPTER 10 DAY TRADING CHART PATTERNS 221

Day Trading Double Tops 221

Day Trading Triple Tops 225

Day Trading Symmetrical Triangles 226

Day Trading Head-and-Shoulders Tops 228

Day Trading Double Bottoms 229

Day Trading Head-and-Shoulders Bottoms 231

Day Trading Triple Bottoms 232

Other Trading Tips 233

CHAPTER 11 OPENING RANGE BREAKOUT 237

What Is Best Range Time? 238

The ORB Setup 241

Does the ORB Setup Work? 247

CHAPTER 12 TEN HORROR STORIES 251

This is a Winner, Mom. Buy it! 251

Three Newsletter Disasters 252

Three Option and Warrant Disasters 254

Two Missed Opportunities 257

The $1 Million Surprise 260

CHAPTER 13 CLOSING POSITION 263

CHAPTER 14 WHAT WE LEARNED 265

Visual Appendix of Chart Patterns 277

Bibliography 283

About the Author 287

Index 289

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THOMAS N. BULKOWSKI is a successful investor with thirty years of experience in the stock market. He is also the author of the Wiley titles Encyclopedia of Candlestick Charts, Encyclopedia of Chart Patterns, Getting Started in Chart Patterns, Trading Classic Chart Patterns, and Visual Guide to Chart Patterns. Bulkowski is also a contributor to Active Trader, Technical Analysis of Stocks & Commodities, and other publications worldwide. Before earning enough from his investments to retire from his day job at age 36, Bulkowski was a hardware design engineer with Raytheon and a senior software engineer for Tandy Corporation.

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“The three books in this series were written for people unfamiliar with the inner workings of the stock market, but will still curl the toes of professionals, too.  Research is used to prove the ideas discussed, but is presented in an easy to understand and light-hearted manner.  You will find the books to be as entertaining as they are informative and packed with moneymaking tips and ideas.  Use the ideas presented here to hone your trading style and improve your success.  Whether you are a novice who has never purchased a stock but wants to, or a professional money manager who trades daily, these books are a necessary addition to any market enthusiast’s bookshelf.”
Alan Battista, Stockineer.com Book Review

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January 03, 2013
Swing and Day Trading: Evolution of a Trader

Evolution of a Trader explores the four trading styles that people use when learning to trade or invest in the stock market. Often, beginners enter the stock market by:

  • Buying and holding onto a stock (value investing). That works well until the trend ends or a bear market begins. Then they try
  • Position trading. This is the same as buy-and-hold, except the technique sells positions before a significant trend change occurs.
  • Swing trading follows when traders increase their frequency of trading, trying to catch the short-term up and down swings. Finally, people try
  • Day trading by completing their trades in a single day.

This series provides comprehensive coverage of the four trading styles by offering numerous tips, sharing discoveries, and discussing specific trading setups to help you become a successful trader or investor as you journey through each style.

Trading Basics takes an in-depth look at money management, stops, support and resistance, and offers dozens of tips every trader should know.

Fundamental Analysis and Position Trading discusses when to sell a buy-and-hold position, uncovers which fundamentals work best, and uses them to find stocks that become 10-baggers—stocks that climb by 10 times their original value.

Swing and Day Trading reveals methods to time the market swings, including specific trading setups, but it covers the basics as well, such as setting up a home trading office and how much money you can make day trading.

See More
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