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The main objective of a swing trader is to profit from swings in price movement over the course of several days. While we might trade every day, we are not day traders. As swing traders, we have the patience to wait until our profit goals have been reached. Fortunately, the wait is not too long. A typical trade is only in play from a few days to a few weeks. When a trade is closed, the funds go into the next trade.

Money management is very important in swing trading. I divide my trading capital by 15. This is the amount that I put into each trade. As the total account grows, the amount of each trade grows. If you can handle a larger number of trades, you might increase the number of trades that are active to 20. Of course you can also start with 2 or 3 trades at a time. Each day I identify 20 to 25 candidates for swing trading. If I have 10 trades active and enough additional investment capital for 5 more trades, I pick the best 10 from my list of 25, and place the orders. Only some of orders will get filled. I don’t worry about running out of money – if there is no cash left in the account, additional orders will simply not get filled. (Make sure that your own account works this way, otherwise, your brokerage firm might fill the order and expect additional funds within the next few days.)
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The 80-20′s is a strategy we use for day trading. Many of our readers may. already be familiar with The Taylor Trading Technique which is a reference manual for swing trading. Simply stated, Taylor’s method implies that markets move with a natural rhythm that is made up of a buy day, sell day, and sell short day This pattern is further evidenced by the research done at the Moore Research Canter by Steve Moore.

Steve profiled days that closed in the top 10 percent of their range for the day. He then tested for the percentage of times the market exceeded the profiled day’s high the following day and the percentage of times it actually closed higher. His research showed that when a market closed in the top/bottom 10 percent of its range, it had a 80-90 percent chance of follow-through the next morning but actually closed higher/lower only 50 percent of the time. This implies that there is a good chance of a midday reversal.

How could a methodology be created that would profit from this reversal phenomenon? Derek Gipson, a fellow trader, noticed that the market has an even higher likelihood of reversing if the setup bar opened in the opposite end of the daily range, so we added a pre qualification that the I The Taylor Trading Technique, Gears Douglass Taylor.
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This book is a simple, practical guide to swing trading. For years I have been
reading books and exploring web sites that are dedicated to swing trading. Yet, I
could not find any simple description of how to enter and exit a trade. So I
developed some basic rules that have been published on my web site
www.mrswing.com. I call these rules The Master Plan. Over the years, thousands
of investors have used my Master Plan to swing trade. It is my firm belief that a
swing trader must trade with discipline. While it is important to keep things
simple, the rules of the Master Plan might seem a little intimidating. The main
reason I wrote this book was to make swing trading more accessible to the
beginner. These rational behind swing trading and the entry and exit rules are
presented very clearly – both the beginner and the experienced swing trader will now
have a simple guide to follow.
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